Yesterday, an intermediate New York State appellate court, the First Department of the Appellate Division of the New York Supreme Court, reinstated the conviction of an Ex-Goldman Sachs programmer, Sergey Aleynikov. At issue here are allegations that Mr. Aleynikov violated the New York penal code by copying source code for a proprietary high frequency trading system at Goldman Sachs before he left to join a competitor. This case is noteworthy for the twists and turns it has taken through the federal and state criminal justice systems and how it evidences the trade secret protection challenges faced by employers on Wall Street and in other industries. Continue Reading Not So Fast: Ex-Goldman Sachs Employee’s Conviction For Stealing Source Code Reinstated
Preetha Chakrabarti is a counsel in Crowell & Moring's New York office and is a member of the firm's Intellectual Property and Environmental & Natural Resources groups. Preetha's intellectual property practice consists of patent litigation, with an emphasis on representing generic pharmaceutical companies in litigation under the Hatch-Waxman Act, as well as matters related to trademark infringement, including opposition proceedings with the Trademark Trial and Appeal Board (TTAB).
1. Clearly label Christmas cards as “Confidential” if these contain secret wishes.
2. Amend Confidentiality Agreements and Employee Manual to include the required Whistleblower language – those elves have rights.
3. Have robust exit interviews with all departing elves, reminding them of their obligations to keep “reindeer games” secret.
4. Insist that expert toy makers are warned not to reveal secret information while enjoying (too much) mulled wine with ‘Happy Holidays’-industry peers.
5. Further restrict access to the Sleigh Packing Room with candy cane key fobs.
On July 5, 2016, the Ninth Circuit affirmed the conviction of David Nosal, an ex-employee of Korn/Ferry, an executive search firm, who left to start a competing firm. With Nosal’s knowledge and encouragement, two other former employees of Korn/Ferry used a current employee’s credentials to gain access to the Korn/Ferry database and take confidential information. U.S. v. Nosal, No. 14-10037, 2016 WL 3608752 at 6 (9th Cir. July 5, 2016).
The prosecutors charged Nosal with violating section 1030 (a)(4) of the Computer Fraud and Abuse Act (“CFAA”), which criminalizes “knowingly and with intent to defraud, access[ing] a protected computer without authorization, or exceed[ing]authorized access, and by means of such conduct further[ing] the intended fraud and obtain[ing] anything of value.”1 Having failed to state an offense that Nosal “exceeded authorized access” by violating the company’s internal use restrictions (decided in Nosal I), the government filed a superseding indictment alleging Nosal violated the “without authorization” prong of the CFAA after his login credentials were revoked through his co-conspirators’ use of his former executive assistant’s login information to access Korn/Ferry’s database.
The jury convicted Nosal on all counts. On appeal, the Ninth Circuit analyzed the meaning of the words “without authorization.” The Court held that the phrase was unambiguous and its plain meaning encompassed the situation in this case where the employer rescinded permission to access a computer and the defendant accessed the computer anyway.
Santa’s 10 considerations for maintaining trade secrets at the North Pole:
- Restrict access to facility by choosing remote location.
- Make the Elves sign Confidentiality Agreements as part of the hiring process.
- Have robust exit interviews with all departing elves, reminding them of their obligations to keep “reindeer games” secrets.
- Insist that gift wrapping specialists with prior experience at competitors like the Three Kings or Saint-Nicholas are properly screened/briefed.
- Further restrict access to gift development/storage facilities with candy cane key fobs.
- Share secret reindeer feed formula on a “need to know” basis.
- Social media policy (what elves shouldn’t discuss/photograph), if only not to spoil the surprise.
- No single elf should know the entire process for packing the sled — divide this information into describe segments and share each among many elves.
- Never disclose your secret for still fitting down chimneys despite eating millions of cookies on one night.
- Good intentions for the new year are fine, but put them on paper.
Note that this reflects good practices, but each situation and company is different and this is not intended to provide legal advice to any particular situation.
On December 7, 2015, Mercedes’ suit against Benjamin Hoyle, one of its former engineers who allegedly breached his employment contract and misappropriated confidential, trade secret information, was made public. Since 2012, Hoyle had been a member of Mercedes’ Performance Engineering Department working on the Mercedes’ High Performance Powertrain (HPP) Limited Formula One (F1) racing engines. Last year, Hoyle informed Mercedes that he would not be renewing his contract set to expire at the end of 2015, and was planning on joining Ferrari.
Banks; oil and gas leases; trade secrets. All three came to a front in a longstanding legal battle that culminated in a decision by the Eight Circuit Court of Appeals on Friday July 17, 2015, affirming that a bank had misappropriated an energy company’s trade secrets.
The Court of Appeals upheld a decision from the U.S. District Court for the District of North Dakota that Macquarie Bank Ltd. misappropriated confidential geological and seismic information it had received as part of the collateral on a loan to develop oil and gas leases, some of which were to be on reserves of North Dakota’s Bakken Shale formation.