As autonomous vehicles quickly move farther towards the mainstream, the underlying technology has become increasingly more valuable and has led to an uptick in the theft of autonomous vehicle (“AV”) trade secrets. Indeed, criminal prosecutions of former employees for trade secret theft have been on the rise, especially in the autonomous vehicle segment. Two recent cases underscore the enforcement agencies’ efforts to stem the rise in trade secret theft in the AV segment. Anthony Scott Levandowski was a former executive at both Uber and Google. He departed Google and created a new company named Ottomotto, LLC that was later purchased by Uber. Levandowski pled guilty to theft of trade secrets from Google, admitting that he downloaded approximately 14,000 files from an internal, password-protected Google server to his personal laptop, including a key internal tracking document from Google that detailed the status of its self-driving car program. Levandowki faces a maximum sentence of 10 years in prison, and $250,000 fine plus restitution.
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GEICO Earns Victory at Intersection Between Copyright and Trade Secret Law Covering Source Code
A recent decision by the Federal District Court for the Eastern District of New York reinforces that owners of trade secret computer programs should carefully approach copyright registration in order to maintain both copyright and trade secret protection. This includes being conscious of copyright regulations allowing the partial and redacted registration of computer code with the Copyright Office.
In a recent manifestation of this principle, Capricorn Management Systems accused GEICO of misappropriating Capricorn’s trade secret source code for medical billing software. Last week, the court granted GEICO’s motion for summary judgment, holding that the code was not entitled to trade secret protection, in part because it was registered, unredacted, with the U.S. Copyright Office, and was therefore publicly available.
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Complex Threat Investigations: Tips for Investigating Trade Secret Misappropriation and Other Digital Crimes
Companies and other organizations increasingly must face serious and complex threats to their business and infrastructure. Whether the threat is trade secret theft, rogue insiders, cybercrime adversaries, aggressive competitors, or misconduct by business and supply chain partners, companies should remain constantly vigilant and defense ready. Adversaries, including especially cybercriminals operating exclusively in the digital domain, are often highly motivated, sophisticated, resourced, and innovative. The opaque, pervasive, and global nature of modern digital networked environments presents opportunities for criminals. The sophistication and relentless creativity of these bad actors pose significant challenges to companies and law enforcement agencies in being able to detect, assess, mitigate, attribute, and deter these threats. Because available tools and real-world practices to address these threats often outpace the law, companies are called upon to develop their own comprehensive approaches to investigate and remediate these forms of risk. In doing so, companies must be willing to assume a certain level of risk to effectively investigate and obtain sufficient insight to counter the problems.
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After Motorola Verdict, DTSA Has Extraterritorial Application
For the first time, a United States federal court has held that a civil action for private damages under the Defend Trade Secrets Act (“DTSA”) can arise from acts of misappropriation that occur completely outside the United States – as long as they have a nexus with some activities within the U.S. In Motorola Sols., Inc. v. Hytera Commc’ns Corp., Ltd., No. 1:17-cv-1973 (N.D. Ill. Mar. 6, 2020) (an earlier decision in this case was previously discussed on this blog here), Motorola alleged that Hytera Communications, a Chinese company, hired away three engineers who then took with them Motorola trade secrets, including thousands of Motorola’s confidential technical documents containing millions of lines of source code and other highly confidential information.
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Is Chinese IP Theft Coming to an End?
The United States has long struggled with intellectual property (IP) theft facilitated or condoned by the Chinese government. Just in the past year, a CNBC CFO survey reports that one in five North American corporations have had their IP stolen by China, and just below one-third of CFOs of North American-based companies on the CNBC Global CFO Council state that Chinese firms have stolen from them during the last decade. This IP theft is very costly. In fact, some sources estimate that the annual cost that international IP theft imposes on the United States exceeds $225 billion in counterfeit goods and could be as elevated as $600 billion.
Chinese entities have been alleged to steal IP from foreign companies using methods such as trading with or forming joint ventures with the companies and then gaining access to their sensitive or proprietary information. Businesses have also willingly allowed Chinese partners to access this information in exchange for accessing China’s immense market. Some examples of alleged Chinese IP theft include a conspiracy to hack into U.S. defense contractors’ computer networks to steal sensitive military data and the fact that the Chinese military has infrastructure that can look suspiciously similar to that used by the United States. In the context of urging NATO allies to ban Chinese 5G equipment, Defense Secretary Mark Esper warned at the Department of Homeland Security’s National Cybersecurity Summit last September that China is committing “the greatest intellectual property theft in human history.”
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Scientist Pleads Guilty to $1 Billion in Trade Secret Theft
Chinese national and materials scientist Hongjin Tan has pled guilty to stealing from his former employer Phillips 66 (“Phillips”) more than $1 billion in trade secrets related to next generation battery technology.
DOJ announced Tan’s guilty plea this week which revealed that he copied substantial research and development files that he knew contained protected company
Luxembourg Implements the Trade Secrets Directive
On June 28, 2019, the Luxembourgish Mémorial published the Law of June 26, 2019 on the protection of undisclosed know-how and business information better known as trade secrets implementing the EU Trade Secrets Directive 2016/943 after a one year delay. The recent Luxembourgish Law is a literal transposition of the EU Directive and provides a legal definition of “trade secrets,” which was up until now only defined by the courts. The EU Directive defined “trade secret” as information that (i) is secret, i.e. not publicly known or readily accessible to persons normally dealing with this kind of information, (ii) has commercial value because it is and remains a secret, and (iii) has been subject to reasonable steps under the circumstances, by the person lawfully in control of the information, to keep it secret. This definition thus includes any kind of sensitive business information that is kept secret by reasonable measures, such as market studies, business plans, pricing information, etc.
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Greece Implements the Trade Secrets Directive
On April 1st, 2019, the Greek Law 4605/2019 implementing the Trade Secrets Directive 2016/943 was published in the Official Gazette. This new law creates a framework for the protection of business information and know-how. Before that date, Greek law did not provide for any legal protection against the expropriation or theft of for example software
Two Men Indicted for Alleged Theft of GE Trade Secrets for Turbine Technology
On April 18, the U.S. District Court for the Northern District of New York unsealed an indictment accusing Zheng Xiaoqing, a former senior engineer for steam turbine design at GE, and Zhang Zhaoxi, a Chinese national, of conspiring to steal GE’s design data and models, engineering drawings, material specifications, configuration files, and other proprietary trade