Anthony Levandowski, one of the founding members of Google’s self-driving car program and a former Uber executive, was sentenced to 18 months in prison and ordered to pay restitution after pleading guilty to one count of stealing self-driving car trade secrets from Google. This sentencing comes after years of civil and criminal matters relating to this lucrative technology.
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DOJ Targets Chinese Hackers for Stealing United States Trade Secrets
This week, the U.S. government continued its enforcement activity against Chinese government-sponsored trade secret theft, indicting two Chinese hackers for allegedly stealing data from 25 domestic and international companies, including targeting those now researching COVID-19 testing, vaccines, and treatment. The two defendants had allegedly acquired hundreds of millions of dollars worth of trade secrets and other valuable business information across a span of nearly eleven years. This announcement follows in the wake of the indictment of Dr. Charles Lieber, a former Harvard professor, who allegedly lied about his participation in China’s “Thousand Talents Plan,” a program that has been accused of facilitating the stealing of American trade secrets. Our coverage of that indictment is here.
On Tuesday, July 21, 2020, the U.S. Department of Justice (“DOJ”) announced charges against Li Xiaoyu and Dong Jiazhi in the Eastern District of Washington, alleging that they hacked the computer networks of 13 United States and 12 international companies in industries ranging from high tech manufacturing and medical device engineering to solar energy and pharmaceuticals, all between September 2009 and July 2020.
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China Proposes Harsher Penalties for Trade Secret Theft in Draft Amendment
China’s National People’s Congress has released a draft law for comment that would impose harsher criminal penalties for any trade secret theft from Chinese companies that benefits foreign companies.
China’s current law imposes a maximum sentence of 3 years imprisonment for “serious” instances and 10 years for “particularly serious” instances of trade secret theft. The proposed law would impose harsher sentences for trade secret theft benefiting a foreign entity, resulting in 5 years for “serious” instances and a minimum of 5 years with no maximum for “particularly serious” instances.
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Livestock Feed Trade Secrets Case Put Out to Pasture
A Kansas District Court judge recently dismissed a trade secrets misappropriation action between two competing livestock nutrition companies.
In Biomin Am. Inc. v. Lesaffre Yeast Corp., Plaintiff Biomin America, Inc. (“Biomin”) sued competitor Lesaffre Yeast Corporation (“Lesaffre”) and two former Biomin employees who now work for Lesaffre, asserting trade secret misappropriation under the Federal Defend Trade Secrets Act of 2016, 18 U.S.C. § 1836 (“DTSA”) as well as a handful of state law claims, including breach of contract, tortious interference, civil conspiracy, and unfair competition.
Specifically, Biomin alleged that the two employees misappropriated trade secrets and violated restrictive covenants contained within their Biomin employment agreements by soliciting Biomin employees and customers and marketing Lesaffre’s competing products at a lower price.
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COVID-19 and the Unique Opportunity for Phishing
The COVID-19 crisis has presented an array of novel issues for companies, including new and unexpected cybersecurity threats. In addition to the now well-known security limitations of video platforms such as Zoom, we are seeing cyber-attacks in the form of COVID-19 related phishing attempts and ransomware attacks. In at least some of these attempted hacks, cybercriminals are hoping to steal trade secrets.
- Cybercriminals are taking advantage of the novel at-home working environment and the increased fear and uncertainty surrounding the pandemic to launch malware and phishing attacks related to COVID-19.
- Employees may be more likely to click a link or open an attachment, even though they would never consider doing so in a normal situation at work.
- Therefore, malware may pose more of a danger than it did when employees primarily accessed their email over their employers’ traditionally more protected systems.
- Companies should consider putting employees on notice about the COVID-19 related phishing attempts and provide examples of common scams.
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Please Join Us for the Fifth Installment of our 2020 Webinar Series: The Revolving Door of Autonomous Vehicle Talent
Crowell & Moring invites you to attend the fifth installment of our Trade Secrets Webinar Series – The Revolving Door of Autonomous Vehicle Talent: Managing Employee Access to Trade Secrets & Facilitating Robust Investigation of Safety Issues, taking place on Tuesday, May 12th at 02:00 pm (EDT).
Autonomous Vehicle (“AV”) developers have been aggressively working to safeguard their vital design documents and data, and have increasingly relied on lawsuits to protect their proprietary information and to prevent such information from reaching their competitors as human talent continues to revolve through the AV industry. Given the increasing popularity of self-driving technology, AV developers should remain vigilant in protecting the trade secrets governing their autonomous vehicle programs and should be sure to implement sound policies for retrieving data upon employee departure.
Join Crowell & Moring attorneys Cheryl Falvey, Rukiya Mohamed, and Paul Mathis for a live discussion on trade secret and liability issues unique to AV developers as well as best practices.
To register, please click here.
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Are You Ready to Respond to Trade Secret Theft in the COVID-19 Age?
The COVID-19 pandemic is shining a new light on the risk of trade secret theft to businesses worldwide from greater employee mobility associated with rising unemployment and a looming recession, cyberattacks by opportunistic hackers, and a growing remote workforce with technological threats from increased use of smart devices that may leave little to no data trail.
Companies should not only consider what to do to safeguard their trade secrets now, as explored in our earlier post on Trade Secret Protection During the COVID-19 Pandemic, but how best to create and communicate the plan for responding to any discovery of trade secret misappropriation.
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Non-Compete Agreements and Restrictive Covenants During COVID-19
Are non-competes still enforceable in middle of the unprecedented economic disruption caused by COVID-19? Many employers have reacted to the business impact of COVID-19 by downsizing and laying off employees, some of whom signed non-compete agreements or restrictive covenants to protect the employer’s legitimate business interests, including its trade secrets and confidential information. Those same businesses now are left wondering whether those non-compete agreements are enforceable in the wake of massive unemployment triggered by the pandemic.
The answer to this question is complex, and depends on state law, public policy, and the terms of the specific agreements. Each state scrutinizes non-competes and restrictive covenants differently and, therefore, the answer may be different depending on where the business and employee are located or the agreement’s choice of law provision.
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Prosecutions of Trade Secret Theft by Former Employees in Autonomous Vehicle Development
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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