Crowell & Moring has issued its seventh-annual “Litigation Forecast 2019: What Corporate Counsel Need to Know for the Coming Year.” This year, we take a deep dive into how technology is increasingly having a profound impact on the practice of law, and in particular on litigation case strategy.

The Forecast cover story, “Welcome to Your New War Room: How Technology Is Finding Its Way into Litigation Case Strategy,” explores how companies and law firms are leveraging technology to improve their legal operations and litigation strategy. From analytics, e-discovery, jury selection, and the promise of virtual reality mock trial experiences, litigation strategies now leverage bytes not books to better arm litigators to win the toughest, most complex courtroom battles.

Be sure to follow the conversation on social media with #LitigationForecast.

On September 14, 2018, a former scientist at GlaxoSmithKline (“GSK”) pled guilty to conspiring to steal trade secrets from his former employer. Dr. Tao Li was accused of stealing confidential information about anti-cancer drugs from a GSK facility in Upper Merion, Pennsylvania after conspiring with other GSK employees who provided information to him via email, in person, and on a thumb drive. Dr. Li had established a rival company in Nanjing, China with financial backing from the Chinese government. The trade secrets allegedly stolen from GSK included detailed information about multiple products under development and information about manufacturing these products. This case is part of a larger trend, as federal authorities seek to crack down on the theft of trade secrets used to establish competitor companies in China. The United States Attorney for the Eastern District of Pennsylvania, William McSwain, commented “[n]ot only is this a serious crime, but it is literally a form of economic warfare against American interests. Such criminal behavior must be prosecuted to the fullest extent of the law.” Dr. Li will be sentenced on January 4, 2019 and faces up to 10 years in federal prison.

On August 1, 2018, Xiaoqing Zheng was arrested for alleged theft of trade secrets belonging to General Electric (“GE”). Mr. Zheng, a graduate of MIT and an engineer who worked in the Power division of GE, is accused of stealing dozens of encrypted computer files related to turbine operation. In order to get the files out of the building, Mr. Zheng allegedly hid the data in the code for a picture of an “innocuous looking” sunset, which he then emailed to his personal email address. However, GE had been monitoring Mr. Zheng’s computer activity after it learned that he had downloaded 19,000 other files to an external hard drive. According to a company statement, GE had been in “close cooperation with the FBI for some time on this matter.” The statement continued, “At GE, we aggressively protect and defend our intellectual property and have strict processes in place for identifying these issues and partnering with law enforcement.” The FBI complaint alleges that Mr. Zheng was using the trade secrets to benefit an aeronautical company he owns in China. This isn’t an isolated incident. Just last month, China-based Sinovel Wind Group paid a $57.5 million dollar settlement related to stolen data regarding wind turbine technology that it took from Massachusetts-based technology company American Superconductor Inc.

The dichotomy between patent and trade secret cases is as old as time. But, Lex Machina’s newest platform – trade secrets – reveals some interesting new insights on key differences between patent and trade secret cases that will matter to plaintiffs and defendants alike. In trade secrets cases, 71% of cases that resolve at trial are won by claimants whereas 29% are won by claim defendants. LexMachina Article. By contrast, in patent cases filed between 2000 to 2018, 7% were won by the claimant whereas 4% were won by the defendant while 68% of those cases resulted in a likely settlement and 14% resolved on a procedural resolution. This stark contrast in outcomes when comparing the different types of intellectual property is useful to clients who are assessing how best to protect these valuable resources. Lex Machina offers evidence about the success of different types of remedies in trade secret cases, revealing 51% of cases granted a temporary restraining order (“TRO”), 86% of cases granted a Permanent Injunction, and 63% of cases denied a Preliminary Injunction which can be further refined by jurisdiction to provide useful intel on case strategy when bringing these cases. Lex Machina also offers empirical data on the outcome of patent litigation, notably the relative proportion of infringement versus no infringement findings at trial. With this data, attorneys can make more informed strategic decisions for their clients for both patent and trade secret cases.

Just last week, Lex Machina introduced its newest module which will cover trade secrets litigation – one of the most requested additions to this valuable analytical platform.

Lex Machina is an important tool for all trade secret litigators, drawing from nearly 10,000 trade secret cases in federal court since 2009 to provide in-depth strategic insights on cases with allegations ranging from state trade secret misappropriation to Defend Trade Secrets Act (“DTSA”) violations.

Lex Machina offers analytical data on key aspects of trade secret cases, including the size of damages awards in a given jurisdiction to the likelihood of securing a preliminary injunction to the most common law firms representing plaintiffs in trade secret cases. Lex Machina can be used to both track trends in trade secret cases over time and drill into specific cases and download copies of relevant pleadings or motions.

Lex Machina also can be a valuable tool both to advise clients who are interested in how long it takes to resolve a trade secrets case either on dispositive motions or at trial and develop a solid legal strategy on issues like whether to file in a certain jurisdiction based on a judge’s track record with trade secrets cases.

For anyone practicing in the trade secrets space who wants a leg up on the latest trends and authoritative insights backed by data, Lex Machina could be a game changer and won’t remain secret for long.

On August 18, 2017, the Office of the United States Trade Representative (USTR) launched a formal investigation pursuant to Section 301 of the Tariff Act of 1974 on the People’s Republic of China (PRC). The probe sought to determine whether the acts, policies, and practices of the PRC related to technology transfer, intellectual property, trade secrets, and innovation were discriminatory towards U.S. firms and undermined the United States’ ability to compete fairly in the global market. Section 301 allows the President to seek removal of any act, policy, or practice of a foreign government that violates an international agreement or that unfairly burdens or restricts U.S. commerce.

On March 22, President Trump issued a Memorandum stating the USTR found PRC actions do undermine U.S. firms’ ability to compete fairly in the global market by (1) requiring or pressuring U.S. companies to transfer technology to Chinese companies; (2) imposing restrictions on, and intervening in, U.S. firms’ investments and activities, including through restrictions on technology licensing terms; (3) obtaining cutting-edge technology by directing and facilitating the investment and acquisition of U.S. companies by Chinese companies; and (4) conducting and supporting intrusions and theft from the computer networks of U.S. companies.

In response, the President has directed the USTR to address these violations via a combination of retaliatory tariffs, World Trade Organization (WTO) dispute settlement, and the Department of the Treasury to address via investment restrictions. Continue Reading USTR: China Discriminates Against U.S. Firms Related to Tech Transfer, IP, and Trade Secrets

U.S. Trade Representative (USTR) Ambassador Robert Lighthizer initiated an investigation on August 18, 2017 pursuant to Section 301 of the Trade Act of 1974. The probe will determine whether acts, policies, and practices of the People’s Republic of China (PRC) related to technology transfer, intellectual property, trade secrets, and innovation are discriminatory towards U.S. firms by undermining the United States’ ability to compete fairly in the global market. Section 301 allows the President to retaliate by removing any act, policy, or practice of a foreign government that violates an international agreement.

The investigation began after PRC President Xi Jinping unveiled a cybersecurity law to “protect personal information and individual privacy,” as reflected in China’s Made in China 2025 initiative. The law requires foreign companies operating in China to store their data on local servers. U.S. companies are now also being instructed to participate in joint ventures with Chinese enterprises, therefore sharing valuable technology information with their Chinese counterparts.

USTR allegedly finalized its report in December 2017, and the remedies are undergoing vetting in the interagency process. However, the U.S. may partner with the European Union and Japan to seek consultations through the WTO, rather than solve the issue unilaterally.

Pursuant to the Trade Act, Ambassador Lighthizer must determine within 12 months from the date of the initiation whether the Chinese government violated U.S. intellectual property laws. The retaliatory action proposed by USTR, if any, must be implemented within 30 days of the determination. USTR may delay the implementation up to 180 days if the agency determines that substantial progress could be made by the foreign government. If the determination is affirmative, then USTR will decide what action to take.

If Ambassador Lighthizer recommends retaliation under Section 301, the President could impose sanctions on certain Chinese industries, specifically steel. The current administration has demonstrated a tough stance on overcapacity by imposing a 25 percent global tariff on imported steel products, and a 10 percent global tariff on imported aluminum products.

As expected, the Chinese government is already demonstrating “tit for tat” retaliation by self-initiating anti-dumping (AD) and countervailing (CVD) investigations on imports of sorghum from the United States. In addition, China is already among one of the countries that has requested consultations from the WTO regarding the safeguard measures on solar cells and residential washing machines.

The USTR is expected to release its findings to the President within the coming months.

On January 14, 2018, IBM’s Chief Diversity Officer resigned to go work for Microsoft in the same role. The caveat: she had a twelve month non-compete clause.

On February 12, 2018, IBM filed a lawsuit to enjoin its former diversity officer to honor her non-compete agreement with IBM and to recover damages. The suit, filed in Southern District New York court, alleges that the IBM non-compete agreement that the defendant signed has a New York federal and state choice of forum provision and is, therefore, enforceable. In addition to a breach of the non-compete agreement, IBM asserts a claim for misappropriation of its trade secrets. According to IBM, if its former diversity officer “is permitted to work for Microsoft, [she] will inevitably (if inadvertently) use and/or disclose IBM trade secrets for her own benefit and for the benefit of Microsoft.” In addition to injunctive relief (seeking an order requiring its former employee to honor the non-compete agreement), IBM is also seeking compensatory damages. It has also demanded that its former employee remit to them her equity compensation because of this alleged breach of her employment agreement. As to the demand that the employee return the equity compensation she had earned as an employee, IBM’s theory is that the employee is engaging directly in a business which is competitive with IBM. Furthermore, IBM asserts that this is considered a “detrimental activity” under the Long Term Performance Plan agreement in which the employee’s equity awards are governed by and, subject to cancellation and in certain circumstances like this, are subject to repayment. Continue Reading Diversity is Important – But Is It A Trade Secret?