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

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

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 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

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?

Chinese Flag
[via Flickr user BriYYZ]

Many U.S. lawyers are surprised when I tell them that China has legal protection for trade secrets.  Although China’s trade secret protections are scattered across several statutes, the most important is the Anti-Unfair Competition Law (AUCL). Article 10 of the AUCL defines a trade secret as technical and business information unknown to the public which has economic value and practical utility and for which the trade secret owner has taken measures to protect its confidentiality. Article 10 of the AUCL prohibits three forms of misappropriation:

  • The acquisition of a trade secret by theft, inducement, duress or other illegal means;
  • The disclosure or use of a trade secret acquired by the above-described illegal means; and
  • The disclosure or use of a trade secret in breach of an agreement or confidentiality obligation imposed by the trade secret owner.


Continue Reading Surprise: Trade Secrets Are Protected In China

[via Flickr user phalinn]
[via Flickr user phalinn]

Earlier this month, the Ninth Circuit rejected a “will not reapply” clause in a settlement agreement under Business & Professions Code Section 16600, the California state statute that makes most non-compete provisions unenforceable. It is unclear if the holding is limited to the particular facts or if all “will not reapply” clauses are at risk. Such clauses are typical features of settlement agreements arising from employment-based disputes. In settling such disputes, the employer does not want to risk another lawsuit on the same grounds brought by the same person in connection with another job. The employer will bargain for the “will not reapply” clause, giving the employer a contractual basis to reject future employment for that same person, and thus avoiding the risk of another suit. The Ninth Circuit decided, in the case at bar, that Section 16600 precludes such a provision as unenforceable restraint of a substantial character on the ability to work within a particular field or industry.
Continue Reading “Will Not Reapply” Clauses on Life Support in California?