C IVIL C ASE R EVIEW
The majority of trade secret cases result from business relation- ships between the parties 26 In particular, most trade secret cases
21 See, e.g., Christopher B Seaman, The Case Against Federalizing Trade Secrecy, 101
24 See id.; see also Levine & Seaman, supra note 18, at 119
25 See Symposium, Understanding the Defend Trade Secrets Act (DTSA): The Fed- eralization of Trade Secrecy, 50 L OYOLA L.A L R EV 331 (2017).
Employers have the right to safeguard their trade secrets and proprietary information, especially when such information is disclosed to employees during their employment Even in the absence of an enforceable restrictive covenant, employers maintain a legitimate interest in protecting their confidential information However, it is essential to ensure that the methods used to protect these trade secrets do not infringe on the rights of employees and other users.
Trade secret cases often arise between competitors, highlighting the importance of maintaining ethical standards in business practices While competition is essential, trade secret laws set clear boundaries to prevent unfair practices, such as hiring a competitor's former employee to gain access to confidential information or illegally accessing their secure assets Courts play a crucial role in balancing anti-competitive behavior with the protection of trade secrets when adjudicating these cases.
This section reviews recent civil trade secret cases resolved in federal and state courts over the past year Most cases continue to be adjudicated under the Uniform Trade Secrets Act (UTSA), while some also involve claims under the Defend Trade Secrets Act (DTSA) Notable cases highlighting specific interpretations of new DTSA provisions are summarized at the end of this section.
28 See, e.g., New England Canteen Serv., Inc v Ashley, 363 N.E.2d 526, 528 (Mass.
1977); D.C Wiring, Inc v Lamontagne, No 91-1722, 1993 WL 818562, at *1-2 (Mass Super.
Ct Dec 20, 1993); Stevens & Co v Stiles, 71 A 802, 805 (R.I 1909).
30 See Levine & Seaman, supra note 18, at 122-23, 123 n.91
31 Kewanee Oil Co v Bicron Corp., 416 U.S 470, 481 (1974).
33 Elizabeth A Rowe, Trade Secret Litigation and Free Speech: Is It Time to Restrain the
34 Only five of the cases reviewed were based on DTSA claims They are Xoran Holdings
L.L.C v Luick, No 16-13703, 2017 WL 4039178 (E.D Mich Sept 13, 2017); CPI Card Group, Inc v Dwyer, 294 F Supp 3d 791 (D Minn 2018); Broker Genius, Inc v Zalta, 280 F Supp.
3d 495 (S.D.N.Y 2017); Christian v Lannett Co., No CV 16-963, 2018 WL 1532849 (E.D Pa.Mar 29, 2018); and Hawkins v Fishbeck, 301 F Supp 3d 650 (W.D Va 2017).
What Is Generally Known & Readily Ascertainable?
Under the Uniform Trade Secrets Act (UTSA) and the Defend Trade Secrets Act (DTSA), trade secrets are not protected if they are "generally known" or "readily ascertainable." While the term "generally known" is not explicitly defined, legal commentary indicates it refers to information recognized by individuals who can derive economic benefit from it, rather than the general public Conversely, the "readily ascertainable" criterion assesses how easily the information could be discovered by others, emphasizing its "knowability."
The Eighth Circuit case HIP, Inc v Hormel Foods Corp highlights that information revealed in a patent application cannot be considered a trade secret Once disclosed, this information becomes public knowledge, which means it is not protected as "confidential" under the nondisclosure agreement relevant to the case.
In the case of Yeiser Research & Development L.L.C v Teknor Apex Co., the court ruled that a plaintiff's assertion of a trade secret concerning its QVC marketing strategy was unfounded, as this information could be readily obtained by competitors through publicly available resources.
36 See U NIF T RADE S ECRETS A CT § 1 cmt (amended 1985), 14 U.L.A 538 (2005); see also
Broker Genius, Inc., 280 F Supp at 513-14, 516-17.
37 U NIF T RADE S ECRETS A CT § 1 cmt
42 See, e.g., Yeiser Research & Dev L.L.C v Teknor Apex Co., 281 F Supp 3d 1021,
43 281 F Supp 3d at 1046-49. ing when and where plaintiff sold its products 44 Accordingly, the plaintiff could not establish the existence of a trade secret 45
In the case of MEI-GSR Holdings, L.L.C v Peppermill Casinos, Inc., the Nevada Supreme Court addressed whether a defendant could prove that certain information was readily ascertainable under the Nevada Uniform Trade Secrets Act if it was obtained through improper means The court concluded that the assessment of whether information is "readily ascertainable by proper means" extends beyond the defendant's actions, indicating a broader interpretation of the statute.
While the lawful acquisition of information by a defendant is an important factor in assessing whether that information qualifies as a trade secret, it is crucial to note that obtaining information through improper means does not prevent the defendant from proving that the information is easily obtainable by others.
Determining whether information is easily accessible or widely recognized is a crucial initial step in assessing if that information qualifies for trade secret protection.
Failure to State a Claim?
To successfully claim trade secret misappropriation under the Uniform Trade Secrets Act (UTSA) and the Defend Trade Secrets Act (DTSA), a plaintiff must demonstrate three key elements: first, that they own a trade secret; second, that the defendant has misappropriated or is likely to misappropriate that trade secret; and third, that the plaintiff is entitled to a remedy Given the wide range of available remedies, the emphasis in trade secret cases often lies in establishing these foundational claims.
46 N EV R EV S TAT A NN § 600A.030 (West 2017).
In the case of Clorox Co v S.C Johnson & Son, Inc., the focus in secret misappropriation cases typically revolves around the initial requirements for determining trade secrets The classification of specific information as a trade secret involves a complex interplay of legal and factual considerations.
The Eighth Circuit's case, Tension Envelope Corporation v JBM Envelope Company, explores the protectability of information generated by a company's customers In this instance, the plaintiff claimed that it manufactured envelopes based on technical specifications provided by its customers rather than developing them independently However, the court concluded that since these customer requirements could have been obtained directly from the customers, the plaintiff did not successfully establish a claim for misappropriation of trade secrets.
In the case of Krawiec v Manly, the North Carolina Supreme Court evaluated whether the plaintiff, a dance studio, adequately described its trade secrets under the North Carolina Trade Secrets Protection Act The plaintiff characterized its trade secrets as "original ideas and concepts for dance productions, marketing strategies and tactics, as well as student, client and customer lists and their contact information." However, the court determined that the plaintiff did not provide enough specific details about these elements to inform the defendants of the exact information claimed to be misappropriated Additionally, the court noted that the complaint failed to demonstrate that the customer lists constituted trade secrets, as it did not indicate that the information was not readily accessible to the defendants Consequently, the plaintiff was required to supply more detailed information to adequately inform both the defendants and the court.
(listing the elements of a prima facie case for trade secret misappropriation under California’s version of the UTSA).
52 See infra Parts I.D, I.G; see also infra note 128 and accompanying text
53 See, e.g., APAC Teleservices, Inc v McRae, 985 F Supp 852, 864 (N.D Iowa 1997).
57 811 S.E 2d 542 (N.C 2018); see also N.C G EN S TAT A NN § 66-153 (West 2017) (outlining an action for misappropriation under the North Carolina Trade Secrets Protection Act)
60 See id on notice as to which “ideas, concepts, strategies, and tactics” were allegedly misappropriated 61
Identification & Pleading with Specificity
The validity of trade secret rights is typically assessed only during litigation, requiring the trade secret holder to establish the existence of the secret before misappropriation occurred This entails identifying each specific piece of information claimed as a trade secret and demonstrating that reasonable efforts were made to protect it However, this process can be particularly challenging for plaintiffs.
The plaintiff must specifically identify their trade secrets, a requirement upheld by case law in most states and mandated by statute in California Similarly, the Wisconsin Uniform Trade Secrets Act (UTSA) necessitates a detailed description of each alleged trade secret for injunctive relief, ensuring that the party being restrained understands the nature of the complaint This specificity is crucial to prevent plaintiffs from exploiting trade secret litigation as a means of gaining competitive intelligence under the pretense of discovery.
62 See Rowe, supra note 33, at 1447.
63 See id.; see also Robert A Kearney, Why The Burden of Proving Causation Should Shift to the Defendant Under the New Federal Trade Secret Act, 13 H ASTINGS B US L.J 1, 3-4 (2016).
The standard for this inquiry should align with the likelihood of success on the merits standard applied in preliminary injunction cases Given that most trade secret disputes, especially in this context, are resolved during preliminary injunction hearings, adopting this standard should pose no challenges and may seamlessly integrate into the injunction evaluation process.
64 See Rowe, supra note 33, at 1447
66 See IDX Systems Corp v Epic Systems Corp., 285 F.3d 581, 583-84 (7th Cir 2002).
67 See C AL C IV P ROC C ODE § 2019.210 (West 2005).
69 See DeRubeis v Witten Tech., Inc., 244 F.R.D 676, 680 (N.D Ga 2007).
It also serves the due process purpose of letting defendants know the details of the claims against them.
Trade secret owners must identify their trade secrets with specificity, as this is essential not only for legal proceedings but also for practical evaluation Vague or broad claims can hinder their ability to prove that the information is not widely known and possesses independent economic value The Eleventh Circuit case, EarthCam, Inc v OxBlue Corp., highlights the importance of concrete allegations, emphasizing that conclusory claims may not be sufficient to survive a motion for summary judgment.
Determining whether specific information qualifies as a trade secret is a factual matter, and mere conclusory statements lacking detailed evidence are inadequate to counter summary judgment In this case, the district court ruled that the general information in the defendant's emails constituted trade secrets An affidavit from the plaintiff asserting that certain information was "not publicly available" and provided a "competitive advantage" was insufficient without further elaboration Similarly, another court assessed confidential information shared in emails by a former employee and reached a comparable conclusion.
“generalized assertions” would not be sufficient to meet the plain- tiff’s burden of proving that it had legitimate trade secrets 75
In the case of RE/MAX, LLC v Quicken Loans Inc., the court dismissed the defendant's counterclaim for trade secret misappropriation, deeming it conclusory due to a lack of sufficient supporting facts The court highlighted that the defendant merely asserted claims without providing adequate evidence.
70 See, e.g., Blake v Prof Coin Grading Serv., 898 F Supp 2d 365, 379 (D Mass 2012)
75 See CPI Card Group, Inc v Dwyer, 294 F Supp 3d 791, 809 (D Minn 2018).
The plaintiff is accused of using and sharing confidential information regarding the defendant's proprietary processes and marketing strategies during the negotiation and implementation of the Agreement for Motto Mortgage Although the defendant presents several reasons to believe that the plaintiff was financially motivated to exploit this confidential information, there are no factual allegations indicating that the plaintiff actually utilized such information.
The court determined that the defendant failed to provide evidence that the plaintiff utilized any of its confidential business information The only claimed similarities were superficial, as both parties operated in the same industry, and the irrelevant assertion that the plaintiff copied a non-confidential slogan Consequently, the court found these allegations inadequate to support a reasonable inference of harm to the defendant, leading to the dismissal of the counterclaim.
In the case of Liberty Mutual Ins Co v Gemma, the defendants failed to dismiss the complaint on grounds of lack of specificity They contended that the complaint did not adequately detail the alleged trade secrets or clarify how the defendants acquired and utilized them However, the court determined that the plaintiff sufficiently claimed that the defendants misappropriated various documents, including customer lists and other related information The court emphasized that, under the Pennsylvania Uniform Trade Secrets Act, misappropriation necessitates the establishment of specific elements, including the existence of a trade secret.
(2) communication of the trade secret pursuant to a confidential relationship; (3) use of the trade secret, in violation of that confi-
77 Id at 1173 (internal citations omitted).
82 12 P A S TAT A ND C ONS S TAT A NN § 5301 (West 2004)
83 See Liberty Mutual Ins Co., 301 F Supp at 540
84 Id dence; and (4) harm to the plaintiff,” the court deemed the com- plaint to be sufficient 85
Reasonable Efforts
In nearly every state, the reasonable efforts requirement plays a crucial role in determining whether a plaintiff possesses a legally protectable trade secret To qualify for trade secret protection, the information must be subject to reasonable efforts to maintain its secrecy This requirement emphasizes that a trade secret holder must demonstrate actual efforts to keep the information confidential, rather than simply expressing an intent to protect it.
Determining whether a trade secret owner has implemented adequate safeguards to satisfy the reasonable efforts requirement is a factual inquiry that depends on specific circumstances This involves balancing the need for effective measures to protect a company's secrets with the necessity of avoiding overly burdensome precautions that could hinder business operations.
In the case of CSS, Inc v Herrington, a software provider filed a lawsuit against a former employee and competitor, claiming they misappropriated several trade secrets, including source code The court evaluated the security measures implemented to protect the source code and noted that it had been stored on the county's servers for approximately twenty years.
86 Elizabeth A Rowe, RATs, TRAPs, and Trade Secrets, 57 B.C L R EV 381, 409 (2006).
87 See id (quoting U NIF T RADE S ECRETS A CT § 1(4)(ii) (amended 1985), 14 U.L.A 538 (2005))
88 Id.; see also Electro-Craft Corp v Controlled Motion, Inc., 332 N.W.2d 890, 901 (Minn.
Under common law, a plaintiff must demonstrate more than just an intention to keep information confidential; they must also show that they took concrete steps to maintain that secrecy.
89 See Rockwell Graphic Sys., Inc v DEV Indus., Inc., 925 F.2d 174, 176-77 (7th Cir.
In the case 306 F Supp 3d 857 (S.D.W Va 2018), the court determined that the source code provided by the plaintiff lacked necessary security measures, such as encryption or password protection, and was not labeled as confidential Additionally, the plaintiff did not require confidentiality agreements from its clients, which included various counties As a result, the court concluded that the source code did not meet the criteria for reasonable efforts to maintain secrecy and could not be classified as a trade secret.
The Southern District of NewYork in Broker Genius, Inc v Zalta,
The court determined that the plaintiff failed to implement reasonable measures to safeguard its software, as it frequently shared its alleged trade secrets with customers without enforcing confidentiality agreements The company provided unrestricted access to the software, along with comprehensive training, user manuals, and instructional videos detailing its functionalities Consequently, the plaintiff could not demonstrate adequate efforts to maintain the confidentiality of its information.
Independent Economic Value
The independent economic value requirement in trade secrecy is often misunderstood, yet it is crucial for legal analysis The value in question is not merely abstract; it must be a specific type of value In cases of trade secret misappropriation, the plaintiff must demonstrate that the alleged trade secret derives independent economic value, whether actual or potential, from its secrecy—meaning it is not generally known or easily obtainable by others who could benefit economically from its disclosure or use.
The specifics of the economic value requirement are often given only brief attention by courts and litigants Frequently, courts
Under the U NIF TRADE SECRETS ACT § 1(4)(i) (amended 1985) and 18 U.S.C § 1839 (Supp IV 2016), it is essential that the alleged trade secrets possess economic value; otherwise, plaintiffs would not pursue legal action However, plaintiffs may occasionally downplay or obscure this requirement to simplify the process of proving their prima facie case.
In the case of Cy Wakeman, Inc v Nicole Price Consulting, L.L.C., the court examined the concept of independent economic value in relation to secrecy, particularly focusing on the plaintiff's claim that its customer relationships were confidential The court, interpreting Nebraska’s Uniform Trade Secrets Act (UTSA), concluded that even if these relationships were indeed secret, it was uncertain how they held independent economic value for others The plaintiff contended that the confidentiality of its client lists generated business, which would be jeopardized if their privacy was compromised However, the court determined that this value was specific to the plaintiff and did not constitute independent value, as there was no evidence that competitors could gain economic advantage merely from knowing the plaintiff's confidential client identities.
The Ohio Supreme Court in In re Review of Alternative Energy
In evaluating the appropriateness of protective orders, the Rider contained in the tariffs of Ohio Edison Co focused on an analysis of independent economic value The utility company involved in this case had established confidentiality agreements with relevant parties.
99 See, e.g., MAI Sys Corp v Peak Computer, Inc., 991 F.2d 511, 521 (9th Cir 1993)
The court determined that the plaintiff's customer database possessed significant economic value, enabling competitors to target existing users of the plaintiff's services In the case of Editions Play Bac, S.A v Western Pub Co., the court found that the alleged trade secret held economic worth, as both the defendant and another company showed interest in licensing the rights to it.
In the case 107 106 N.E.3d 1, 9-10 (Ohio 2018), the Public Utilities Commission granted protective orders to prevent the disclosure of supplier and pricing information submitted during a competitive bidding process However, the Environmental Law and Policy Center and the Office of the Ohio Consumers Council challenged these orders, arguing that the information did not qualify for trade secret protection due to a lack of independent economic value They contended that the Commission failed to demonstrate how the sealed information retained its economic value in light of its age and changing market conditions The Commission claimed that public access to this trade secret information could undermine supplier confidence and disrupt the Renewable Energy Credit (REC) market Ultimately, the court found that while trade secrets could still be protected if they retained some value, the Commission did not provide sufficient evidence to justify its protective order.
Preliminary Injunctions
The fundamental principles of injunctive relief established in common law are still relevant under the Uniform Trade Secrets Act (UTSA) and the Defend Trade Secrets Act (DTSA) For a court to issue a preliminary injunction, the plaintiff must demonstrate: (1) a likelihood of success on the merits, (2) a significant threat of irreparable harm if the injunction is not granted, (3) that the balance of hardships leans in favor of the plaintiff, and (4) that granting the injunction aligns with the public interest.
In Mercer Health & Benefits L.L.C v DiGregorio, the Southern District of New York granted a preliminary injunction enforcing
114 See Hull Mun Lighting Plant v Mass Mun Wholesale Elec Co., 506 N.E.2d 140, 141-
In the cases of Town of Brookline v Goldstein and others, the court examined nonsolicitation and confidentiality agreements signed by individual defendants, emphasizing the importance of affirmative conduct by the defendants The court's decision to grant an injunction was based on compelling evidence presented during the proceedings.
The Individual Defendants engaged in a series of meetings with representatives of the competitor while still employed by the plaintiff, during which they transferred confidential documents to personal email accounts They coordinated their resignations from the plaintiff and informed clients about their transition to the competitor After joining the competitor, they actively sought meetings with former clients and successfully convinced at least one client to switch its business to the competitor.
In the case of Cerro Fabricated Products L.L.C v Solanick, the court granted a preliminary injunction despite the absence of affirmative acts by the defendant The ruling emphasized that, even without evidence of document theft, the defendant was likely to retain a substantial amount of confidential information in his memory, warranting the injunction.
To prevent the misuse of confidential information with a new employer, it is crucial to compartmentalize sensitive data However, the defendants failed to provide evidence of any measures taken or planned to safeguard the plaintiff's trade secrets, leading to a significant risk of disclosure Therefore, the court deemed a preliminary injunction necessary to protect the trade secrets.
Misappropriation
To successfully claim trade secret misappropriation under the Uniform Trade Secrets Act (UTSA) and the Defend Trade Secrets Act (DTSA), a plaintiff must demonstrate ownership of a trade secret or possess the standing to sue Additionally, it must be proven that one or more of the plaintiff's trade secrets have been misappropriated.
120 See id been or are threatened to be misappropriated by the defendant; and
(3) that plaintiff is entitled to a remedy 121 Because the available remedies are broad, the focus of trade secret misappropriation cases is usually on the first and second requirements 122
Trade secret law is distinct from patent, copyright, and trademark law due to its specific knowledge requirement for misappropriation Under trade secret law, a defendant must "know or have reason to know" of the alleged trade secrets and the wrongful acts involved In contrast, patent, copyright, and trademark laws operate under strict liability, meaning a defendant can be held liable for infringement regardless of their awareness of the plaintiff's intellectual property rights.
In trade secret cases, a plaintiff's approach to proving the necessary knowledge varies based on the specifics of each case, as direct evidence of actual knowledge is not mandatory Instead, knowledge or the reason to know can often be established through circumstantial evidence When a defendant is directly involved in wrongful acts that amount to misappropriation, demonstrating the requisite knowledge becomes more straightforward Thus, the central focus in these cases is to establish that the defendant had the necessary knowledge regarding the misappropriation.
121 See Clorox Co v S.C Johnson & Son, Inc., 627 F Supp 2d, 954, 968 (E.D Wis 2009)
(listing the elements of a prima facie case for trade secret misappropriation under California’s version of the UTSA).
To establish liability for trade secret misappropriation, it is essential to demonstrate that the protected information has been 'misappropriated.' This distinctive requirement highlights the uniqueness of trade secret law and underscores its different origins compared to patent and copyright laws.
124 See 18 U.S.C § 1839 (Supp IV 2012); U NIF T RADE S ECRETS A CT § 1(2)(i) (amended
1985), 14 U.L.A 538 (2005)); R ESTATEMENT (T HIRD ) OF U NFAIR C OMPETITION , § 40 (A M L AW
125 See, e.g., Roger D Blair, Strict Liability and Its Alternatives in Patent Law, 17
B ERKELY T ECH L.J 799, 800-01 (2002); N Coast Indus v Jason Maxwell, Inc., 972 F.2d
To prove copyright infringement, the copyright holder must demonstrate valid ownership of the copyright and establish that the alleged infringer has violated that copyright.
126 See, e.g., Clorox Co., 627 F Supp 2d at 968-69
128 See, e.g., Beard Res., Inc v Kates, 8 A.3d 573, 599 (Del Ch 2010). defendant knew or had reason to know that the information he ac- quired, disclosed, or used was trade secret information 129
Circumstantial evidence plays a crucial role in assessing whether a defendant was aware of the misappropriation of trade secrets A defendant cannot escape liability by claiming ignorance of relevant warning signs Furthermore, a defendant's constructive notice regarding the status of the information as a trade secret is deemed adequate for legal accountability.
In Experian Information Solutions, Inc v Nationwide Marketing
In a case reviewed by the Ninth Circuit, the court examined whether the defendant was aware or should have been aware that it had acquired and used a trade secret through improper means The court highlighted that both improper acquisition and improper use of protected works are valid grounds for trade secret misappropriation Notably, the defendant had paid less than 1% of the market rate for a one-time license to obtain the contested data, which suggested a level of knowledge regarding the questionable nature of the acquisition This low payment supported the plaintiff's argument that the defendant had constructive knowledge of the improper means used to obtain the data, providing sufficient evidence to challenge the summary judgment decision.
In the case of GE Betz, Inc v Moffitt-Johnston, the Fifth Circuit emphasized that circumstantial evidence alone is inadequate to establish trade secret misappropriation The court found that the defendant's actions, such as downloading company files, misrepresenting employment with a competitor, and alleged solicitation at industry events, were deemed too speculative to create a genuine issue of material fact.
130 See Curtiss-Wright Corp v Edel-Brown Tool & Die Co., 407 N.E.2d 319, 324 (Mass.
The court concluded that while it may be reasonable to deduce that the defendant utilized the plaintiff’s cost structure to gain market share, the goal of acquiring market share through lower margins is a typical strategy for a nascent business Therefore, it would be unreasonable to assume that the defendant intended to exploit the plaintiff’s trade secrets based solely on this general objective.
C.D.S., Inc v Zetler highlights the critical need for precise contractual language between business partners regarding the ownership and access to proprietary information This case involves a complex web of nearly a dozen parties within the fashion technology sector, with activities occurring across three different continents.
The court interpreted the distributorship agreement and determined that the defendants had no rights to the source code, which could lead to potential liability for misappropriation However, the court found that the distribution agreement allowed the defendants to use a customer list in their sales efforts, thus ruling out misappropriation in that context Additionally, the court upheld the binding forum selection clause favoring the French courts as stipulated in the agreement.
In the case of Iconics, Inc v Massaro, the court determined that a trade secret need not provide a substantial advantage to constitute misappropriation The ruling emphasized that even minimal benefits derived from the use of a trade secret can qualify as misappropriation, particularly if the defendant fails to fully capitalize on its value The court suggested that a reasonable jury could view the defendant's implementation as inferior to that of the plaintiff, indicating that any advantage gained, regardless of its size, could be sufficient for a finding of misappropriation.
147 Id whether small or ephemeral, would still be enough to constitute trade secret misappropriation 148
In the case of Elenza, Inc v Alcon Labs Holding Corp., the Supreme Court of Delaware assessed whether having "motive and opportunity" was adequate to establish misappropriation of a trade secret The plaintiff aimed to demonstrate that the defendant possessed the necessary intent and means to unlawfully acquire the trade secret in question.
The court ruled that the plaintiff failed to establish a clear case of misappropriation of trade secrets, despite claims that the defendant had both motive and opportunity through collaboration with third parties and similarities in design as indicated by the defendant's patent application It emphasized that merely suggesting the defendant "could have" utilized the plaintiff's designs was inadequate; concrete evidence demonstrating that the defendant actually did use those designs was necessary to support the allegations.
Non-Competes and Other Agreements
Protective Orders and Requests to Seal
Because defendants in trade secret cases have the right to dis- cover the identification and details of the plaintiff’s putative trade
155 See, e.g., T&S Brass & Bronze Works, Inc v Slanina, No 6:16-03687-MGL, 2017 WL
In several legal cases, courts have granted preliminary injunctions despite concerns about restricting defendants' employment opportunities For instance, in First W Capital Mgmt Co v Malamed, the court issued an injunction that limited the defendant's ability to serve existing and prospective clients, while in Panera, L.L.C v Nettles, a temporary restraining order was implemented to uphold a confidentiality and noncompete agreement, safeguarding the plaintiff's trade secrets These rulings illustrate the courts' willingness to prioritize the protection of trade secrets and contractual agreements over potential employment limitations for defendants.
During litigation, there is a significant risk of exposing trade secrets To establish a prima facie case at trial, the plaintiff must disclose the nature of these trade secrets, which could lead to their revelation.
To aid in the discovery process, courts typically issue protective orders to safeguard plaintiffs' information throughout the litigation This practice is mandated by both the Uniform Trade Secrets Act (UTSA) and the Defend Trade Secrets Act (DTSA), with Section 5 of the UTSA explicitly requiring such measures.
A court is obligated to protect the confidentiality of an alleged trade secret through reasonable measures, which may involve issuing protective orders during discovery, conducting in-camera hearings, sealing case records, and prohibiting any party involved in the litigation from disclosing the trade secret without prior court authorization.
Protecting trade secrets is generally more manageable during the pleading and discovery phases of litigation compared to the trial phase This is primarily due to the strong public policy that supports open and accessible judicial proceedings.
Courts may limit public access to proceedings to safeguard trade secrets when sufficient evidence is presented regarding their confidentiality and the absence of viable alternatives for protection Additionally, they assess the potential competitive harm that parties could face if their sensitive information were disclosed.
160 See Brian D Range, Identification of Trade Secret Claims in Litigation: Solutions for a Ubiquitous Dispute, 5 NW J T ECH & I NTELL P ROP 68, 69, 71, 73 (2006).
161 See Rowe, supra note 33, at 1447
162 See, e.g., Apple, Inc v Samsung Elecs Co., 727 F.3d 1214, 1223-24, 1229 (Fed Cir.
163 See 18 U.S.C § 1835 (Supp IV 2016); U NIF T RADE S ECRETS A CT § 5 (amended 1985),
165 See, e.g., Citizens First Nat’l Bank of Princeton v Cincinnati Ins., 178 F.3d 943, 944-
The public has a vested interest in judicial proceedings since they are funded by taxpayer money; however, this interest must be balanced against the privacy and property rights of the litigants involved While the public's interest is significant, it can only be set aside if the private interests of the parties involved are deemed to be more important in a specific case.
167 See Publicker Indus., Inc v Cohen, 733 F.2d 1059, 1071 (3d Cir 1984) lic 168 If so, the court could order that certain information be sealed from the public and third parties 169
The case of Nevro Corp v Boston Scientific Corp highlights the public nature of federal litigation and the potential sanctions for attorneys who submit frivolous sealing requests The Northern District of California emphasized that mere embarrassment to a company does not justify sealing documents that should be publicly accessible After denying a sealing request, the court cautioned both parties against submitting frivolous motions, leading to further requests from the defendants that prompted the court to consider sanctions against their lawyers The court's decision was influenced by the Ninth Circuit's ruling in Kamakana v City and County of Honolulu, which requires "compelling reasons" for sealing documents.
During the hearing regarding the order to show cause, it was emphasized that attorneys, especially those representing corporate clients, face immense pressure to file motions to seal information that their clients wish to keep confidential, even in the absence of legitimate reasons While this poses a considerable challenge for corporate lawyers, resorting to frivolous sealing requests is not the solution Instead, attorneys should clearly communicate to their clients that litigation is inherently a public process, and the public has a right to access information about the proceedings, with only a few limited exceptions.
The court concluded that there was no justification for the sealing request, and the request was objectively frivolous in violation of Rule 11 of the Federal Rules of Civil Procedure 176
169 See, e.g., Apple, Inc v Samsung Elecs Co., 727 F.3d 1214, 1224-25 (Fed Cir 2013)
(sealing product-specific financial information from public disclosure).
Lyft, Inc v City of Seattle, addressed the Washington state Public
The Washington Supreme Court addressed the appropriateness of an injunction that prevented the disclosure of records related to car rides in various city zip codes Following an evidentiary hearing, the King County Superior Court determined that these records constituted trade secrets under the Uniform Trade Secrets Act (UTSA) The key question was whether such trade secret records are entirely exempt from public disclosure under the Public Records Act Lyft had agreed to provide the City with quarterly standardized reports detailing the total number of rides, completion rates by zip code, pick-up and drop-off locations, unfulfilled ride requests, collision data, and statistics on requested rides for accessible vehicles.
In response to Lyft's confidentiality concerns, the Seattle City Council passed an ordinance requiring the City to notify record owners before disclosing documents marked as confidential in public records requests When a Texas resident submitted such a request, Lyft sought an injunction to block the release of the reports However, the court determined that the Public Records Act does not exempt trade secrets from disclosure, indicating that any exemptions must be based on other statutes, specifically the Uniform Trade Secrets Act (UTSA).
The UTSA does not provide a specific exemption for trade secrets from public disclosure laws The court's analysis under the UTSA began with assessing whether the data in question met the criteria for trade secret protection It ultimately determined that the zip code reports were considered a compilation of information in line with the UTSA Nevertheless, the court concluded that the UTSA allowed for an injunction regarding the matter.
179 Id at 110; see generally W ASH R EV C ODE § 42.56 (2018)
The City had no legal obligation to maintain the confidentiality of public records, as it could not promise confidentiality in a manner inconsistent with the Public Records Act Consequently, the case was sent back to the trial court to assess whether injunctive relief was appropriate, applying the stricter injunction standards outlined in the Public Records Act.
“lesser UTSA standard” involving misappropriation between private parties 189
The Alabama Supreme Court in Ex parte Industrial Warehouse
In a recent case, a trucking company sought a protective order against discovery requests related to a personal injury lawsuit stemming from a fatal auto accident involving one of its drivers The estates of the deceased parties requested access to the company's bills of lading and operations and safety manuals However, the circuit court denied the company's motion, stating it did not demonstrate good cause under Rule 26(c) of the Alabama Rules of Civil Procedure The company contended that the requested information included confidential and trade secret data Ultimately, the Alabama Supreme Court ruled that the safety manuals were not trade secrets, as federal law mandated the company to report certain information to the Federal Motor Carrier Safety Administration, and the content of the manuals was based on applicable regulations.
190 Nos 1170013 & 1170087, 2018 WL 1126576, at *1 (Ala Mar 2, 2018).
The court determined that the information in the bills of lading qualified as a trade secret, as it was integral to the trucking industry and easily accessible from public sources.
Damages
Under the Uniform Trade Secrets Act (UTSA), plaintiffs can seek damages for both actual losses resulting from misappropriation and the unjust enrichment gained by the defendant This allows for recovery of compensatory damages alongside the "unjust benefit" obtained through the misappropriation However, while compensatory damages can be paired with injunctive relief, the UTSA warns that such relief typically prevents monetary awards during the period the injunction is in effect.
When a defendant is proven to have used or disclosed a trade secret, resulting in actual harm, compensatory damages are warranted The damages are typically assessed based on the actual and potential value of the trade secrets to the plaintiff had the disclosure not occurred Various methods can be employed to calculate these damages, including lost profits, loss of market share, out-of-pocket expenses, and any advantages gained by the defendant.
The Texas state court case Title Source Inc v HouseCanary Inc resulted in one of the largest jury verdicts of 2018, amounting to over $706 million in compensatory and punitive damages.
199 U NIF T RADE S ECRETS A CT § 3(a) (amended 1985), 14 U.L.A 538 (2005).
203 S ANDEEN & R OWE , supra note 19, at 258-59.
204 See, e.g., Univ Computing Co v Lykes-Youngstown Corp., 504 F.2d 518, 536 (5th Cir. 1974); Synergeering Group, L.L.C v Jonatzke (In re Jonatzke), 478 B.R 846, 861 (Bankr. E.D Mich 2012)
In the case of Title Source Inc v HouseCanary Inc., the significant damages awarded to the defendant on its counterclaim highlight the importance of caution for plaintiffs, particularly when alleging trade secret violations Title Source initiated the lawsuit, claiming HouseCanary breached a license and nondisclosure agreement However, HouseCanary's successful counterclaim for misappropriation of trade secrets, breach of contract, and fraud serves as a warning to plaintiffs about the potential consequences of their legal actions.
On a motion for summary judgment, the court in Repat, Inc v.
IndieWhip, L.L.C was granted summary judgment in favor of the defendants due to the plaintiff's inability to demonstrate proof of damages The plaintiff contended that the defendant had a motive to exploit its trade secrets, but the court observed that, after two years, the plaintiff's business continued to prosper The court questioned the existence of "imminent and irreparable harm," noting that the plaintiff failed to provide any material evidence of the defendant's use of its proprietary marketing secrets Consequently, the plaintiff could not establish any dispute regarding actual damages, thus failing to meet the burden of proof for the trade secrets claim.
The question of whether disgorgement can be determined by a jury emerged in two significant cases In GSI Technology, Inc v United Memories, Inc., the Ninth Circuit acknowledged that profit disgorgement is classified as an equitable remedy, thereby influencing its adjudication.
209 See, e.g., Elizabeth A Rowe, Unpacking Trade Secret Damages, 55 H OUS L REV 155, 195-96 (2017) (providing empirical data on the size of trade secret damage awards).
In the case of Texas Advanced Optoelectronic Solutions, Inc v Renesas Electronics America, Inc., the Federal Circuit conducted a historical analysis to assess the legal availability of disgorgement of profits, emphasizing that such decisions are made by the trial court rather than the jury.
In the case of trade secret misappropriation, the Federal Circuit determined that the jury's award of disgorgement profits to the plaintiff was based on expert testimony, but it lacked a limitation to a "head-start period." This absence could significantly impact the case, as it implied that if such a claim was not recognized in 1791, the plaintiff would forfeit the constitutional right to a jury trial regarding disgorgement Additionally, the court in In re Mandel established that while compensatory damages in trade secret cases can be determined flexibly, plaintiffs must still provide sufficient credible evidence to substantiate their claims of misappropriation.
The dissent emphasized that while damages can be inferred reasonably, they must remain realistic and based on solid theoretical and factual foundations, rather than speculative or exaggerated claims.
The New York Court of Appeals in E.J Brooks Co v Cambridge
In the case of Security Seals, the court determined that a plaintiff is not entitled to compensatory damages based on the costs that a defendant evaded through illegal actions This decision arose from a review by the United States Court of Appeals for the Second Circuit, which examined whether, under New York law, a plaintiff could claim damages for the misappropriation of trade secrets.
222 Id at 191 (internal quotations omitted).
In the case No 26, 2018 WL 2048724, the court addressed the measurement of damages in trade secret misappropriation, unfair competition, and unjust enrichment claims, ultimately ruling that damages should reflect the plaintiff's losses rather than the defendant's avoided costs The jury had previously found the defendant liable and awarded $3.9 million in total compensatory damages The defendant argued against the use of avoided costs as a measure of damages, but the trial court maintained that such costs could represent either the defendant's gains or the plaintiff's losses The New York Court of Appeals concurred, emphasizing that damages must be based on the plaintiff’s actual losses, as these are quantifiable and incurred, whereas the defendant’s avoided costs are hypothetical and unreliable.
In Eagle Oil & Gas Co v Shale Exploration, L.L.C., the Texas
Court of Appeals addressed whether the economic loss rule barred recovery for misappropriation of trade secrets 233 A jury found the defendant liable for trade secret misappropriation, and awarded the
In the case No 01-15-00888-CV, the plaintiff sought $14,300,000 in lost profits and $4,500,000 in exemplary damages, while the defendant contended that the economic loss rule prevented the misappropriation claim, arguing it was solely a contract issue due to a confidentiality agreement The plaintiff's claims included both breach of the confidentiality agreement and misappropriation of trade secrets The court determined that while a breach of a confidential relationship can lead to contractual liability, it can also constitute an independent claim for misappropriation of trade secrets, irrespective of any contractual obligations Consequently, the court ruled that if sufficient evidence supports the elements of the tort of misappropriation of trade secrets, the economic loss rule does not bar the claim.
Permanent Injunctive Relief
In cases of trade secret misappropriation where provable monetary damages are absent, permanent injunctive relief is often the primary remedy The Defend Trade Secrets Act (DTSA) allows courts to grant such relief to prevent actual or threatened misappropriation under reasonable terms, including the duration of the injunction The Uniform Trade Secrets Act (USTA) restricts the length of this relief to the time the trade secrets remain confidential While it is expected that the same limitation will apply under the DTSA, it is uncertain how federal courts will interpret state rules and what they will consider reasonable in these situations.
239 See Rowe, supra note 209, at 195
240 18 U.S.C § 1836(b)(3)(A)(i) (Supp IV 2016); see also U NIF T RADE S ECRETS A CT § 2(a) (amended 1985), 14 U.L.A 538 (2005).
241 See U NIF T RADE S ECRETS A CT § 2(a).
In trade secret cases, particularly under the Uniform Trade Secrets Act (UTSA) or the Defend Trade Secrets Act (DTSA), once a plaintiff demonstrates misappropriation, they may claim an automatic right to injunctive relief as a statutory remedy The success of this argument hinges on state law and federal court interpretations of the DTSA Unlike patent law, where the eBay case mandated the application of equitable principles, neither the UTSA nor DTSA explicitly requires such principles Nonetheless, the tradition of trade secret law typically subjects the granting of permanent injunctive relief to equitable considerations Ultimately, the applicable law and specific case facts will determine the equitable factors that courts weigh in their decisions regarding permanent injunctive relief.
In the case of CardiAQ Valve Technologies, Inc v Neovasc Inc., the Federal Circuit upheld the denial of a permanent injunction, determining that it would duplicate the monetary relief already awarded to the plaintiff The district court also took into account market uncertainty, the potential impact on the defendant, and the public's interest in accessing a potentially life-saving technology.
In the case of TMRJ Holdings, Inc v Inhance Technologies, L.L.C., the Texas court of appeals examined the trial court's decision to grant both damages and permanent injunctive relief The defendant contended that these remedies were duplicative and violated the one-satisfaction rule The jury ultimately awarded the plaintiff $4 million in reasonable royalty damages and $10,500 in lost profits.
242 See, e.g., E.I DuPont de Nemours & Co v Kolon Indus., No 3:09cv58, 2012 WL
245 See, e.g., E.I DuPont de Nemours & Co., 2012 WL 4490547, at *4-5, *7, *12, *16, *22-
The trial court awarded damages and a permanent injunction, determining that reasonable royalty damages did not fully compensate the plaintiff for the misappropriation of trade secrets The jury's award was based on misappropriation rather than actual future use of the technology, which was valued partly on its potential for future use Evidence showed that the plaintiff intended to keep the trade secrets exclusive and never meant for them to be commercially available or licensed Consequently, the court concluded that a reasonable royalty would not adequately address the misappropriation of trade secrets intended for exclusive use, as the royalty calculation included potential future revenue from licensing that the plaintiff never intended to pursue in the marketplace.
DTSA Whistleblower Provision
C RIMINAL U PDATE
The Economic Espionage Act (EEA) is a federal law that criminalizes the misappropriation of trade secrets and espionage It empowers federal authorities, such as the US Department of Justice and local prosecutors, to investigate and prosecute individuals or companies involved in criminal trade secret theft Most prosecutions under the EEA target employees, former employees, and other individuals associated with the companies involved.
‘insiders.’” 280 However, acts of corporate espionage by outsiders are also covered by the EEA 281
The Economic Espionage Act (EEA) comprises two key sections addressing trade secret theft: section 1831 focuses on theft for the benefit of a foreign government, while section 1832 covers all other forms of trade secret theft Section 1832 is more commonly enforced, prohibiting the intentional or knowing conversion of trade secrets related to products or services used in interstate or foreign commerce Notably, prosecution under the EEA can occur even without the actual theft of trade secrets, as both sections criminalize attempts and conspiracies to steal trade secrets.
The EEA also has extraterritorial reach and can be applied even where conduct does not occur on U.S soil 286 Section 1837 extends
277 No 16-13703, 2017 WL 4039178, at *7 (E.D Mich Sept 13, 2017).
278 Foreign and Economic Espionage Penalty Enhancement Act of 2012, Pub L No 112-
269, 126 Stat 2442 (codified as amended at 18 U.S.C § 1831 (2012))
279 Rowe, supra note 86, at 387; see also 18 U.S.C § 1831
284 See Rowe, supra note 86, at 388.
Under 18 U.S.C § 1837, U.S jurisdiction applies if the defendant is a U.S citizen or corporation, or if any act related to the offense occurred within the United States However, this legal provision has seen limited use by prosecutors, largely due to the difficulties associated with enforcement and serving legal processes in foreign nations.
The Economic Espionage Act (EEA) imposes significant penalties for violations, including fines and prison sentences Individuals may face fines up to $5 million, while organizations can incur fines reaching $10 million or three times the value of the stolen trade secrets Additionally, the maximum prison term for individuals is fifteen years The Defend Trade Secrets Act (DTSA) has further increased financial penalties for organizations, allowing for fines of either $5 million or three times the value of the trade secrets, with a maximum prison sentence of ten years for individuals.
Since its enactment in 1996, prosecutions under the Economic Espionage Act (EEA) have remained relatively low However, the past year has seen a consistent increase in federal criminal trade secret offenses, marked by several notable convictions and indictments These espionage cases frequently involve prominent companies and high-level employees, with competitors attempting to gain access to valuable technology.
288 See Rowe, supra note 86, at 394
294 T HE N ATIONAL B UREAU OF A SIAN R ESEARCH , T HE C OMMISSION ON THE T HEFT OF
A MERICAN I NTELLECTUAL P ROPERTY , T HE IP C OMMISSION R EPORT 43 (May 2013), http://www. ipcommission.org/report/IP_Commission_Report_ 052213.pdf [https://perma.cc/QG42-YUMX]
295 See infra Parts II.A, II.B
296 See infra Parts II.A, II.B
297 In an upcoming article I will explore this phenomenon of scientists, engineers, and executives as criminals under the EEA.
298 See infra Part II.A, II.B.
Convictions
Former DuPont Employee Pleads Guilty
Josh Harry Isler, while working at DuPont, accepted a position with a competitor in the ethanol fuel enzyme sector During his tenure at DuPont, he unlawfully downloaded proprietary information and trade secrets, including files pertaining to DuPont's customers, many of whom were potential clients for his new employer.
Jury Convicts Electrical Engineer for Theft from
On July 9, 2018, a jury in Hartford, Connecticut, convicted Jared Dylan Sparks, an electrical engineer formerly employed by defense contractor LBI, Inc., of trade secret theft LBI specialized in designing and constructing unmanned underwater vehicles for the Navy Prior to his departure to Charles River Analytics, Sparks illegally uploaded thousands of confidential LBI files to his Dropbox account, which contained sensitive accounting and engineering documents, along with design-related photos and renderings.
299 See Press Release, U.S Dep’t of Justice, Former DuPont Employee Pleads Guilty to
On July 11, 2018, a former DuPont employee pleaded guilty to stealing trade secrets and providing false information to the FBI This case highlights the serious implications of intellectual property theft and the legal consequences of obstructing federal investigations The employee's actions not only violated corporate confidentiality but also undermined the integrity of the justice system.
On July 10, 2018, the U.S Department of Justice announced that an electrical engineer was found guilty of attempting to convert trade secrets from a defense contractor This case highlights the serious legal consequences of intellectual property theft within the defense industry For more information, visit the official press release.
Sinovel Convicted and Fined for Theft from AMSC
A jury in Madison, Wisconsin, found Sinovel Wind Group guilty of conspiring to steal trade secrets from AMSC, specifically proprietary wind turbine technology The court determined that AMSC suffered losses exceeding $550 million due to the theft As a result, Sinovel was fined the statutory maximum of $1.5 million and sentenced to one year of probation, in addition to being ordered to pay approximately $57 million in restitution.
Former Chemours Employee Pleads Guilty
On June 8, 2018, Canadian citizen Jerry Jindong Xu pleaded guilty to conspiracy to steal trade secrets related to sodium cyanide from The Chemours Company, which was established in 2015 from DuPont’s chemicals division Xu, a former DuPont employee in China, admitted to misleading colleagues to gather pricing information, using personal email accounts to share confidential data, and employing an encrypted Chinese messaging service to communicate with co-conspirators He also received information from a Chinese investor who stated that technology theft is a common practice in China.
305 See Press Release, U.S Dep’t of Justice, Court Imposes Maximum Fine on Sinovel
Wind Group for Theft of Trade Secrets (July 6, 2018), https://www.justice.gov/opa/pr/court- imposes-maximum-fine-sinovel-wind-group-theft-trade-secrets [http://perma.cc/V68C-RK5R].
A former Chemours employee has pleaded guilty to a conspiracy involving the theft of trade secrets aimed at attracting Chinese investors to the sodium cyanide market, according to a press release from the U.S Department of Justice dated June 12, 2018.
Scientist Convicted for Theft of Engineered Rice
In February 2017, Weiqiang Zhang was convicted for unlawfully acquiring genetically engineered rice seeds utilized in therapeutic and medical research His former employer, Ventria, invested millions in developing cost-effective protein extraction methods from these seeds Zhang illegally supplied the seeds to representatives from a Chinese crop institute during their visit to his home in Manhattan, Kansas, resulting in a sentence of 121 months in prison.
Developer Pleads Guilty and Sentenced to
Xu Jiaqiang admitted to stealing proprietary source code from his previous employer to aid the National Health and Family Planning Commission of China As a developer, he had access to the source code and communicated with undercover officers posing as a financial investor and a project manager Additionally, he uploaded the stolen code to a server established by the FBI Consequently, he was sentenced to five years in prison.
314 See Press Release, U.S Dep’t of Justice, Chinese Scientist Sentenced to Prison in
Theft of Engineered Rice (Apr 4, 2018), https://www.justice.gov/opa/pr/chinese-scientist- sentenced-prison-theft-engineered-rice [http://perma.cc/6RLS-JFJZ].
On January 18, 2018, the U.S Department of Justice announced the sentencing of a Chinese national for economic espionage and the theft of trade secrets from a U.S company This case highlights the ongoing issues of intellectual property theft and the importance of protecting trade secrets in the global economy For more details, visit the official press release at the U.S Department of Justice website.
Former Executive Convicted for Trade Secret Theft from
Christopher Barry, the former Vice President of Research and Development at Lutonix, Inc., was sentenced to over a year in prison after pleading guilty to stealing trade secrets for a new medical device startup Responsible for all aspects of research, development, quality assurance, and manufacturing at Lutonix, Barry illicitly took proprietary files to benefit his new employer His sentence includes twelve months and one day in prison, three years of supervised release, and a restitution payment of $533,842.
Chicago Trader Convicted for Theft of His Employer’s
David Newman pleaded guilty to stealing trade secrets from his employer, WH Trading LLC, by downloading over 400,000 proprietary files and trading software onto multiple USB drives After this theft, he resigned to launch his own trading firm, intending to use the stolen information to compete against WH Trading.
“pricing futures and options contracts, executing trades on various exchanges, analyzing the risk of trades, and interpreting exchange
323 See Press Release, U.S Dep’t of Justice, Former Lutonix Executive Sentenced to a
A former executive of Lutonix has been sentenced to one year and one day in prison for stealing trade secrets, as announced on August 17, 2017 The case highlights the serious legal consequences of corporate espionage and the importance of protecting intellectual property The sentencing reflects the commitment of law enforcement to uphold business integrity and deter future theft of proprietary information For more details, visit the official announcement from the U.S Attorney's Office.
A Chicago trader has been sentenced to one year in federal prison for stealing proprietary trading secrets from his employer, according to a press release from the U.S Department of Justice dated June 5, 2017 This case highlights the serious legal consequences of corporate espionage in the financial sector For more details, visit the official Justice Department website.
329 See id market data.” 330 He was sentenced to one year and one day in prison and fined $100,000 331
Engineer Pleads Guilty to Selling Secrets to
Gregory Allen Justice, a former engineer for a defense contractor, pleaded guilty to selling sensitive satellite information to someone he thought was a Russian intelligence agent He stole proprietary trade secrets from his employer and subsequently provided them to an undercover FBI agent posing as a Russian operative, receiving thousands of dollars in cash for his actions.
Indictments
Six Former and Current Fitbit Employees Indicted
On June 14, 2018, six former and current employees of Fitbit were indicted in California for federal trade secret violations They are accused of stealing market research about fitness tracker opportunities from Jawbone and internal studies, including a consumer behavior comparison study involving both Jawbone and Fitbit devices The charges filed against these individuals include felony possession of stolen trade secrets.
A defense contractor employee has pleaded guilty to selling sensitive satellite information to an undercover agent who was posing as a Russian spy, as reported by the U.S Department of Justice on May 22, 2017 This case highlights significant security concerns regarding the protection of classified information within the defense industry For more details, visit the official press release at the U.S Department of Justice website.
336 See Press Release, U.S Dep’t of Justice, Six Former and Current Fitbit Employees
On June 14, 2018, six former and current Fitbit employees were indicted for possessing multiple trade secrets that had been stolen from Jawbone This case highlights the serious legal implications of intellectual property theft in the tech industry The indictment underscores the importance of protecting trade secrets and the potential consequences for individuals who engage in such unlawful activities.
337 See id sion of stolen trade secrets, in violation of 18 U.S.C § 1832(a)(3),” for which the maximum sentence is 10 years in prison 338
In a notable case, Jawbone previously sued Fitbit in 2015, alleging that the company and specific individuals were involved in the "systematic plundering" of over 300,000 confidential trade secrets After a nine-day trial, the International Trade Commission (ITC) ruled in favor of Fitbit, concluding that no trade secrets from Jawbone were misappropriated or utilized in any Fitbit products Despite this ruling, U.S federal prosecutors have opted to pursue a criminal indictment against the defendants involved.
The criminal case involves defendants who allegedly received and possessed trade secrets for the economic gain of parties other than Jawbone, fully aware that these secrets were stolen and held without authorization after leaving the company This case is significant to monitor as it progresses, especially considering the findings from the ITC proceeding.
Former Apple Employee Indicted
On July 12, 2018, a grand jury in San Jose indicted Xiaolang Zhang for allegedly stealing a confidential 25-page document with detailed circuit board schematics intended for use in an autonomous vehicle Zhang had informed Apple of his resignation to return to China for family reasons, but it was later discovered that he intended to join a competitor.
339 Shannon Liao, Feds Charged Six Current and Former Fitbit Employees for Stealing
Trade Secrets From Jawbone, T HE V ERGE (June 15, 2018), https://www.theverge.com/circuit breaker/2018/6/15/17467820/fitbit-employees-charged-stolen-jawbone-trade-secrets-jawbone [https://perma.cc/SPB2-YTNY].
342 See U.S Dep’t of Justice, Six Former and Current Fitbit Employees Indicted for Possessing Multiple Trade Secrets Stolen from Jawbone, supra note 336
On July 16, 2018, the U.S Department of Justice announced the indictment of a former Apple employee for the theft of trade secrets related to a Chinese company specializing in electric automobiles and autonomous vehicle technology The individual, identified as Zhang, was apprehended by federal agents at San Jose International Airport after allegedly downloading sensitive information from project databases.
Man Arrested for Attempting to Steal Trade Secrets from
Dong Liu, a dual citizen of China and Canada, was arrested for allegedly attempting to steal trade secrets from Medrobotics Corporation in Raynham, Massachusetts The company specializes in manufacturing a robot-assisted device designed for minimally invasive surgery, enabling surgeons to access hard-to-reach areas of the human body Liu was apprehended by the CEO of Medrobotics while sitting in a conference room with three open laptops, despite lacking authorization to be on the premises and providing inconsistent explanations for his presence.
Man Indicted for Stealing Trade Secrets to Benefit Rival
Robert O’Rourke, who had been employed by a Woodstock-based cast-iron manufacturer since 1984, reportedly initiated talks in 2015 with a Chinese firm for a vice president role.
347 See Press Release, U.S Dep’t of Justice, Dual Canadian/Chinese Citizen Arrested for
On August 31, 2017, a dual Canadian-Chinese citizen was arrested for attempting to steal trade secrets and computer information, highlighting ongoing concerns about intellectual property theft This incident underscores the importance of protecting sensitive business data and the legal repercussions associated with such criminal activities For more details, visit the official announcement from the U.S Attorney's Office at justice.gov.
On July 20, 2017, the U.S Department of Justice announced the indictment of a businessman accused of stealing trade secrets from his employer while preparing to join a competing firm in China This case highlights the serious legal consequences of corporate espionage and the protection of intellectual property rights For more details, visit the official press release [here](https://www.justice.gov/usao-ndil/pr/businessman-indicted-allegedly-stealing-employer-s-trade-secrets-while-planning-new-job).
O’Rourke was indicted for allegedly stealing proprietary information from the Woodstock company with plans to board a flight from Chicago to China He was subsequently arrested by federal authorities at O’Hare International Airport.
Russian Officers Charged for Hacking Yahoo
In March 2017, a grand jury in the Northern District of California indicted four defendants, including two officers from the Russian Federal Security Service (FSB), for allegedly using unauthorized access to Yahoo's systems to steal information from at least 500 million accounts The stolen data was then used to infiltrate additional accounts at Google and other webmail providers, affecting not only Russian journalists but also U.S and Russian government officials, as well as private-sector employees from various industries, including finance and transportation.
Chinese Hackers Charged for Intrusions Against Moody’s, Siemens, and Trimble
In November 2017, three Chinese nationals were indicted for their involvement in a conspiracy to hack into private corporate servers and steal trade secrets They targeted confidential business information by exploiting employees' computers and executing spear phishing email campaigns to deploy malicious code.
355 See Press Release, U.S Dep’t of Justice, U.S Charges Russian FSB Officers and Their
On March 15, 2017, U.S authorities charged Russian FSB officers and their criminal associates for orchestrating a massive hacking scheme that compromised Yahoo and millions of email accounts This significant cybercrime operation involved unauthorized access to sensitive user data, highlighting the ongoing threat posed by state-sponsored hackers The indictment underscores the importance of cybersecurity measures to protect personal information from sophisticated cyber threats.
359 See Press Release, U.S Dep’t of Justice, U.S Charges Three Chinese Hackers Who
On November 27, 2017, the U.S Department of Justice announced charges against three Chinese hackers employed by an internet security firm for illegally infiltrating three corporations to gain a commercial advantage The actions of these individuals highlight the ongoing cybersecurity threats faced by businesses and the importance of robust security measures to protect sensitive information.