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Peter J. Toren Weisbrod, Matteis, and Copley PLLC 1900 M Street, N.W. Washington, D.C. 20036 202-499-7900 [email protected] Petertoren.com Weisbrod Matteis & Copley 1
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Weisbrod Matteis & Copley
Peter J. TorenWeisbrod, Matteis, and Copley PLLC
1900 M Street, N.W.Washington, D.C. 20036
Petertoren.com
1
Weisbrod Matteis & Copley 2
OverviewSocial Media
Identification of trade secrets
Preemption
Misappropriation By Departing Employees/Other AgentsComputer Fraud and Abuse Act
(“authorization”)
International
Economic Espionage Act
Weisbrod Matteis & Copley 3
SOCIAL MEDIA
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Social MediaAre employer social
networking accounts protectable trade secrets?
E.g., whether a nightclub owner’s MySpace page and its connections could constitute a protectable trade secret
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Social MediaMySpace pages password protected“Friend” connections for the clubs’ MySpace
pages were more than just lists of potential customersProvided personal information about the
“friends” and their preferencesClubs’ list of friends could not be duplicated
without a substantial amount of time and expense.
Sufficient facts to state a claim that those accounts were trade secrets. (Christou v. Beatport LLC, 849 F.Supp. 2d 1055).
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SPECIFICITY OF IDENTIFICATION OF THE TRADE SECRETS
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Trade Secret Identification
CA section 2019: Before commencing any discovery relating to a trade secret allegedly misappropriated, the alleging party must “identify the trade secret with reasonable particularity”
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IdentificationWhat does this mean?
Does not require “every minute detail” or the “greatest degree of particularity possible.”
How is it determined?Mini-trial not required.May require an explanation of how the
alleged trade secret differs from matters known to skilled persons in the field.
Must be more than a generalized description
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IdentificationComposition of Gel Material: Delphon
customizes the composition of its gel materials to its customer needs. Specifically, the properties of the gel, including the tackiness can be modified per customer requests. The varieties of Delphon gel materials (i.e., levels of tackiness) and the ingredients, additives or fillers to manufacture each type of Delphon gel are proprietary trade secrets.”
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Identification“Plaintiff must identify each particular composition, formula, technology and manufacturing techniques, application and manufacture of gel materials without further delay.”
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Other StatesOther states have followed
California New York – State court required that a
plaintiff specifically plead its trade secrets in detail before proceeding with discovery.
Colo. Dist. Ct. – Before the plaintiffs may compel discovery they must file a complaint that “describes the actual equipment, methods, software or other information” the claim as trade secrets.General allegations and references to other products or
information are not sufficient.
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New YorkMust identify specific source codes and their
component parts and sequencing that a former employee allegedly misappropriated and shared with his current employer.
Rejected plaintiff’s argument that a cost effective and legally sufficient solution to meet its burden of trade secret identification was to list the source code components that were not subject to trade secret protection – i.e., code that was covered by third-party licenses, in the public domain, or otherwise nonproprietary.
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PREEMPTION
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PreemptionUTSA: Displaces/preempts
conflicting state remedies based on a misappropriation of a trade secret.3 exceptions – (1) Contractual
remedies; (2) Civil remedies that are not based upon misappropriation of a trade secret: or (3) Criminal remedies.
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PreemptionDoes the UTSA preempt
claims based on the misappropriation of information that does not meet the UTSA’s definition of a “trade secret?”
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Preemption It depends
“Majority” – Undermine the uniformity and clarity that motivated the creation and passage of the UTSA (preemption) . Intended result: Otherwise would render the statutory
preemption provision effectively meaningless. “Minority” - Common law/statutory claims are not
preempted if they involve information that does not meet the statutory definition of a trade secret.Preempted by a statute that does not provide a cause
of action
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PreemptionAre the other claims dependent on the same facts as the misappropriation of the trade secrets claim?
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PreemptionDifferent Standards:
All claims that are factually related to the alleged misappropriation
Only appropriate where other claims are no more than a restatement of the same operative facts which would plainly and exclusively spell out only trade secret misappropriation
Claims only where proof of a non-UTSA claims would also simultaneously establish a claim for misappropriation of trade secrets.
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MISAPPROPRIATION OF TRADE SECRETS BY DEPARTING EMPLOYEES OR OTHER AGENTS
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Computer Fraud and Abuse Act
(CFAA)Primarily a criminal statute
Damage or loss in excess of $5,000.
Section 1030(a)(2): Prohibits the intentional access of a protected computer without authorization or in excess of authorization for the purpose of obtaining information.
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CFAAUsed as an entrée to federal court by companies to assert claims against disloyal employees who have stolen confidential info/trade secrets.
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CFAACourts are split about whether
it is intended to cover only computer hackers and electronic trespassers or does it also apply to employees who abuse computer access privileges and misuse company information?
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CFAA “Exceeds
Authorization” Does an employee who
downloads files shortly before leaving a company for a competitor exceed authorized access or access without authorization if at the time he downloaded the files he had access privileges?
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CFAA “Exceeds
Authorization
Exceeds authorized access: “[T]o access a computer with authorization and to use such access to obtain or alter information in the computer that he accesser is not entitled so to obtain or alter.” Applies to a person who uses a limited level of
initial access authority to obtain other, more highly protected information that he or she is not entitled to access
“an authorized user who crosses boundaries set by the system owner.”
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CFAA “Without
Authorization”Not defined
Circuit split on whether an employee who accessed a computer network with an improper purpose acted “without authorization” and may be held liable under the CFAA
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CFAA “Without
Authorization”Fifth and Sixth Circuits
“The employee’s breach of his duty terminates his agency relationship and with it his authority to access the laptop.” (Int’l Airport Ctrs. v. Citrin, 440 F.3d 418 (7th Cir. 2006).
Employee exceeded her authorized access when she accessed confidential customer information in violation of her employer’s computer use restrictions and used that information to commit fraud (United States v. John, 597 F.3d 263 (5th Cir. 2010)).
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CFAA “Without
Authorization”4th and 9th Circuits
Rejected expansive reading of the CFAA.Violations of an employer’s computer use policy
constituted accessing a computer in excess of authorization.
Intended to punish hacking, not misappropriation of trade secrets.
If Congress meant to expand the scope of criminal liability to everyone who uses a computer in violation of computer use restrictions they would have said so.
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Dissent“Nothing to do” with minor violations of
company’s computer policy
Everything to do with “stealing an employer’s valuable information to set up a competing business with the purloined data, siphoned away from the victim, knowing such access and use were prohibited in the defendants employment contracts.
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INTERNATIONAL ISSUES
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International IssuesComplaint pleading requirements
Forum Court Personal jurisdiction under long-arm statute/due
process clause
Discovery pursuant to the Hague Convention
Foreign privacy laws
Inform the government? EEA
ITC proceedings
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ECONOMIC ESPIONAGE ACT
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Economic Espionage Act
Section 1831: Economic Espionage (benefit a foreign entity)
Section 1832: Theft of Trade Secrets
Common elements Misappropriation of information. Knowledge that the information is a trade secret. Information is in fact a trade secret. Reaches overseas conduct.
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U.S. v. Aleynikov Aleynikov encrypted and uploaded thousands of lines source code from
GS’ HFT system to an outsider server in Europe, attempted to erase his digital tracks, downloaded the source code to his personal computer in N.J.
Convicted/Sentenced to 97 months. EEA/NSPA
Imprisonment based on “$7
to $20 million loss figure.”
Served over 1 year
2d Circuit overturned
conviction.
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U.S. v. AleynikovEEA: Trade secret itself is “intended to, or actually
move in interstate or foreign commerce.HFT system was neither “produced for” nor “placed
in” interstate/foreign commerce. “Because the HFT system was not designed to
enter or pass in commerce, or to make something that does, Aleynikov’s theft of source code relating to that system was not an offense under the EEA.”
EEA only covers trade secrets that relate to products that are intended for sale in the open market.
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EEA Prosecutions9 prosecutions under §1831
115 under § 1832
Year 199
6
9
7
9
8
9
9
200
0
0
1
0
2
0
3
0
4
05 0
6
0
7
0
8
09 1
0
1
1
1
2
Total
§ 1831 0 0 0 0 0 1 1 0 1 0 0 1 2 0 1 2 0 9
§ 1832 1 3 8 5 6 4 8 7 3 6 11 6 10 10 1
1
11 5 115
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Recent CasesAttempted theft of trade secrets from DuPont relating
to technology to produce titanium dioxide. (1st case charging a Chinese company owned or controlled by the state.
Two Chinese nationals charged for attempting to purchase trade secrets from Pittsburgh Corning in Sedalia, Missouri.
South Korean company and five executives indicted on October 18, 2012, for stealing trade secrets from DuPont relating to Kevlar.
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Need More Information?Buy my book: Intellectual Property & Computer Crimes, (Law Journal Press)
Coverage includes detailed analysis of the EEA
and civil trade secret law
Damages and the meaning of unauthorized
access under the CFAA
Recent prosecutions under the Trademark Counterfeiting Act
State prosecutions for computer hacking and theft of trade secrets
Analysis of DMCA criminal and civil cases
Discussion of general criminal laws used to prosecute intellectual property crimes.
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Thank You!Questions
202-499-7900
