In a September 24, 2013, column entitled American hypocritical approach to economic espionage,” Orly Lobel, Professor of Law the University of San Diego, writes that the U.S. no longer has the moral high ground when it comes to protecting intellectual property, in general, and trade secrets in particular. In support of this position, she claims that the U.S. has lost its position because of the “shifting international perception that the U.S. is not the target but the predator” and that the U.S. has extended trade secret protection to information that is better left unprotected. This has resulted in “trying to halt the engines of economic progress while those secrets in most need of protection go unwatched in the confusion.” The conclusions, however, are based on a selective and misleading application of the facts and a fundamental misunderstanding of trade secret law. Continue reading »
Please join me at the Second Annual AIPLA Trade Secret Summit on October 22, 2013, held in conjunction with the AIPLA Annual Meeting to take place in Washington, D.C. from October 24-26, at the Wardman Park Marriot Hotel. I will be co-chairing the event and will be also moderating a panel on trade secrets and the International Trade Commission. The panelists will include Judge David Shaw of the ITC. If you are interested in checking out the agenda click here. You can sign up on the AIPLA website, http://www.aipla.org/learningcenter/AM13/Pages/default.aspx.
The Summit should be of interest to lawyers who are interested in learning about recent developments in the trade secret arena. Indeed, trade secret cases and issues continue to make the news. Civil cases continued to be hotly litigated. Within the past year, a Congress that has been marked by strife quickly passed the Theft of Trade Secrets Clarification Act that expanded the jurisdictional reach of the criminal provisions of the Economic Espionage Act. And Congress has been asked to broaden the civil remedies available under that same Act.
This Summit will explore issues common to and, often, determinative of, trade secret cases—from the way in which counsel work together to avoiding or obtaining a TRO or preliminary injunction to knowing what the pitfalls for a plaintiff and defendant of a concurrent criminal case. This is to say nothing of the often draconian remedies levied by the ITC.
The Washington Business Journal ran an article on September 13, 2013, on my firm, Weisbrod, Matteis & Copley’s efforts to collect a $26 million copyright infringement lawsuit against Shandong Linglong Rubber, Co., one of the largest tire manufacturer’s in the world. To read the article, click here
As reported in the story, William Copley and August Matteis, while at their former firm, represented Jordan Fishman, president of Sarasota, Fla, based Tire Engineering and Distribution LLC, in a copyright infringement lawsuit against Shandong Linglong and a number of defendants alleging that defendants had infringed on his design for tires used on mining vehicles. The Fourth Circuit affirmed the jury award of $26 million, which is one of the largest copyright infringement award’s ever. The Supreme Court declined certiorari.
Despite the finality of the judgment and that Linglong does tens of million of dollars, if not hundreds of millions of dollars in business in the U.S., it has refused to pay a cent of the judgment. Linglong’s counsel, Morgan Lewis, withdrew from the case on September 6, 2013, citing “irreconcilable differences,” the same day that Linglong was ordered by the court to produce records of its assets. To date, Linglong has not produced any documents.
Despite repeatedly being told that we will not be able to collect from Linglong, we have not given up. Our recovery efforts so far include suing the Bank of China in New York. A New York statute allows judgement creditors to garnish bank accounts of debtors held in foreign banks so long as the foreign bank has a branch in New York state. The district court dismissed the case but the judge stayed the order pending appeal. The case will be argued before the Second Circuit on October 11. In addition, we have served writs of garnishment on a number of companies in the U.S. who purchase tires directly from Linglong seeking to attach money owed to judgment debtor.
The case is yet another example of a Chinese company refusing to comply with the laws of the United States. After stealing the intellectual property from an American company that almost put that company out of business causing the loss of jobs, Linglong has refused to pay the judgment and is actively and willfully evading collection efforts. This despite that Linglong is continuing to do millions of dollars in business in the United States and is continuing to infringe the Jordan Fishman’s copyright outside the U.S.
If you’re interested in more information about our collection efforts, please send an email to me at email@example.com.
Looking for the Latest Updates on Federal Law Concerning Criminal Theft of Trade Secrets and Computer Hacking
Whether you are a criminal lawyer seeking guidance on intellectual property issues or a civil lawyer with questions about criminal law or the use of criminal statutes in civil litigation, you’ll want to get a copy of my book, Intellectual Property & Computer Crimes. It is a invaluable reference for you Internet and Computer Law practice. To obtain a copy click here.
Release 20 of my classic work was just published and this update features a number of current issues including analysis of a recent Fourth Circuit case that broke with precedent in holding that a distributor’s material alteration of genuine goods bearing a genuine mark did not constitute a violation of Section 2320(a) of the Trademark Counterfeiting Act. The flaws in the court’s opinion are evaluated in light of precedent, legislative history, and policy.
- Other topics discussed in this Release include:
- Gray market goods
- Whether possession of “high volume” counterfeiting equipment may be evidence of criminal intent
- Trade Secrets Clarification Act of 2012
- Whether the distribution and marketing of serial numbers and product keys to gain access to plaintiff’s software programs is in violation of the DMCA
- Increased penalties under the Foreign and Economic Espionage Penalty Enhancement Act of 2013
- Circuit split on whether employee’s misuse of employer’s information violates Computer Fraud and Abuse Act
- Permissibility of third party interception of electronic communication over a Wi-Fi network.
Surveillance warning: Does Jay-Z’s new Android app that collects massive amounts of information from those who install and use it violate criminal law under the Computer Fraud and Abuse Act (CFAA)?
Prior to the release of the Jay-Z’s new album, “Magna Carta . . . Holy Grail,” Samsung published a mobile app intended to distribute a million downloads of the album – purchased by Samsung for $5 each. According to the Electronic Privacy Information Center (EPIC), the app collects massive amounts of personal information from users, including location data and data pulled from other accounts and other apps on the users’ phones.” “The Magna Carta app also includes hidden spam techniques that force users to hpromote the album.” New York Times music critic Jon Pareles, wrote that the app not only acquired account information — including email addresses and social media usernames — for the handset owner prior to running, but also demanded a working login to Facebook or Twitter, plus permission to post to those accounts, before it would unlock the new album. Likewise, unlocking the album lyrics required making further posts to promote the album.
Because of these privacy concerns, EPIC filed a complaint with the FTC alleging that the app also “interfered with the functionality of the users’ smartphones in ways that users could not reasonably have expected,” such as requiring that the device accept messages relayed by Samsung, which might incur data charges. The app could also control the device’s vibration setting, preventing the device from going into sleep mode, according to the complaint. EPIC said it requested that the FTC “require Samsung to suspend the distribution of the app until the privacy problems are fixed and to implement the privacy protections contained in the Consumer Privacy Bill of Rights.” There is little doubt that many people would find that the app constitutes an invasion of privacy, but what is less clear is whether the sale of the app also violates criminal law under the CFAA. Continue reading »
Representative Zoe Lofgren (D- CA) has been busy. In addition to the bill she introduced with Sen. Wyden to amend the Computer Fraud and Abuse Act, she also introduced a bill entitled, “Private Right of Action Against Theft of Trade Secrets Act of 2013“(“PRATSA”), that would provide for a private civil claim for trade secrets theft under the Economic Espionage Act (“EEA”). The bill amends section 1832 of the EEA by including the following two subsections:
‘(c) Any person who suffers injury by reason of a violation of this section may maintain a civil action against the violator to obtain appropriate compensatory damages and injunctive relief or other equitable relief. No action may be brought under this subsection unless such action is begun within 2 years of the date of the act complained of or the date of the discovery of the damage.
‘(d) For purposes of this section, the term ‘without authorization’ shall not mean independent derivation or working backwards from a lawfully obtained known product or service to divine the process which aided its development or manufacture.’ Continue reading »
In today’s global economy many corporations must turn to outsourcing production of key components to compete and to expand their business in lower cost markets. Doing so can increase the risk of loss valuable trade secrets and confidential data. Indeed, the theft of trade secrets in countries in which the work is often outsourced, especially China, is pervasive. It is essential, therefore, for companies involved in outsourcing to be aware of these risks and implement a range of best practices to reduce the risk of theft of trade secrets in their supply chains.
The danger of theft of trade secrets from U.S. businesses by foreign actors is greatly increasing regardless of the extent that the company outsources all or part of production. The increased risk is caused by a number of factors. First, U.S. companies remain the leader in innovation in a number of areas and the economic value of intellectual property has never been greater. Approximately 70% of the value of publicly traded corporations is estimated to be in “intangible assets,” such as trade secrets.[i] Valuable trade secrets are not just high-tech in nature, but can include any type of information so long as the information is secret and has economic value. According to a recent study of EEA prosecutions, the type of trade secrets that were misappropriated, for example, not only includes the formula used in the manufacture of solar cells or the design of car parts, but also “starter” tobacco, which is used to manufacture various tobacco products, and advance copies of a Nike catalogue. [ii] Continue reading »
Rep. Zoe Lofgren (D-Calif) and Sen. Ron Wyden (D-Ore) have introduced “Aaron’s Law,” a billed named after Aaron Swartz, who committed suicide while facing federal charges. The bill would amend the Computer Fraud and Abuse Act (CFAA) by providing that simply violating term of services, website notices, contracts or employment agreements are not violations. According to the sponsors, the amendment is necessary to “distinguish between common online activities and harmful attacks.”In particular, the bill would strike the phrase “exceeds authorized access,” from the statue and would amend the existing definition of “access without authorization” to “obtain information on a computer that the accesser lacks authorization to obtain; and by knowingly circumventing one or more technological or physical measures that are designed to exclude or prevent unauthorized individuals from obtaining that information.” The summary of the bill provides that “’access without authorization’ would include bypassing technological or physical measures via deception (as in the case with phishing or social engineering, and scenarios in which an authorized individual provides a means to circumvent to an unauthorized individual (i.e, sharing login credentials). Examples of technological or physical measures include password requirements, cryptography, or locked office doors.” The sponsors assert that the proposed definition of “access without authorization” is based on recent Ninth and Fourth Circuit decision.
On June 10, 2013, the court denied defendants motion to dismiss a number of the charges in the only case that the government has brought against an entity under the control of a foreign government under section 1831 of the Economic Espionage Act. (Click here for a copy of the order). On March 12, 2013, the Grand Jury returned a twenty-two count Second Superseding Indictment (“SSI”) alleging that the Pangang Group, a Chinese company with Chinese government ties was behind the attempted theft of trade secrets from DuPont relating to the obscure, but valuable technology to produce titanium dioxide, a white pigment used in paints and other products. DuPont had allegedly been successful in keeping the information secret for over 50 years by, in part, allowing most employees to know about only individual parts of the process. According to the SSI, Walter Liew, a Malaysian born naturalized U.S. citizen, over the course of 15 years hired several employees from DuPont knowledgeable about specific pieces of the titanium process. Liew’s company allegedly received more than $12 million from a subsidiary of Panang between 2009 and 2011.
I gave a 90 minute webinar on the history and current status of the Computer Fraud and Abuse Act. I also provided a number of tips to help individuals and companies better protect their computer systems.
Click here for a copy of my PowerPoint presentation.
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"A must-have desk reference.... A practical all-in-one legal resource on intellectual property and computer crimes...." — The Vermont Bar Journal
Recent Media Mentions
- "Google Faces Tough Battle In Escalation Of Smartphone Wars," (Law360, Nov. 1, 2013).
- "US Pushing Hatch-Waxman Protections In TPP," (Law360, Nov. 20, 2013).
- "Jury Tips Toward Apple With $290M Samsung Penalty," (E-Commerce Times, Nov. 22, 2013).
- "Google, Partners Caught in Patent Lawsuit Blizzard," (E-Commerce Times, Nov. 1, 2013).