peter j. toren weisbrod, matteis, and copley pllc 1900 m street, n.w. washington, d.c. 20036

38
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

Upload: sona

Post on 23-Feb-2016

45 views

Category:

Documents


0 download

DESCRIPTION

Peter J. Toren Weisbrod, Matteis, and Copley PLLC 1900 M Street, N.W. Washington, D.C. 20036 202-499-7900 [email protected] Petertoren.com. Overview. Social Media Identification of trade secrets Preemption Misappropriation By Departing Employees/Other Agents - PowerPoint PPT Presentation

TRANSCRIPT

Page 1: Peter J. Toren Weisbrod, Matteis, and Copley PLLC 1900 M Street, N.W. Washington, D.C. 20036

Weisbrod Matteis & Copley

Peter J. TorenWeisbrod, Matteis, and Copley PLLC

1900 M Street, N.W.Washington, D.C. 20036

[email protected]

Petertoren.com

1

Page 2: Peter J. Toren Weisbrod, Matteis, and Copley PLLC 1900 M Street, N.W. Washington, D.C. 20036

Weisbrod Matteis & Copley 2

OverviewSocial MediaIdentification of trade secretsPreemptionMisappropriation By Departing

Employees/Other AgentsComputer Fraud and Abuse Act

(“authorization”)International Economic Espionage Act

Page 3: Peter J. Toren Weisbrod, Matteis, and Copley PLLC 1900 M Street, N.W. Washington, D.C. 20036

Weisbrod Matteis & Copley 3

SOCIAL MEDIA

Page 4: Peter J. Toren Weisbrod, Matteis, and Copley PLLC 1900 M Street, N.W. Washington, D.C. 20036

Weisbrod Matteis & Copley 4

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

Page 5: Peter J. Toren Weisbrod, Matteis, and Copley PLLC 1900 M Street, N.W. Washington, D.C. 20036

Weisbrod Matteis & Copley 5

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).

Page 6: Peter J. Toren Weisbrod, Matteis, and Copley PLLC 1900 M Street, N.W. Washington, D.C. 20036

Weisbrod Matteis & Copley 6

SPECIFICITY OF IDENTIFICATION OF THE TRADE SECRETS

Page 7: Peter J. Toren Weisbrod, Matteis, and Copley PLLC 1900 M Street, N.W. Washington, D.C. 20036

Weisbrod Matteis & Copley 7

Trade Secret IdentificationCA section 2019: Before

commencing any discovery relating to a trade secret allegedly misappropriated, the alleging party must “identify the trade secret with reasonable particularity”

Page 8: Peter J. Toren Weisbrod, Matteis, and Copley PLLC 1900 M Street, N.W. Washington, D.C. 20036

Weisbrod Matteis & Copley 8

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

Page 9: Peter J. Toren Weisbrod, Matteis, and Copley PLLC 1900 M Street, N.W. Washington, D.C. 20036

Weisbrod Matteis & Copley 9

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.”

Page 10: Peter J. Toren Weisbrod, Matteis, and Copley PLLC 1900 M Street, N.W. Washington, D.C. 20036

Weisbrod Matteis & Copley 10

Identification“Plaintiff must identify each particular composition, formula, technology and manufacturing techniques, application and manufacture of gel materials without further delay.”

Page 11: Peter J. Toren Weisbrod, Matteis, and Copley PLLC 1900 M Street, N.W. Washington, D.C. 20036

Weisbrod Matteis & Copley 11

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.

Page 12: Peter J. Toren Weisbrod, Matteis, and Copley PLLC 1900 M Street, N.W. Washington, D.C. 20036

Weisbrod Matteis & Copley 12

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.

Page 13: Peter J. Toren Weisbrod, Matteis, and Copley PLLC 1900 M Street, N.W. Washington, D.C. 20036

Weisbrod Matteis & Copley 13

PREEMPTION

Page 14: Peter J. Toren Weisbrod, Matteis, and Copley PLLC 1900 M Street, N.W. Washington, D.C. 20036

Weisbrod Matteis & Copley 14

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.

Page 15: Peter J. Toren Weisbrod, Matteis, and Copley PLLC 1900 M Street, N.W. Washington, D.C. 20036

Weisbrod Matteis & Copley 15

PreemptionDoes the UTSA preempt

claims based on the misappropriation of information that does not meet the UTSA’s definition of a “trade secret?”

Page 16: Peter J. Toren Weisbrod, Matteis, and Copley PLLC 1900 M Street, N.W. Washington, D.C. 20036

Weisbrod Matteis & Copley 16

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

Page 17: Peter J. Toren Weisbrod, Matteis, and Copley PLLC 1900 M Street, N.W. Washington, D.C. 20036

Weisbrod Matteis & Copley 17

PreemptionAre the other claims dependent on the same facts as the misappropriation of the trade secrets claim?

Page 18: Peter J. Toren Weisbrod, Matteis, and Copley PLLC 1900 M Street, N.W. Washington, D.C. 20036

Weisbrod Matteis & Copley 18

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.

Page 19: Peter J. Toren Weisbrod, Matteis, and Copley PLLC 1900 M Street, N.W. Washington, D.C. 20036

Weisbrod Matteis & Copley 19

MISAPPROPRIATION OF TRADE SECRETS BY DEPARTING EMPLOYEES OR OTHER AGENTS

Page 20: Peter J. Toren Weisbrod, Matteis, and Copley PLLC 1900 M Street, N.W. Washington, D.C. 20036

Weisbrod Matteis & Copley 20

Computer Fraud and Abuse Act

(CFAA)Primarily a criminal statuteDamage 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.

Page 21: Peter J. Toren Weisbrod, Matteis, and Copley PLLC 1900 M Street, N.W. Washington, D.C. 20036

Weisbrod Matteis & Copley 21

CFAAUsed as an entrée to federal court by companies to assert claims against disloyal employees who have stolen confidential info/trade secrets.

Page 22: Peter J. Toren Weisbrod, Matteis, and Copley PLLC 1900 M Street, N.W. Washington, D.C. 20036

Weisbrod Matteis & Copley 22

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?

Page 23: Peter J. Toren Weisbrod, Matteis, and Copley PLLC 1900 M Street, N.W. Washington, D.C. 20036

Weisbrod Matteis & Copley 23

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?

Page 24: Peter J. Toren Weisbrod, Matteis, and Copley PLLC 1900 M Street, N.W. Washington, D.C. 20036

Weisbrod Matteis & Copley 24

CFAA “Exceeds

AuthorizationExceeds 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.”

Page 25: Peter J. Toren Weisbrod, Matteis, and Copley PLLC 1900 M Street, N.W. Washington, D.C. 20036

Weisbrod Matteis & Copley 25

CFAA “Without

Authorization”Not definedCircuit 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

Page 26: Peter J. Toren Weisbrod, Matteis, and Copley PLLC 1900 M Street, N.W. Washington, D.C. 20036

Weisbrod Matteis & Copley 26

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)).

Page 27: Peter J. Toren Weisbrod, Matteis, and Copley PLLC 1900 M Street, N.W. Washington, D.C. 20036

Weisbrod Matteis & Copley 27

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.

Page 28: Peter J. Toren Weisbrod, Matteis, and Copley PLLC 1900 M Street, N.W. Washington, D.C. 20036

Weisbrod Matteis & Copley 28

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.

Page 29: Peter J. Toren Weisbrod, Matteis, and Copley PLLC 1900 M Street, N.W. Washington, D.C. 20036

Weisbrod Matteis & Copley 29

INTERNATIONAL ISSUES

Page 30: Peter J. Toren Weisbrod, Matteis, and Copley PLLC 1900 M Street, N.W. Washington, D.C. 20036

Weisbrod Matteis & Copley 30

International IssuesComplaint pleading requirementsForum Court

Personal jurisdiction under long-arm statute/due process clause

Discovery pursuant to the Hague ConventionForeign privacy laws Inform the government?

EEA ITC proceedings

Page 31: Peter J. Toren Weisbrod, Matteis, and Copley PLLC 1900 M Street, N.W. Washington, D.C. 20036

Weisbrod Matteis & Copley 31

ECONOMIC ESPIONAGE ACT

Page 32: Peter J. Toren Weisbrod, Matteis, and Copley PLLC 1900 M Street, N.W. Washington, D.C. 20036

Weisbrod Matteis & Copley 32

Economic Espionage ActSection 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.

Page 33: Peter J. Toren Weisbrod, Matteis, and Copley PLLC 1900 M Street, N.W. Washington, D.C. 20036

Weisbrod Matteis & Copley 33

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.

Page 34: Peter J. Toren Weisbrod, Matteis, and Copley PLLC 1900 M Street, N.W. Washington, D.C. 20036

Weisbrod Matteis & Copley 34

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.

Page 35: Peter J. Toren Weisbrod, Matteis, and Copley PLLC 1900 M Street, N.W. Washington, D.C. 20036

Weisbrod Matteis & Copley 35

EEA Prosecutions9 prosecutions under §1831

115 under § 1832

Year 1996

97

98

99

2000

01

02

03

04

05 06

07

08

09 10

11

12

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

111 5 115

Page 36: Peter J. Toren Weisbrod, Matteis, and Copley PLLC 1900 M Street, N.W. Washington, D.C. 20036

Weisbrod Matteis & Copley 36

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.

Page 37: Peter J. Toren Weisbrod, Matteis, and Copley PLLC 1900 M Street, N.W. Washington, D.C. 20036

Weisbrod Matteis & Copley 37

Need More Information?Buy my book: Intellectual Property & Computer Crimes, (Law Journal Press)Coverage includes detailed analysis of the EEAand civil trade secret lawDamages and the meaning of unauthorized access under the CFAARecent prosecutions under the Trademark Counterfeiting Act State prosecutions for computer hacking and theft of trade secretsAnalysis of DMCA criminal and civil casesDiscussion of general criminal laws used to prosecute intellectual property crimes.

Page 38: Peter J. Toren Weisbrod, Matteis, and Copley PLLC 1900 M Street, N.W. Washington, D.C. 20036

Weisbrod Matteis & Copley 38

Thank You!Questions

202-499-7900

[email protected]