The Trade Secrets Vault

The brinjal battles

Fri, 16 May 2008 13:56:38 -0500

It’s an unlikely candidate for controversy, but the lowly brinjal is at the heart of a battle. The issues at stake: whether agricultural and pharmaceutical companies should share classified data (read: trade secrets) with the government and independent watchdogs. The two sides in this joust: the Indian partner of a US-based biotech firm that’s trying to ease in a new version of a genetically modified (GM) brinjal, on the one side, and the environmental group Greenpeace and, indirectly, the Central Information Commission (CIC), on the other.

Last month, the Maharashtra-based Mahyco, the Indian partner of US agro-biotech firm Monsanto, moved the Delhi High Court against a CIC order seeking details of the safety test data generated during clinical trials of its GM brinjal — the first GM edible crop that is to be introduced in India.

Greenpeace had first filed the suit against Mahyco two years ago, invoking the Right to Information (RTI) Act, asking for details about its safety. But the case, Greenpeace claims, has shown the other side of the RTI, which has been hailed as a revolutionary initiative in contemporary India.

11th Circuit briefly examined this principle in affirming a district court’s grant of dismissal and concluded that the Complaint must set forth facts from which the court could infer that any misappropriation of trade secrets was knowing

Thu, 15 May 2008 23:26:34 -0500

Southern Nuclear Operating Co, Inc v Electronic Data Systems Corp Seyfarth Shaw LLP Jason Jarvis Georgia’s Trade Secrets Act prohibits knowing misappropriation of trade secrets. See Ga. Code Ann. § 10-1-761. In a recent decision, the Eleventh Circuit briefly examined this principle in affirming a district court’s grant of dismissal and concluded that the Complaint must set forth facts from which the court could infer that any misappropriation of trade secrets was knowing. Southern Nuclear Operating Co., Inc. v. Electronic Data Systems Corp., 2008 WL 1700204 (11th Cir. Apr. 14, 2008). Southern Nuclear Operating Company had retained Electronic Data Systems (“EDS”) to provide computer and software services. Southern Nuclear eventually terminated that agreement and hired Computer Technologies Solutions, Inc., (“CTS”) to perform the same functions. EDS requested that Southern Nuclear return EDS’s products and documentation or certify their destruction. Southern Nuclear never did so, and so EDS filed an action against Southern Nuclear and CTS for misappropriation of its trade secrets. The only issue on appeal was whether the district court had erred in granting dismissal on the grounds that EDS did not allege that CTS knew or should have known at the time it was hired that it had misappropriated trade secrets of EDS. The court of appeals agreed with the district court and affirmed the dismissal in a very brief opinion because there was “nothing in the Complaint that provides facts from which the court could infer that CTS knew or should have known that it had misappropriated trade secrets of EDS.” Nonetheless, service providers such as CTS should still be conscious of trade secrets issues when they enter into new agreements to provide services or products, ensuring that information used by the client and made available to the service provider is not a competitors’ trade secrets, particularly if there is some reason to suspect that the information may be protected.

Tex App - Information in rental logs could be trade secrets.

Thu, 15 May 2008 23:22:58 -0500

SP Midtown, Ltd. v. Urban Storage, L.P. (Tex App 5/8/08) SP sued Urban and The Jenkins Organization, Inc. (collectively "Urban") for misappropriation of trade secrets and related claims. The trial court granted summary judgment in favor of Urban and the appellate court affirmed in part, reversed in part, and remanded in part. SP operates a self-storage facility in Texas. In 2005, Getz, SP's principal, hired Welch as the on-site property manager. As a condition of her employment, Welch was required to sign a contract that included a confidentiality provision. In November 2005, Welch met with Dames, an Urban manager. Dames offered Welch a job as a manger for Urban; Welch accepted, but continued working for SP until the end of the month. Upon inspection of his books, Getz discovered that Welch had no sales in the month of November, with the exception of four sales at the beginning of the month. Getz asked a friend to call Welch and pose as a potential customer. Welch informed her that Urban's prices were more reasonable. A private investigator hired by Getz received the same information while posing as a customer. Getz later discovered that Welch had sent SP's daily rental logs to Urban. These logs contained the names of SP's tenants, the dates on which the rental contracts commenced, the terms of the rental obligations, and the number and size of the units rented. In addition, Urban prepared proposals for two of SP's biggest customers using information obtained from Welch. Both customers transferred their business to Urban. Evidence existed showing that the information contained in the daily rental logs was not known outside of SP's business. The physical copies of the logs were kept inside a filing cabinet, which was not accessible to the public. There was no publicly available way to ascertain the customers' names contained in these documents. There was also evidence that SP made an effort to keep this information secret. The information contained in the daily rental logs was valuable, as it would allow competitors to undercut SP's prices. Therefore, SP presented more than a scintilla of evidence to create a genuine issue of material fact as to whether the daily rental logs constituted trade secrets. In addition, the evidence showed that Urban improperly acquired SP's trade secrets through the actions of Welch, who violated her duties to SP. A fact-finder could reasonably infer that Urban sent Welch its vacancy reports in an effort to elicit SP's trade secrets. Moreover, SP presented evidence that Urban used its trade secrets for commercial purposes. Urban, with the help of Welch, contacted at least two of SP's customers and persuaded them to transfer their business to Urban. Finally, there was evidence of damages resulting from the actions of Welch and Urban. SP lost these customers and their monthly rental payments. Additionally, SP lost the value of its confidential information.

Manufacturer of high-tech biochemical filtering devices used in various manufacturing and other processes, fired a production supervisor, Yong "Jake" Zhang, for allegedly videotaping the company's trade secrets and confidential manufacturing processes.

Thu, 15 May 2008 23:18:16 -0500

The parties settled for $50,000 prior to trial. The settlement did not include an admission of guilt, as Zhang still maintains he did nothing wrong. Plaintiff's counsel reported that all of the settlement proceeds were donated to charity. Synder, Inc. sued Zhang, claiming he had misappropriated trade secrets. Synder alleged that Zhang gave the tapes and other documents containing trade secrets to a Chinese company, and that company got enough information from this transaction to attempt to replicate Synder's manufacturing facility. Zhang denied providing the Chinese company with Synder's trade secrets. He maintained that he did nothing wrong.

Man Gave Military Secrets To China

Wed, 14 May 2008 17:05:53 -0500

Jerry Markon A New Orleans businessman pleaded guilty to espionage yesterday, admitting that he gave the Chinese government highly sensitive military information he obtained from a former Defense Department official. Tai Shen Kuo, 58, said in court papers that he plied the official with gifts, cash and dinners to secure classified projections of U.S. military sales to Taiwan. He was paid $50,000 to pass the materials to his Chinese contact through e-mails and telephone calls to Beijing, the documents said. Kuo pleaded guilty in U.S. District Court in Alexandria to conspiracy to deliver national defense information to a foreign government. He faces up to life in prison when he is sentenced Aug. 8.

Craigslist counter-sues eBay for 'stealing corporate trade secrets'

Wed, 14 May 2008 16:56:56 -0500

James Quinn Craigslist, the classified advertising website, has accused eBay of stealing corporate trade secrets, in a counter-lawsuit that comes just three weeks after the online auction giant accused it of diluting its minority stake in the business. Craigslist has accused eBay of stealing corporate trade secrets, in a counter-lawsuit that comes just three weeks after the online auction giant accused it of diluting its minority stake in the business Craigslist chief executive Jim Buckmaster Craiglist accuses eBay not only of unfair competition and fraudulent business claims, but also of copyright infringement and using misleading advertising on Google - to run adverts for its rival Kijiji site that masqueraded as Craigslist adverts. The counter-suit comes in response to eBay's original lawsuit, filed in late April, which claimed that Craiglist held clandestine meetings in order to dilute eBay's 28.4pc stake in the business.

Fact issues whether appropriation of trade secrets had occurred precluded summary judgement

Sun, 11 May 2008 22:10:00 -0500

United States District Court, D. Connecticut. PANTERRA ENGINEERED PLASTICS, INC., Plaintiff, v. TRANSPORTATION SYSTEM SOLUTIONS, LLC, et al., Defendants. Civil Action No. 3:05-cv-01447 (VLB). March 27, 2008. Intellectual property holder brought action against corporate competitor and its officers claiming misappropriation of trade secrets, breach of fiduciary duty, violation of Connecticut statutes, conspiracy, and false advertising under Lanham Act. Competitor brought motion to dismiss for lack of personal jurisdiction and improper venue, or alternatively, to transfer. The District Court, 455 F.Supp.2d 104, Arterton, J., denied motion. Thereafter, defendants moved for summary judgment. Holdings: The District Court, Vanessa L. Bryant, J., held that: (1) fact issues whether appropriation of trade secrets had occurred precluded summary judgment under Connecticut Uniform Trade Secrets Act (CUTSA); (2) same issues precluded summary judgment that defendants had not engaged in false advertising, in violation of Lanham Act; and (3) same issues precluded summary judgment that holder had not suffered injury, as required for suit under Connecticut Unfair Trade Practices Act (CUTPA). Motion denied.

Civil remedy portion of Indiana's Racketeer Influenced and Corrupt Organizations statute is not preempted by Indiana Uniform Trade Secrets Act;

Thu, 08 May 2008 23:07:48 -0500

884 N.E.2d 294 (In 2008) Plaintiff company providing quality control services to manufacturers and suppliers brought action against competitor, its sister company, owners of sister company, and two former employees of plaintiff, asserting claims for misappropriation of trade secrets under the Indiana Uniform Trade Secrets Act (IUTSA) and Indiana's Racketeer Influenced and Corrupt Organizations (RICO) statute. The Superior Court, Marion County, Thomas J. Carroll, J., granted preliminary injunction to plaintiffs. Defendants filed interlocutory appeal. Holdings: The Court of Appeals, Bailey , J., held that: (1) as a matter of first impression, civil remedy portion of Indiana's Racketeer Influenced and Corrupt Organizations statute is not preempted by Indiana Uniform Trade Secrets Act; (2) preliminary injunction was warranted, under Indiana's RICO statute; (3) it was appropriate to subject sister corporation to the preliminary injunction; but (4) it was inappropriate to include a two-year time frame in the preliminary injunction; and (5) preliminary injunction was overbroad.

Iowa - Possibility of reverse engineering was not dispositive of issue.

Thu, 08 May 2008 23:00:34 -0500

From our friends at Jurisnotes.com Cemen Tech, Inc. v. Three D Industries, LLC (Iowa 5/2/08) CTI sued Three, Longnecker, Jones, Luhrs, Yelton, Dorman, and others for misappropriation of trade secrets and related claims. The trial court granted Three's motion for summary judgment on virtually all of CTI's claims and the Supreme Court of Iowa affirmed in part, reversed in part, and remanded. CTI is a manufacturer of mobile volumetric concrete mixers. Defendants Longnecker and Enos, through their business, Three, were interested in purchasing CTI. In 1999, Three sent a letter of intent to CTI requesting information regarding the business. CTI eventually provided Three with various documents, including strategic plans, financial statements, customer and supplier lists, and organizational charts. By 2001, it became clear that the purchase was not going to happen and CTI terminated Three's latest letter of intent, though discussions continued regarding the possible purchase of a portion of CTI business. In September 2001, Longnecker and Enos, through a third-party entity, submitted a letter of intent to CTI to purchase its "sludge" division. CTI apparently ignored this letter. By the end of 2001, the remaining employee defendants resigned from CTI and began working for Three developing volumetric concrete mixers. In 2002, Three exhibited a prototype cement mixer at a trade show closely resembling CTI's mixer.

WD Pa - Stored Communications Act preemption clause did not apply.

Thu, 08 May 2008 22:55:36 -0500

From our friends at Jurisnotes.com Ideal Aerosmith, Inc. v. Acutronic USA (WD Pa 4/23/08) Ideal sued Acutronic and others (collectively "Acutronic") for misappropriation of trade secrets and related claims. The court denied Acutronic's motion for judgment on the pleadings. Ideal briefly operated the business of a competitor, Carco Electronics, while Carco was in bankruptcy. In connection with its operation, Ideal hired Carco's employees and used Carco's email addresses. Carco was subsequently acquired by Acutronic. The former Carco employees hired by Ideal did not join Acutronic, but remained Ideal employees and were given new Ideal email addresses. Ideal alleges that despite these new email addresses, former Carco employees and third-parties doing business with Ideal inadvertently continued to send communications using the old Carco email addresses. According to Ideal, Acutronic, which now owned the Carco servers, caused the servers to redirect those email messages to an Acutronic server. Acutronic then read the messages, some of which allegedly contained Ideal trade secrets.

The final Intellectual Property show in the 13 part Summit TV series hosts Jeremy Sampson from Interbrand and Alan Lewis from Adams & Adams Attorneys on how to measure the value of intellectual property

Thu, 08 May 2008 22:03:28 -0500

- Click here to listen to the interview It’s on a comparative benchmarking basis. That is somewhat difficult to do with patents and trade secrets and the like - because people don’t expose or disclose what they’ve paid or bought if there’s an assignment, or the licence fee if there’s a licence. One methodology is as I said is the market approach, there is the royalty or the punitive royalty income stream approach where you turn around and say “if I was a patentee, how much would I charge you as a prospective licensee, and how much would you be prepared to pay to use my rights?” You could base it on the cost approach - how much was invested to get that technology?

Authorities arrested David A. Gamache, 45, of Bradenton, this week. They say he stole computer files from his employers that contained addresses and passwords, among other information.

Thu, 08 May 2008 22:01:30 -0500

Michael A. Scarcella BRADENTON — The owner of a computer company is accused of stealing trade secrets from a business he was working for, according to Manatee County sheriff’s reports. Authorities arrested David A. Gamache, 45, of Bradenton, this week. They say he stole computer files from his employers that contained addresses and passwords, among other information. He reportedly threatened to give the information to competing companies. Gamache was hired by Scoring System to refine their business model, sheriff’s deputies said. The victims said Gamache, owner of Syber Masters, a consulting firm, put the stolen files on a personal laptop. Authorities said the victims seized Gamache’s laptop as evidence. The victims estimated the value of the stolen information at $40 million, according to sheriff’s reports. A reported victim, Brunhilde Merker, is seeking a restraining order against Gamache, who is on state probation in Florida until 2018 for an investment scheme.

Tesla Motors sues competitor alleging theft of trade secrets

Thu, 08 May 2008 21:58:56 -0500

TERENCE CHEA SAN FRANCISCO—Tesla Motors Inc., a Silicon Valley company that makes electric cars, has filed suit against a competing company and its founders alleging they stole trade secrets to design a competing vehicle. San Carlos-based Tesla recently started shipping its first vehicle, a two-door electric sports car called the Tesla Roadster, which has generated excitement among environmentalists and auto enthusiasts. Last year, the company hired Fisker Coachbuild LLC, a well-known automotive design firm founded by Henrik Fisker and Bernhard Koehler, to help design the body and interior of Tesla's next vehicle, known as project White Star, a four-door sports sedan with a hybrid-electric engine. In the lawsuit filed Monday in San Mateo County Superior Court, Tesla claims that Fisker and Koehler fraudulently accepted the design contract to gain access to Tesla's trade secrets and proprietary engineering and design information so they could develop their own hybrid sports sedan. In a statement Tuesday, Fisker said, "We believe that the allegations set forth in the complaint are without merit and intend to defend ourselves vigorously." Tesla paid Fisker Coachbuild about $800,000 for its design services last year, but Tesla officials said the styling work was "substandard" and decided last fall not to use it, according to the lawsuit.

One cause of the predicament is that companies fear interns might leak data or trade secrets.

Mon, 05 May 2008 00:10:11 -0500

Aparna Kalra New Delhi: After a few on-campus visits to recruit summer interns at the Indian Institute of Management, or IIM, in Ahmedabad, financial services company Edelweiss Capital Ltd created such a buzz that the students invited the company for final job placements last year. That’s how important summer internships can be—to both employers and students. These days, most companies are using internships as a tryout for a full-time job. Internships establish their brand on campus, judge candidates in a more effective way than exams or interviews, and, in the best scenario, lead to a permanent job offer. A well-done summer job gets noticed even by competitors.

Managing expenses: trade secrets

Mon, 05 May 2008 00:08:03 -0500

Recent public sector scandals have brought expense management into the spotlight. So what's the best way to ensure your organisation doesn't get ripped off? More than 50 MPs have reportedly laid-off members of staff following the expenses scandal surrounding Tory MP, Derek Conway, who used his expenses to employ two of his sons as researchers earlier this year. Soon after, House of Commons Speaker, Michael Martin, was also accused of abusing his expenses.