The CFAA Debuts In The Big Leagues

images Accessing someone’s computer without authorization is a federal crime under the Computer Fraud and Abuse Act (CFAA). This past week, several news sources have reported that the FBI and Justice Department are investigating executives of the St. Louis Cardinals for allegedly violating the CFAA by hacking into the Houston Astros’ internal computer network. It’s suspected that the Cardinals’ front office were trying to steal the Astros’ player personnel data and other proprietary information. According to the New York Times:

Internal discussions about trades, proprietary statistics and scouting reports were compromised . . . . Law enforcement officials believe the hacking was executed by vengeful front-office employees for the Cardinals hoping to wreak havoc on the work of Jeff Luhnow, the Astros’ general manager, who had been a successful and polarizing executive with the Cardinals until 2011.

Investigators told the New York Times that the Cardinals front office “examined a master list of passwords used by Mr. Luhnow and other officials” and then “used those passwords to gain access to the Astros’ network.”

This internal network contained highly valuable information. The New York Times cited a Bloomberg Business article (titled Extreme Moneyball) that described the database as housing the Astros’ “collective baseball knowledge,” which takes a series of variables and weighs them “according to the values determined by the team’s statisticians, physicist, doctors, scouts and coaches.”

Many businesses are now quite familiar with this type of illegal activity—though it may be the first reported case of corporate espionage involving two professional sports team. But the way that the Cardinals’ front office allegedly accessed the Astros’ computer network underscores specific measures that companies should take to address ever-present risks when employees switch teams.

Controlling Passwords. Companies should already be enforcing a password-duration policy that requires employees to change their computer passwords every few months. But this investigation highlights that, during the on-boarding process, companies should prohibit newly-hired employees from recycling passwords that were used to access their former employer’s computer network. Especially when those former employers are direct competitors.

Monitoring Access. Company network administrators should be utilizing the auditing features built into their computer networks’ operating systems. These audits can alert administrators to abnormal file access or log-in patterns that can help uncover suspicious activity. And there should be an open line of communication between these administrators and executives about potentially suspicious activity.

Understanding Value/Liability. Companies need to start fostering a corporate culture where employees understand the value of keeping business information confidential (as well as the potential liability of attempting to use or steal another competitor’s confidential business information). In addition to confidentiality agreements and policies, regular training on what the company expects will go a long way.

Contacting Law Enforcement. Companies should consider whether contacting law enforcement officials makes the most business sense. The Astros contacted authorities after its information was posted on Deadspin, but that was nearly a year ago. Companies can also pursue civil litigation in state or federal courts—where they may be able to receive quicker business relief through an injunction.

These are just a few suggested measures. But the broader point is that companies must remain proactive, vigilant, and creative when it comes to protecting their business information.

On the Hill: Congress “Attacks” Cyber-Security

By Jones Walker LLP on May 5, 2015 Posted in Confidential Information, Congress, Cybersecurity, Data Protection, Trade Secret

download Cyber-security and data breaches are hot-button issues that recently received some well-deserved attention from the federal government. Last year we posted about the FBI’s efforts to combat economic espionage and trade secret theft. At that time, the Assistant Director of the FBI—who was testifying before a Senate subcommittee—offered salient advice on how American companies could protect themselves from trade-secret theft and insider threats. But the Assistant Director noted an important trend: companies who learn about trade secret theft often pursue private negotiations or civil litigation—without alerting law enforcement. The FBI wanted this to change:

The FBI is committed to ensuring companies have an established line of communication to report concerns about possible economic espionage or trade secret theft to law enforcement. But the FBI must assure companies the government will work to protect their proprietary information from disclosure during prosecution, so that more companies are willing to come forward and report concerns about possible trade secret theft.

Nearly a year after that call for change—and after a spate of high-profile data breaches—Congress took heed of the FBI’s advice by passing measures to increase the public-private flow of information about hacking attempts. Lawmakers, government officials, and most industry groups agree that more data will help both sides better understand their attackers and bolster network defenses that have been repeatedly compromised. The Chairman of the House Homeland Security Committee recently explained why such comprehensive cyber-security laws are needed:

Make no mistake. We are in the middle of a silent crisis. At this very moment, our nation’s businesses are being robbed and sensitive government information is being stolen.

THE LEGISLATION. The reluctance that many American companies have with sharing internal data about cyber-attacks has greatly stymied previous efforts to fight the theft of personal information and state-sponsored campaigns to steal American intellectual property. But two bills recently passed by the House are intended to quell these fears by making it easier for private companies to share information about cyber-security threats among themselves and with the government without fear of lawsuits.

On April 22, 2015, The Protecting Cyber Networks Act passed with overwhelming support from House Intelligence Committee leaders, and members from both sides of the aisle. The bill—which is similar to a measure approved by the Senate Intelligence Committee and headed for that chamber’s floor this spring—would give companies liability protections when sharing cyber threat data with government civilian agencies, such as the Treasury or Commerce Departments.

Similarly, on April 23, 2015 the House passed the National Cyber-security Protection Advancement Act of 2015, which extends liability protections to companies that follow certain procedures and share information about cyber-attacks with the U.S. Department of Homeland Security.

These bills are two of three measures that Congress must pass to get a comprehensive cyber info-sharing law in place. Under both bills as currently written, companies that share data-breach information with the government would receive liability protection only if that data is stripped of all personal information on two separate occasions—once by the company before it gives the data to the government and another round of cleansing by the government agency that receives the data. These bills will now be merged and sent to the Senate, where similar legislation has bipartisan support.

THE IMPACT. Congress has contemplated various forms of this law for nearly five years. But the recent computer attacks on corporate giants like Sony Pictures Entertainment, Target, Anthem, and JPMorgan Chase—which exposed confidential business information and compromised credit card data, Social Security numbers, and personal health information—has changed the political equation and places the onus on Congress to act. Whether or not these two house bills become law, the Committee of Homeland Security Chairman has made clear that cyber-security will remain a priority for Congress:

Cyber criminals, hacktivists, and nation-states will never stop targeting Americans’ private information and American companies’ and government networks to damage, disturb and steal intellectual property and U.S. Government secrets. One of the greatest cyber threats to the homeland is the weakness of our power grids, and energy and water systems. A successful cyber attack on our critical infrastructure could cripple our economy. Congress must take action to defend America’s vital digital networks and help American businesses better protect themselves.

Should the House and Senate come together on final legislation, it would be the federal government’s most aggressive response. And as these bills go to senate and the white house, we will keep you updated.

Huawei’s Two Bites At The Apple To Dismiss T-Mobile’s Trade Secret Claims

By Jones Walker LLP on April 28, 2015 Posted in Trade Secret

In a previous post, we examined T-Mobile’s complaint against Chinese smartphone marker Huawei and its US subsidiary, in which T-Mobile accused Huawei employees of stealing trade secrets relating to a mobile phone testing robot named “Tappy”.

T-Mobile filed its complaint in September 2014, and the following month Huawei’s US subsidiary responded with a motion to dismiss. Huawei USA argued the complaint failed to identify any information that qualified as a trade secret, urging the Court to consider three published patent applications and a video featuring Tappy (see below). Huawei also challenged T-Mobile’s claim that it created the robot, pointing out the conspicuous Epson logo on one of Tappy’s components.

https://youtube.com/watch?v=mv69ZxKOFSw

T-Mobile’s opposition disputed Huawei’s version of the facts and argued that it was improper to consider papers outside of the complaint at the motion to dismiss stage. It also accused Huawei of failing to distinguish between its burden of, on the one hand, identifying its trade secrets, a pleading requirement, and, on the other hand, proving that the information was in fact secret, a question of fact requiring discovery. T-Mobile further stressed that Epson only created one component of its robot and, even when combining known components, trade secret protection may extend to the combination itself, if secret.

By November 2014 briefing on Huawei USA’s motion to dismiss was complete. For five months no substantive motions were filed, and the Court had not yet ruled on Huawei USA’s motion.

Then, last week, on April 22, 2015, the Chinese Huawei parent company filed its own motion to dismiss. It asserted a new argument—lack of personal jurisdiction—but it also adopted and expanded on its subsidiary’s arguments on the merits. It attached to its motion foreign patent applications corresponding to the ones its subsidiary previously identified and several media reports on various aspects of T-Mobile’s robot and testing lab, some of which were not included in the earlier motion to dismiss.

Considering that the same counsel represents both Huawei’s parent and subsidiary companies, it appears Huawei may get a second chance to brief its earlier motion to dismiss before the Court issues its ruling. T-Mobile may cry foul, but it is more likely to attack Huawei’s new evidence and arguments on the same grounds as its previous opposition.

We’ll have more when the Court issues its ruling. Stay posted.

Federal Court Invalidates Tennessee Choice-of-Law Clause in Louisiana Employee’s Non-Compete

By Jones Walker LLP on April 2, 2015 Posted in Non-Compete

The federal district for the Western District of Louisiana added to the growing list of decisions that have applied Louisiana’s non-compete statute to invalidate choice-of-law or forum-selection clauses. These decisions have struck down clauses that, on their faces, would have required Louisiana employees of non-Louisiana employers to litigate under the law or in the courts of some other state. The decisions should also serve as a reminder that employers should not take a one-size-fits-all approach when drafting non-competes for employees residing in multiple states.

The Ruling. Louisiana’s non-compete statute, La. R.S. 23:921, invalidates a choice-of-law or a forum-selection clause in an employment agreement unless the employee agrees to the clause or expressly ratifies it after the dispute arises. After leaving their employment, employees generally do not ratify these clauses made at the start of the employment relationship — unless of course the chosen law or forum favors the employee. This scenario played out in Bell v. L. H. Brown Company, Inc., No. 14-2772 (W.D. La. 2015), where a Louisiana employee was able to avoid complying with his non-compete.

Charles Bell was a recently-departed employee who sued his former employer in Louisiana state court, asking for a declaration that the non-compete agreement was invalid under Louisiana law. After his former employer removed the case to federal court, Mr. Bell raised these same arguments. The pivotal question for the court to decide was whether Louisiana law or Tennessee law applied — since the non-compete agreement included a Tennessee choice-of-law clause.

The facts did not present an uncommon scenario: the employer was located in one state while Mr. Bell resided in another. The employer’s principal place of business was in Memphis, Tennessee, and Mr. Bell signed the non-compete agreement, knowing that it called for Tennessee law to govern his relationship with the company. The Tennessee employer argued that the non-compete complied with Tennessee law and emphasized that the parties formed the employment relationship in Memphis when Mr. Bell personally delivered the agreement with his signature to the company’s Memphis headquarters (where the employer then signed it); Mr. Bell had been the only company employee in Louisiana; Mr. Bell received his company vehicle, telephone, and computer from the Memphis office; and Mr. Bell attended work-related meetings in Tennessee.

Notwithstanding the many contacts with Tennessee, the court refused to enforce the parties’ choice of Tennessee law. As a court sitting in Louisiana, the federal judge applied Louisiana’s choice-of-law rules. The court found that Louisiana’s public policy that Louisiana law and Louisiana courts must determine the validity of non-competes entered into by Louisiana employees was so strong that the policy outweighed the other considerations in the choice-of-law analysis.

The court in Bell v. L. H. Brown went on to invalidate the non-compete agreement. Louisiana law requires that non-compete agreements limit their geographical scope to “a specified parish or parishes [i.e., county or counties], or municipality or municipalities, or parts thereof.” The non-compete agreement did not contain the requisite geographic restriction which, according to the employer, Tennessee law would not have imposed.

The Take–Aways. Employers must be aware of each potential state law that could affect their non-competes with employees working or living in multiple states. This case shows that a Louisiana court will usually apply Louisiana’s non-compete laws to Louisiana employees — even if the non-compete calls for another state’s law and even if the non-compete (drafted to comply with the law that the parties selected in their agreement) would be invalid under Louisiana law. This case also teaches that employers should consider quickly filing suit in their preferred forum if they question whether their non-compete complies with the employee’s home-state laws. Conversely, an employee who expects his or her former employer to try to enforce a non-compete agreement should consider prompt legal action as well in his or her own state.

Update: Comfortable With Your Non-Compete?

By Jason Culotta on March 23, 2015 Posted in Non-Compete

We previously analyzed a Pennsylvania appellate court decision, which held that a non-compete agreement was unenforceable for lack of consideration. The case, Socko v. Mid-Atlantic Systems of CPA, Inc., is now before the Pennsylvania Supreme Court.

The Court must decide whether Pennsylvania law allows parties to waive the consideration requirement for non-competes through an express agreement.

On the one hand, Pennsylvania’s Uniform Written Obligations Act (“UWOA”) permits parties to a written agreement to waive their rights to challenge the validity of the contract based on lack of consideration. On the other hand, valuable consideration is necessary for a valid non-compete.

Both parties concede that valuable consideration was not exchanged for the non-compete at issue. But the non-compete explicitly states that the parties “intend to be legally bound” by the restrictive covenants.

The employer argues that the UWOA’s waiver provision should apply to non-competes. And because the agreement incorporates the waiver language — “intend to be legally bound” — the non-compete is enforceable despite the lack of valuable consideration. Conversely, the employee urges the Court to affirm the appellate court’s holding — that is, the consideration requirement for non-competes cannot be waived.

We will continue to monitor this case, and will post an update as soon as the Pennsylvania Supreme Court issues its ruling. But regardless of the Court’s decision, this case still serves as a reminder: employers need to be proactive and consistently ensure that their non-competes have the greatest chance of being enforceable.

“Professional” Distinction: A New Approach To Bans On Non-Competes?

By Jones Walker LLP on March 12, 2015 Posted in Non-Compete

A recent Florida appellate court decision may alter long-standing prohibitions against non-compete agreements for certain professionals. In AmSurg New Port Richey FL Inc. v. Vangara, the court upheld a non-compete, finding that it prohibited a physician from operating a rival business—but not from practicing medicine. This was the pivotal distinction for saving the non-compete, and other state courts could adopt this same logic.

Background: In 2007, Dr. Vangara and his business partners entered into a joint venture agreement with AmSurg New Port Richey FL, Inc. (AmSurg), to form the New Port Richey FL Multi–Specialty ASC, LLC (Multi–Specialty ASC)—an ambulatory surgical center. The joint-venture agreement was governed by Tennessee law and included a non-compete. By its terms, the restrictive covenants prohibited Dr. Vangara from having “any financial interest in any business or entity competing or planning to compete with the [Multi-Specialty ASC].”

But Dr. Vangara failed to comply with this covenant. In 2010, AmSurg learned that Dr. Vangara owned and operated a competing ambulatory surgery business, and after multiple cease-and-desist requests, Dr. Vangara refused to stop. AmSurg finally responded by suing Dr. Vangara for breach of contract and various other business torts.

Rationale: At the trial court level, Dr. Vangara filed a summary judgment motion, arguing that the non-compete was invalid as a matter of law. The trial court agreed. It found that the non-compete was inimical to Tennessee’s public policy, and therefore unenforceable. The trial court relied on a Tennessee Supreme Court decision that prohibited most contracts that restrict a doctor’s right to freely practice medicine.

In that case, a medical clinic sued to enforce a non-compete that prevented a physician from practicing medicine within a twenty-five mile radius. Finding that the non-compete was unenforceable as a matter of public policy, the Tennessee Supreme Court placed more value on public interest considerations—such as affordable healthcare and a patient’s fundamental right to freely choose physicians—rather than the specific terms of the contract. These same concerns guided the trial court’s refusal to enforce Dr. Vangara’s non-compete.

On appeal, the court took a narrower interpretation of the Tennessee Supreme Court decision. It distinguished between “practicing medicine” and “operating a competing business.” The court reasoned that the joint-venture agreement only prevented Dr. Vangara from having ownership interests in competing businesses—not from practicing medicine. The court pointed out that the non-compete specifically provided that Dr. Vangara was “not prevent[ed] from engaging in his … profession, the practice of medicine.” Because Dr. Vangara could freely practice medicine without violating the joint-venture agreement, the court reversed the summary judgment previously entered in Dr. Vangara’s favor.

Take Away: In states that prohibit non-competes for certain professions based on public policy concerns, this court’s distinction—between “practicing” a profession and “owning” a competing business within that profession—could limit the scope of those non-compete bans. Companies should thus consider making similar distinctions when drafting non-competes for traditionally-protected professionals.

Federal Arbitration Act Preempts Louisiana’s Non-Compete Statute

By Jones Walker LLP on November 20, 2014 Posted in Non-Compete

Eastern_district_Lousiana_seal_v1_AG_126px_0

The U.S. District Court for the Eastern District of Louisiana recently held that the Federal Arbitration Act preempts Louisiana’s non-compete statute (La. R.S. 23:921). Among other things, this statute invalidates forum selection clauses in employment agreements unless the employee agrees to or expressly ratifies the clause after the incident that gives rise to the dispute. Though the statute expresses a strong public policy of Louisiana, the Eastern District found that federal courts must enforce otherwise valid arbitration clauses that select a particular forum—even if the clauses violate Louisiana’s non-compete statute.

Background. In Sherman v. RK Restaurant Holdings, Inc., No. 13-6054 (E.D. La. 2014), a former employee sued his former employer in state court in New Orleans, where the employee had worked at the employer’s restaurant. The employer removed the case to the Eastern District, and then moved to stay the lawsuit pending arbitration. The employer claimed that an arbitration clause in the employment agreement required that the parties arbitrate their dispute in either Lufkin or Nacogdoches, Texas.

In response, the employee argued that Lufkin and Nacogdoches, Texas, were each more than 350 miles away from his home in New Orleans and that enforcing the arbitration clause would be unconscionable. The employee also argued that the clause was invalid under La. R.S. 23:921 because he had not agreed to or ratified the forum selection clause after the dispute arose. The employee pointed out that the United States Supreme Court had said in M/S Bremen v. Zapata Off–Shore Company, 407 U.S. 1 (1972) that contractual forum selection clauses “should be held unenforceable if enforcement would contravene a strong public policy of the forum in which the suit is brought.” According to the employee, Louisiana has such a policy, expressed in La. R.S. 23:921.

Rationale. The Eastern District ultimately found that the Federal Arbitration Act preempted La. R.S. 23:921 and required the court to enforce the arbitration agreement as written.

The court agreed that the arbitration clause “contains a forum selection clause that violates La. R.S. 23:921” because it calls for a Texas forum. But the Federal Arbitration Act says that an arbitration clause in a contract involving interstate commerce “shall be valid, irrevocable, and enforceable, save upon such grounds exist at law or in equity for the revocation of any contract.” Thus, the court noted, “as a matter of federal law, arbitration agreements and clauses are to be enforced unless they are invalid under principles of state law that govern all contracts.”

From there, the court concluded that the arbitration clause would be valid under general contract law principles in Louisiana. Consequently, the FAA required the court to enforce the arbitration clause, notwithstanding its conflict with La. R.S. 23:921.

The Take–Away. Louisiana has a strong public policy that limits the enforceability of forum selection clauses in employment agreements. An employer who expects to be able to use a non-Louisiana forum to enforce a non-compete agreement or another employment-related agreement with a Louisiana employee may find its efforts blocked by La. R.S. 23:921. However, an otherwise valid arbitration clause covered by the FAA may be enforceable, even if it would violate the restrictions in La. R.S. 23:921 on forum selection clauses.

Forum Selection Clause Causes Roadblock In Trade Secret Case

By PJ Kee on November 13, 2014 Posted in Confidential Information, NDAs, Trade Secret, Uncategorized

StopSign The recent decision in Wellogix, Inc. v. SAP America, Inc., No. 14-0741 (S.D. Tex. Nov. 10, 2014), demonstrates that federal courts can rely on contractual forum selection clauses to dismiss or transfer trade secret theft cases. It’s a reminder to weigh how these clauses could impact litigation strategies and to consider the specific language negotiated during contract talks.

Background: Wellogix and SAP AG/SAP America, Inc. (SAP) entered into a cooperative relationship to develop software for oil and gas operators. That relationship soured shortly after a client pitch. Wellogix, who had shared its trade secret technology with SAP through a cooperation agreement, believed that SAP misappropriated those trade secrets to develop software solutions for a client—without notifying Wellogix and excluding Wellogix from the deal.

In 2008, Wellogix sued SAP (and the companies who benefited from SAP’s alleged misconduct) for breach of contract, trade secret theft, and various other business torts. But Wellogix’s claims against SAP were dismissed because the cooperation agreement contained a forum selection clause that called for a German forum. Wellogix could not have been too upset, though, since its trade secret claim against a co-defendant resulted in a multi-million-dollar jury verdict.

A dispute between SAP and Wellogix nevertheless reemerged in 2010. SAP sued Wellogix, seeking a judgment concerning Wellogix’s patents. Wellogix responded by filing counterclaims—reasserting its trade secret theft claims previously dismissed in 2008. SAP opposed the counterclaims and sought to dismiss them based on the forum selection clause relied on in the 2008 litigation.

Rationale: The court first considered whether SAP waived its right to enforce the forum selection clause by bringing the patent action. After examining choice-of-law questions and various approaches to waiver, the court reasoned that SAP had not waived its right to enforce the clause, even though it had sued Wellogix in the Texas court.

The court then moved to the ultimate question—whether the forum selection clause applied to Wellogix’s trade secret claims. The court focused on the clause’s language and found that, under federal law, it must be construed broadly to encompass both contract claims and trade secret claims. Rather than using narrow language—like disputes “arising out of” the contract—the cooperation agreement used the phrase— disputes “arising in connection with” the contract. The court noted that this phrase reaches “every dispute between the parties having a significant relationship to the contract and all disputes having their origin or genesis in the contract.” Because the trade secrets were shared through the cooperation agreement, the court reasoned that Wellogix’s claims had a significant relationship to and stemmed from the cooperation agreement. And thus, the forum selection clause applied to Wellogix’s trade secret claims.

But that did not end the court’s analysis. Since the clause called for a non-federal forum, the court could not simply “transfer” the case. That is, the court could only dismiss it. And in Atlantic Marine Construction Co., Inc., the Supreme Court recently instructed lower courts confronted with this scenario to undertake a traditional forum non conveniens analysis to decide whether dismissal is appropriate. That’s what the court did and ultimately dismissed the case—with the caveat that it “may reassert jurisdiction upon timely notification if the courts of Germany refuse to accept jurisdiction.”

Take Away: The decision reminds us that forum selection clauses can significantly impact trade secret litigation and strategy. It also underscores the need to seriously consider a forum selection clause’s language during contract negotiations—focusing specifically on how narrowly or broadly a court will interpret phrases like “disputes arising out of” as opposed to “disputes arising in connection with.”

Chinese Company Steals T-Mobile’s “Tappy” Robot Tech, Complaint Alleges

By Jones Walker LLP on September 19, 2014 Posted in Trade Secret

Tappy Key takeaway: Where appropriate, confidentiality agreements should include promises not to reverse engineer the disclosing party’s technology.

Meet “Tappy”, the mobile phone testing robot. Designed by T-Mobile’s Bellevue, Washington, labs in 2006, its mechanical “finger” mimics user inputs for mobile phones. Tappy helps T-Mobile model how users interact with mobile phones, replicating days or weeks of use in a few hours of testing. T-Mobile claims that testing mobile phones before they’re released helps improve their quality, decreasing the number of returns and unhappy T-Mobile customers.

T-Mobile keeps Tappy in a secure testing lab at its offices in Bellevue, Washington. Based on contractual relationships between T-Mobile and Chinese smart phone maker Huawei—requiring Huawei to maintain the secrecy of T-Mobile’s intellectual property and to refrain from attempting to reverse engineer or photograph Tappy—some of Huawei employees had security clearance to access T-Mobile’s labs.

T-Mobile now accuses Huawei of stealing its trade secrets in Tappy’s design and software, according to a complaint T-Mobile filed with a Federal Court in Seattle in early September. Huawei’s allegedly unsuccessful efforts to create its own mobile phone testing robot led it to steal T-Mobile’s robot technology.

T-Mobile alleges that Huawei’s employees engaged in serious misconduct. For instance, T-Mobile claims that two Huawei employees, who had access to the lab, allowed a member of Huawei’s Test Systems R&D team in China to enter the lab, even though he had no permission from T-Mobile to do so. After T-Mobile asked this R&D team member to leave, the two Huawei employees then helped him reenter the lab the next day to photograph Tappy—despite T-Mobile’s ban on lab photography. T-Mobile also alleges that another Huawei employee stole an “end effector” (a key component of Tappy), lied about knowing its whereabouts, and used it in a conference call with Huawei’s R&D team, who were intent on learning more about Tappy’s robot finger and tip. T-Mobile also accuses Huawei employees of stealing Tappy’s operating software.

T-Mobile’s primary claims are theft of trade secrets, breach of contract, and unjust enrichment. Interestingly, T-Mobile also claims that several aspects of the robot are patented or patent-pending. If that’s true, then it may not have trade secret protection in information to the extent it’s published in T-Mobile’s patent applications, because that publicly-available information may no longer be considered a “secret.” On the other hand, it would be surprising for Huawei to have gone to such lengths to obtain information about T-Mobile’s robot if the desired information was already published. In any event, if the allegations in the complaint are true, Huawei may be liable for breaking its promise not to reverse engineer T-Mobile’s robot.

This complaint serves as a caution. Companies should ensure that their confidentiality agreements include prohibitions on reverse engineering, if they plan to disclose technology secrets to partners or vendors.

Protecting Trade Secrets Furnished To The Government

By W. Whitaker Rayner on July 29, 2014 Posted in Public Records, Trade Secret, Uncategorized

Picture this situation: your company is submitting a bid on a public contract, whether a technology acquisition, software development project, construction project, insurance quote, or financial services contract, to name but a few. Or picture responding to state and federal regulatory authorities that require disclosing company information concerning approval and licensing of your gaming establishment or approval of your oil and gas exploration project. Then also picture a legal framework that requires governmental agencies, whether state or federal, to disclose public records to all who ask—even competitors.

Essentially, your company has just disclosed proprietary information that is not normally open to the public, and could include sales margins or profits, personnel lists, undisclosed proprietary technology, customer lists and supplier information, to name but a few. And those governmental agencies could be required to disclose that proprietary information to anyone who requests it.

This is not just a mental exercise.

The last few years have been marked by increases in businesses seeking to obtain information on their competitors by filing public record requests. Companies have found that seeking such public documentation is a relatively inexpensive and easy way to scout out their competitors, requesting production of all competitor’s documents filed with public entities.

What, if anything, can be done to protect your confidential and proprietary information from disclosure to the public or other entities? Fortunately, state and federal law typically provide for certain levels of protection for third party trade secrets. But such protection in some cases requires court involvement and litigation expense in order to achieve such protection. Continue Reading