Microwave Technology For Sale? Oops - That'll Get You Prison Time

Allen Cotten apparently worked for Genesis Microwave Inc. in El Dorado Hills, and admitted that beginning in February 2004 he began to steal plans, designs, parts and specifications for components known as logarithmic video amplifiers. The technology has military applications for radar jamming, guidance, countermeasures and locating enemy signals during combat.
Cotten sold trade secrets and offered them for sale to foreign governments and foreign military contractors through February 2006, prosecutors said; evidence and Cotten's statements indicated he sold or was seeking to sell parts and information for a total amount of $250,000.

Cotten has pleaded guilty to theft of trade secrets in U.S. District Court and admitted to a two-year scheme to steal and sell microwave technology, the local U.S. Attorney's office said in a news release. He faces up to 10 years in prison and a $250,000 fine.

The New Era of Cloak and Dagger in the U.S.

From Family Security Matters, an interesting article by Jim Kouri, who is currently vice-president of the National Association of Chiefs of Police.

He writes about the recent spate of economic espionage cases and particularly about what appear to be the concerted efforts by China to steal America's trade secrets.

D.C. Circuit Bars Air Force From Disclosing Contractor’s Pricing Information in Response to FOIA Request

From our brethren at the Unfair Business Practices Blog, a summary of an important DC Circuit decision on trade secrets in the context of a FOIA request from an unsuccessful bidder on a federal contract.

Nice Summary of the Boeing Case and it Larger Meaning

From The Conservative Voice, an excellent summary of the Boeing case initially reported by us here. The article also summarizes last week's economic espionage case out of New Orleans.

Trade Secrets at Risk in International Travel?

InfoWorld has just posted an interesting piece on the possibility that data is being obtained by U.S. Customs in the travel process and that trade secrets are at risk in these exchanges. We've not examined this issue yet on Womble Trade Secrets so we'd thought you should take a look at Mr. Cringely's interesting piece.

Boeing Engineer Arrested for Stealing Aerospace Trade Secrets for China

A former Boeing engineer was arrested on Monday on charges of stealing trade secrets for China related to several aerospace programs, including the Space Shuttle, the U.S. Justice Department said.

http://www.chicagotribune.com/business/chi-biz-boeing-space-shuttle-ba-spy-0211feb11,1,1242946.story

The Justice Department said that it has arrested a former Boeing Co. engineer on charges that he stole Boeing trade secrets related to several aerospace programs -- including the Space Shuttle -- on behalf of the Peoples Republic of China.The department said the arrest of 72-year-old Dongfan "Greg" Chung, of Orange, Calif. follows his indictment on eight counts of economic espionage and acting as an unregistered foreign agent for China.Chung is alleged to have taken and concealed Boeing trade secrets relating to the Space Shuttle, the C-17 military transport aircraft and the Delta IV rocket.

In a statement, the department said Chung, a native of China who is a naturalized U.S. citizen, held a "Secret" security clearance when he worked on the Space Shuttle program for Rockwell International and later, after Rockwell was acquired by Boeing in 1996, for Boeing.

Tom Cruise Scientology Video - A Religion's Trade Secret?

Boston University's The Daily Free Press is reporting that 200 protesters stood in front of Boston's Church of Scientology to protest recent actions of the church in allegedly threatening people with cease and desist letters in connection with a release of a confidential marketing video featuring Tom Cruise, seen here: http://gawker.com/5002269/the-cruise-indoctrination-video-scientology-tried-to-suppress.

They report that "Passing out homemade flyers and waving posters reading "Religion is Free, Scientology is Not" and "Trade Secrets are for Business, Not Religion," about 200 masked and bandanna-clad protesters stood at the intersection of Beacon and Hereford streets -- in front of the Church of Scientology -- despite the freezing drizzle yesterday.They call themselves Anonymous: They are either an uncommonly elaborate Internet prank or a grassroots collective of technologically inclined cyber activists. Either way, they are united in their distaste and distrust of the Church of Scientology. Anonymous's efforts have been largely organized through the Internet -- via the social networking site Facebook in particular -- and the group does not have a central figure head, executive board or even website. It formed about a month ago following the widely publicized leak of an internal promotional video for the Church featuring celebrity Scientologist Tom Cruise. The video was available online for a short time before the Church of Scientology sent out scores of cease-and-desist letters. One site, Gawker.com, said it will not take the video down because of its newsworthiness." As an editorial note, the protesters look like some of the cast in Cruise's movie "Eyes Wide Shut."

Womble Trade Secrets has not reviewed the cease-and-desist letters yet but we will attempt to obtain a copy and report back on the claims made in that letter. Until then, keep your eyes wide open on this one. We're not saying the Church of Scientology is engaged in a mission impossible by claiming this video is its trade secret but it is a novel claim by a church. A better claim might be that the video is copyrighted by the Church but even that might be risky business.

Trade Secrets All in the Head

Can you state a claim for a trade secrets case based solely on the fact that the person walked out with the trade secrets in his or her head? In Ohio at least, the answer is "yes."

From the Associated Press, via Dayton, Ohio television station, WDTN:

The Ohio Supreme Court ruled yesterday that memorizing a company's trade secrets is just as wrong as writing them down or copying them in some other format.

The court unanimously ordered a former employee of Al Minor & Associates to pay damages for memorizing a client list. The company sued Robert Martin, a pension analyst, when he left to start his own company in 2003. Martin was accused of taking 15 clients with him whose names he recalled from memory.

Justice Terrence O'Donnell said in the ruling that employees who leave their jobs inevitably have casual memories of contacts and things that occurred during their employment.
But he said that information is not protected.

For the more scholarly-minded, we are providing a link to the Ohio Supreme Court's opinion here.

Florida's VP Gables Sues Washington's Cobalt For Trade Secret Theft

Fox Business is reporting that VP Gables, LLC (formerly known as VinPlus, LLC), a previous provider of data management solutions, today announced that it has filed a complaint against The Cobalt Group, Inc., a provider of automotive marketing services headquartered in Seattle, Washington. VP Gables is seeking damages from Cobalt based on allegations that Cobalt violated obligations to VP Gables under the terms of a non- disclosure agreement, and made wrongful use of VP Gables' propriety information.

Specific counts against Cobalt include: breach of contract; the misappropriation of VP Gables' trade secrets in violation of the Florida Uniform Trade Secrets Act; tortious interference with business relations; and violation of the Florida Deceptive and Unfair Trade Practices Act. The complaint was filed in the United States District Court in the Southern District of Florida.

What's interesting in this report is that VP Gables is no longer a provider of data management solutions - but they're suing over the loss of rights in that area relating to their former involvement with it. As the report goes on to acknowledge: "Headquartered in Coral Gables, FL, VP Gables, LLC (f/k/a VinPlus, LLC) was a provider of data management solutions and services to the automotive sector including OEMs; Dealers; and other companies in the automotive retail and supply chain. Its state-of-the-art platform DataWareextracted data from the dealers' management systems and distributed that data in a consistent and secure manner to its clients. VP Gables LLC sold all of its assets, including DataWare, in May 2007 to the Netlink Software Group headquartered in Southfield, MI."

So - they must be arguing that their sale of assets to Netlink was impaired by this former breach. Interesting. We'll keep our eyes on this one for you.

NFL and Trade Secrets

This posting follows up on Todd's from yesterday:

The wheels are coming off the economy and we're in a protracted war in Iraq and so Congress is taking the bull by the horns and investigating . . . possible cheating in the NFL.

Now Sporting News, too, weighs in with an article indicating that the main allegations in "Spygate" -- the contention that the New England Patriots may have improperly taped the defensive sideline signals and practices of their opponents -- may violate the federal Economic Espionage Act.

The idea here is that the items "stolen," i.e. knowledge of an opponents plans in a sporting event, could fit the definition of trade secrets. The EEA, of course, is a criminal statute and the thought of Pats coach Bill Belichik behind bars is undoubtedly attractive to Jets fans.

All of this, of course, seems highly unlikely, but still has the prospect to embarrass the Patriots and the NFL.

What's next? A prosecution of a runner at second base in a baseball game who "steals" the catcher's signals?

Oh well, it's not like we've not got anything more important to worry about.

Did Bill Belichick and the Patriots' Video Guy Violate the Economic Espionage Act?

Did any of you know that The Sporting News has a legal consultant? Well, we didn't either. His name is Mike Florio and he's just posted a fascinating idea on the blog - that the Spygate actions of New England Patriots coach Bill Belichick may have violated the Economic Espionage Act of 1996. Hmmm - maybe the hand signals of a play are a trade secret. Never thought of that. They're a compilation of information and symbols, are technical in nature and relate to technical plays, they are valuable in that they're not known by others, teams use reasonable means to protect them, and teams get the crap kicked out of them (e.g., damaged) if they are stolen or lost.

Florio suggests: "As the media, the NFL and Congress commence the process of determining whether a video employee fired five years ago can prove the Patriots' video operation went far enough to potentially compromise the outcome of an NFL championship, a possibility exists that the federal government will launch an investigation into whether the Patriots took any action that violated the Economic Espionage Act.

Signed into law by President Bill Clinton in 1996, the Economic Espionage Act makes the theft of trade secrets a federal offense. Without getting into the nuts and bolts of the applicable legal mumbo-jumbo, 18 U.S.C. § 1832 makes it a criminal act to steal, take, carry away or obtain by fraud or deception what 18 U.S.C § 1839 defines as a "trade secret."

It's a broad definition, and, as a practical matter, the question of whether a pro football team's game plan constitutes a "trade secret" under this law is something that would be sorted out after a grand jury hands up indictments.

Belichick, ex-Patriots videographer Matt Walsh and employees throughout the Patriots' organization could be required to testify under oath. And like the investigation into the Valerie Plame situation, there could be prosecutions for perjury even if there ultimately is no actual prosecution for the theft of trade secrets.

And that's the most potentially damaging aspect of any investigation that might be launched by United States Attorneys in Louisiana (site of Super Bowl 36), Texas (Super Bowl 38) and/or Florida (Super Bowl 39).

It's not that Belichick or others might face up to 10 years in prison or that the organization might have to pay up to $5 million in fines. It's that such an investigation would provide an unwelcome vehicle for the truth to come out.

An internal NFL investigation with evidence that self-destructs or a dog-and-senator show for ESPN and/or C-SPAN won't necessarily result in the general public knowing the truth, whatever that truth might be. A criminal investigation commandeered by a federal investigator very well could do just that -- and anyone who tries to obstruct that effort might want to talk to Martha Stewart or Scooter Libby before doing so.

Let's be clear. I'm not saying that such an investigation should occur. But it certainly could.
If the NFL office does a thorough and transparent investigation that is forthcoming and complete, it could satisfy the congressmen and general public. NFL commissioner Roger Goodell's tactic in the first round of Spygate -- "everything is fine, and by the way we've destroyed the evidence" -- won't suffice anymore."

Fascinating application of trade secrets law to a football game and some nefarious signal thefts.

Mebane (NC) Firm Accuses Scientist of Taking Trade Secrets

From the Burlington (NC) Times News, and posted without editorial comment since it's Todd's case.