BLOGS: Trade Secrets Blog

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Thursday, January 29, 2009, 1/29/2009 08:33:00 AM

Federal Indictments in Eaton Aerospace-Frisby Trade Secrets Case

From the Jackson (MS) Clarion-Ledger a story that follows up on our earlier postings (going back to 2006) here, here, here and here concerning the Eaton Aerospace-Frisby trade secrets case.

A third criminal indictment has now been filed against five former Eaton Aerospace engineers on charges of conspiracy to defraud the United States and possession of trade secrets.

According to the story, the trial of Rodney Case, Kevin Clark, Mike Fulton, Douglas Murphy and James Ward had been set for April 13 on a conspiracy-to-defraud charge. The new indictment, however, may affect that date.

In April 2008, Mississippi federal judge William Barbour Jr. threw out the majority of the charges in the old indictment, saying the charges of one count of conspiracy to defraud the United States, two counts of theft of trade secrets and two counts of wire fraud were unconstitutionally vague.

He also tossed out two other counts involving theft of trade secrets, saying they were barred by the statute of limitations. The Fifth Circuit denied the government’s appeal.

Not surprisingly, the lawyer for the defendants is contending the new indictment is nothing but an attempted end-run around that earlier ruling.

The Clarion-Ledger states that the five engineers initially were accused of stealing secrets from Mississippi Eaton Aerospace and of taking them to Frisby Aerospace in Clemmons, North Carolina, where they started working in January 2002. (Frisby now is known as Triumph Actuation Systems.)

Wednesday, January 28, 2009, 1/28/2009 01:39:00 PM

IBM and Papermaster (er, Apple) Settle - Papermaster Permitted to Commence Work for Apple in April, 2009

By Todd
Apple just announced that 25-year IBM vet Mark Papermaster will start work as head of hardware engineering for the iPhone and iPod effort on April 24. According to Apple, Papermaster and IBM have settled the legal spat that occurred when Big Blue sued him for violating the non-compete clause of his contract in taking the job with Apple late last year. No details on the terms of the settlement were announced, and Apple spokesman Steve Dowling didn’t comment as to whether the settlement will limit what Papermaster can do for Apple. Here is the full release:

Mark Papermaster to Begin at Apple as Senior Vice President of Devices Hardware Engineering on April 24 CUPERTINO, California—January 27, 2009—Apple® today announced that Mark Papermaster will be coming to Apple as senior vice president of Devices Hardware Engineering, reporting to Apple CEO Steve Jobs, on April 24. Papermaster, who comes to Apple from IBM, will lead Apple’s iPod® and iPhone™ hardware engineering teams. The litigation between IBM and Mark Papermaster has been resolved.

Friday, January 23, 2009, 1/23/2009 11:12:00 AM

SkinMedica Files Trade Secrets Action Against Histogen Alleging Theft of Cosmeceutical Ideas

By Todd
We'd never heard of the term "cosmeceuticals" before so we thought we'd let you in on this story:

San Diego-based SkinMedica, which develops cosmeceuticals for the skin care market, said today that it has filed a patent and trade secret action against competitors Histogen,Inc., Histogen Aesthetics, LLC, and Dr. Gail Naughton, founder, President, and CEO of Histogen. According to SkinMedica, those firms are infringing on two patents held by the firm, U.S. Patents 6,372,494 and 7,118,746.

SkinMedica said that it is seeking relief for infringement on the patents and also for misappropriation of its trade secrets by the defendants. Naughton was a co-founder of Advanced Tissue Sciences, which went into bankruptcy in 2002; SkinMedica said it acquired several assets from ATS, including intellectual property that included the two patents. Both of the patents in the lawsuit name Naughton as an inventor of the patent.

Big Alabama Trade Secrets Verdict Upheld

The Birmingham News is reporting that Mobile County Circuit Court Judge Robert Smith has upheld a verdict against Ineos Americas LLC and Ineos Phenol in a case brought Dr. Sven Peter Mannsfeld.

Mannsfeld claimed that the chemical companies stole his trade secrets for a process that transformed some hazardous waste into valuable manufacturing ingredients.Last October, a Mobile jury determined that the companies owed $192 million in compensatory damages.

Ineos is appealing.

Mannsfeld, according to the report, is 72 and worked at chemical maker Degussa for three decades.

Monday, January 19, 2009, 1/19/2009 02:39:00 PM

International Rectifier Sues Former CEO For Theft of Trade Secrets of Gallium Nitride

By Todd
International Rectifier has filed a federal suit accusing Alexander Lidow of engaging in an ongoing criminal enterprise – also known as a racketeer influenced and corrupt organization, or RICO – by stealing information, intellectual property and technology related to the company’s secret research on a superconducting material that could become the future of semiconductor power management technology. A key hearing in the case is scheduled for Feb. 2.

The suit alleges that Lidow devised a plan to steal IR’s trade secrets, and then recruited six former IR researchers and sales executives to help him launch a competing company, which is currently using the stolen research to develop its own products from the special material, called gallium nitride.

IR’s chips are in consumer products, such as washing machines, laptop computers, automotive systems and Sony’s PlayStation, as well as military satellites.

Robert Sacks, Lidow’s attorney, said his clients are not using IR’s gallium nitride technology, and that Lidow’s new venture is developing a different product in the semiconductor field.

Trade Secrets of the Grocers

From in Portland, Oregon, a story arising out of natural food marketer, Whole Foods, and its attempt to defend itself against Federal Trade Commission claims that its purchase of Wild Oats Markets created a natural foods monopoly.

According to the story, after months of battling to keep its trade secrets under wraps, New Seasons Market had agreed to hand over some operational information to rival grocer Whole Foods Market.

Portland-based New Seasons didn’t give details but said the information was significantly less than what Whole Foods had requested in its original subpoena.

In October, Whole Foods subpoenaed New Seasons and 92 other vendors and retailers asking for private data, including store sales figures, internal e-mails and memos, product lineups and marketing strategies.

Tuesday, January 13, 2009, 1/13/2009 09:12:00 AM

The Trade Secrets of the Use of TARP Funds

By Todd
$350 billion has essentially been sent from the United States to banks of all shapes and sizes. The theory of the investments was that the government was going to provide banks liquidity that they could use to lend money and get our economy going again. Congresspeople, especially Barney Frank, have been making noise about learning how that liquidity is being used and has been used. Banks are keeping a tight seal on identifying their use of these dollars. Which raises a question: are banks entitled, on trade secrets grounds, to withhold from the government regulators or muckety-mucks what they've done with their TARP funds?

In this editorial from iStockAnalyst the argument is a clear "yes." Banks have a competitive interest, this editorial argues, in keeping its use of bank assets secret. The editorial argues that disclosure equals loss of competitive advantage. Now, we're not suggesting that the level of analysis in this editorial is sufficient to exhaust the topic - but we wanted to advise our readers of a topic that is sure to recur in the future. Barney Frank doesn't appear to be going away - and he's suggesting that answers to these questions will be demanded.

Remember, too, that the Fed itself has argued on trade secrets grounds that IT doesn't have to disclose how IT has used the TARP funds: Hell, if the government, which doesn't have much competition in what it does, has a valid trade secrets argument - why wouldn't a bank which DOES have a bunch of active competitors?

We're keeping an eye on this issue for you.

Thursday, January 08, 2009, 1/08/2009 02:00:00 PM

Litigation in India Over Trade Secrets Risks - Ever Heard of an RS 501CR Injunction?

By Todd
First, the Chinese engaged in a crackdown of copyright pirates who were allegedly copying Communist era DVDs that the government sold for a profit. Now, we learn that India actually has an injunction aimed at employee defectors - an RS 501 CR injunction. Good stuff. If you read the report below, it sounds like these Indian litigants are trying out a version of inevitable disclosure doctrine without calling it that:

"What is the threat to you now that he has gone away?'' Justice A V Nirgude asked Attorney Khambata.

"He will divulge trade information from which the company's competitors would profit...What better asset than to offer the firm's trade secrets if he sets up a consultancy.''

In response, the judge asked: "Assuming an injunction is granted, how will you ensure it is implemented?''

Khambata admitted that it might be difficult to monitor Singh's activities, but said he was entitled to an injunction.

But Singh's counsel Rajiv Kumar suggested that there was more to the matter, and said that Singh would not be able to reveal secrets he does not even have. He added that Singh, in fact, resigned in October 2007, and had been threatened with dire consequences by Wadia and a few other company members when he was called in for some advice last June.

"His laptop and diary was forcefully taken from him. He was wrongfully confined in a room for six hours only to find that his car was broken into and all papers missing,'' said Kumar.

Attorney Khambata immediately refuted the allegations as being "completely false'' and said he would "deal with them point by point.''

But Attorney Kumar added that Singh was bold enough to mention in his affidavit that he had received a threat that he would get the same treatment as two other prominent industrialists who had crossed paths with the company in the past. In fact, Singh's affidavit said he was "under tremendous tension and fear of reprisal including imminent danger to his and his family's life.'' He added that the attempt of the legal battle was to defame him and deprive him of any other job, but Attorney Khambata said that the company has no such intentions.

"The company is not saying he can't work elsewhere, but he can't get a job based on the company's secrets.'' The matter will continue on Friday.

Sounds familiar, eh?

Saturday, January 03, 2009, 1/03/2009 11:02:00 AM

Bailout Trade Secrets

Remember, the accounting is all secret:

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