BLOGS: Trade Secrets Blog

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Sunday, May 31, 2009, 5/31/2009 11:51:00 AM

University Mailing Lists – Public Records or Trade Secrets?

An interesting article – about an interesting conundrum – from The Day in New London, Connecticut: are university donors’ lists public records and therefore subject to disclosure to companies in the mailing list business?

As a public policy matter, the answer seems easy. Most not-for-profits jealously guard their donors’ lists. Put another way, Charity A hardly wants Charity B to start soliciting Charity A’s donors who might diminish their contributions to Charity A in favor of Charity B. In a worst case scenario, donors to Charity A might not give at all if they knew their names and addresses would be shared with others.

The problem, of course, is that the charity’s interest might conflict with public records law if the charity in question is, say, a state university. Public records hardliners contend that every scrap of information about public institutions belongs to the public, all other considerations be damned.

Now the University of Connecticut finds itself on the horns of that dilemma.

According to David Collins’s column in The Day a recent decision by the Connecticut Freedom of Information Commission ordered the university to make public a number of its lists, which included “everything from a list of sporting event season ticket holders and a list of Jorgenson Auditorium subscribers to the names of donors to the school's library.”
The commission’s ruling comes after a complaint from Jonathan Pelto, “a former state legislator who now runs a public relations company that, among other things, develops and sells mailing lists.”
According to Collins, the commission rejected most of the exemption claims raised by the school, including the assertion that lists like the one for Jorgenson Auditorium should be protected from disclosure under statutes that shield “customer lists” and other trade secrets.
The ruling is expected to be stayed while the matter is appealed to Connecticut Superior Court.

Wednesday, May 27, 2009, 5/27/2009 02:16:00 PM

Lockheed Martin Wins $37.28 Million Trade Secrets Verdict Against L-3

By Todd

After a three week trial, Lockheed Martin convinced a federal court jury in Atlanta that it suffered losses due to trade secrets theft by L-3 Communications. We blogged about this trade secrets trial here:

“Lockheed Martin is pleased with the jury’s decision,” Joe Stout, a company spokesman, said yesterday in an e-mailed statement. “Throughout our industry, companies make tremendous investments in the design and development of highly complex systems. We are pleased that the right to defend that investment has been recognized.”

Lockheed, based in Bethesda, Maryland, sued L-3 in 2005 over claims it was using proprietary Lockheed data for a contract to modify and upgrade the Korean aircraft.

Tuesday, May 26, 2009, 5/26/2009 10:14:00 AM

Taiwanese Law Firm Tells Web-Site Engadget to Take Down Pictures of Sony PlayStation 3 Prototype

By Todd

Those who follow this blog know that we've blogged over and over about alleged Chinese involvement in theft of trade secrets from others. Now comes a report from the website Engadget regarding a cease-and-desist letter they received from an unknown Taiwanese law firm telling Engadget they must take down the pictures of the new slim PS3 and keep the fact and content of the cease-and-desist demand confidential. Well - Engadget refused.

We'll keep an eye on this one for you.

Thursday, May 21, 2009, 5/21/2009 01:06:00 PM

The Trade Secrets of Mosquito Nets - England and Wales High Court Zaps Defendant

By Todd

Citing only common law principles, oral contract and common sense, the England and Wales High Court (Chancery Division) has found a departed scientist liable for trade secret misappropriation of a former employer. The 700+ page decision is attached above.

Dr Skovmand was a consultant to Danish company Vestergaard Frandsen, where he helped them to develop a mosquito net which was injected with insect repellent. He later worked for Bestnet Europe, a company formed by two ex-Vestergaard Frandsen workers which developed a competing net.

Vestergaard Frandsen sued Bestnet, claiming that it had breached its confidence by using details from its database in developing its product. It said that test results and information about the best chemical mixes to use were its trade secrets, and were used by Bestnet having been transferred to them by Skovmand.

Bestnet said that the database information was not a trade secret, that it was simply the knowledge and experience someone would gain in the course of their work. It also said that it was not used in the development of its product.

Bestnet had previously argued that the case did not merit a full trial, and that the information used had been in the public domain. That argument was rejected, leading to this trial.

Mr Justice Arnold found that Skovmand did owe Vestergaard Frandsen a duty of confidence, and that this was expressed in their oral contract. Even if it weren't, there would be an implied term of the contract that confidence was owed.

The judge listed 11 reasons why the duty of confidence was owed, including that Skovmand was a consultant employed to develop new products; he was subject to the company's direction; much of the work was carried out by people employed by the company; the material was the result of advice from other people as well as Skovmand; and the company had paid for the raw materials used in the work.

Mr Justice Arnold said that it was clearly understood that his inventions while there belonged to Vestergaard Frandsen. "It cannot have been intended that Dr Skovmand would be able to exploit the information created during the course of his work for VF [Vertergaard Frandsen], and in particular the information in the Fence database, for his own benefit either during or after the termination of his relationship with VF. Nor can it have been intended that Dr Skovmand would license third parties to do so," he said.

The Court found that this would have been true even if there had been no contract at all between Skovmand and Vertergaard Frandsen. "Even if there was no contract between Dr Skovmand and VF, I consider that he was subject to an equitable obligation to keep the information confidential to VF," said the judge.

The Court said that Skovmand was permitted to use his own skill, knowledge and experience gained while working for Vertergaard Frandsen for his own benefit or anybody else's, but that he was not allowed to use the company's trade secrets. The judge said that Skovmand was, in this case, in the position of an employee.

"While I am not sure that this approach would apply to all consultants, in the particular circumstances of the present case I am prepared to adopt the agreed position of counsel," he said.

Tuesday, May 19, 2009, 5/19/2009 09:36:00 AM

Mayo Clinic to Former Top Executive - Return Our Source Code and Trade Secrets

By Todd
Mayo Clinic and one of its former top executives are squaring off in federal court over medical records software.

The case stems from Mayo's allegations that Dr. Peter Elkin took the core code from the program he helped develop and deleted all copies from Mayo computers. Mayo said Elkin had signed over all control of the software to the clinic, as the clinic's policy dictates.

Because the software is "too complex for Mayo to recreate," the complaint alleges it is completely under Elkin's control.

Elkin was with Mayo Clinic until he left for a position with Mount Sinai Center for Biomedical Information in New York in August 2008, according to court records.

Mayo, along with Cerner Corp., filed a lawsuit in December against Elkin alleging breach of contract. Elkin has filed countersuits.

"Mayo has offered a number of reasonable options to Dr. Elkin above and beyond those required by law, including an offer to permit Dr. Elkin to continue his research on the NLP Software," Mayo's attorney wrote in court documents. "Nevertheless, Dr. Elkin has flatly refused this and all reasonable resolutions, necessarily giving rise to this litigation."

The lawsuit also claims that Elkin attempted to sell the software to Merck & Co., Inc. And, according to the compliant, he gave a presentation about the software in November that revealed proprietary aspects of the program.

"... If Dr. Elkin is not enjoined from disclosing Mayo's confidential and proprietary information and trade secrets relating to the NLP Software, Mayo will lose the value of that information and those trade secrets forever," Mayo says in its complaint.

In 2002, Mayo formed a company with private entities to commercialize the software. Elkin was to receive royalties on the software.

The Mayo company, then called LingoLogix, was purchased for $5.7 million by Cerner Corp. in August 2008, which included the license to the software.

In a Pittsburgh Tribune-Review story Saturday, Elkin's attorneys alleged that Mayo is "violating the terms of federal grants that paid Mayo millions of dollars to develop software for the public good."

Three weeks after Mayo and Cerner filed their lawsuits against Elkin, he filed suits alleging breach of contract on Mayo's side and withholding royalty payments owed to him.

He is seeking damages totaling $560,000 as well "an accounting of Mayo's profits on the Cerner license and an equitable share thereof."

Tuesday, May 12, 2009, 5/12/2009 11:09:00 AM

Cupcake Trade Secrets Allegedly Stolen

By Todd

The Las Vegas area's trendy and fast-growing Cupcakery business is suing a California cupcake entrepreneur, charging she stole trade secrets and infringed on trademarks when she opened two gourmet cupcake shops there. You can look at the complaint here:

The Cupcakery was launched by Pamela Jenkins in 2005 and now has shops in the Silverado area on Eastern Avenue, in northwest Las Vegas on Lake Mead Boulevard and in Frisco, Texas; with a fourth planned for Dallas.

The popularity of the concept has expanded with numerous upscale cupcake shops, including two called Sift: A Cupcakery in Napa and Cotati, Calif., owned by Andrea Ballus.

In an April 2008 press release, Ballus said she's a master cupcake baker and related why she, her husband Jeff and her mother started the business in California.

"The idea for Sift occurred to me when we were planning our Sonoma County wedding in Sonoma last year," she said in the release. "We wanted to serve cupcakes, but all we could find were ones that tasted like plastic cupcakes, or were too dry, or really boring. Let's face it, Sonoma County has tons of great wine, but it is severely lacking in the cupcake department."
The release says: "Andrea Ballus left a promising career as a fine dining consultant in Las Vegas, where she worked with that city’s growing cadre of nationally renowned chefs, sommeliers and restaurateurs."

The Cupcakery, in a May 5 lawsuit filed in U.S. District Court in Las Vegas, says Ballus is now profiting from the Cupcakery's intellectual property assets.

Ballus could not immediately be reached for comment on the allegations Monday.

The suit says Ballus applied for and was hired for a part-time position at the Cupcakery in January 2008 and that while working there, she registered the trade name Sift: A Cupcakery with the California Secretary of State.

"Upon information and belief, Defendant Ballus used Plaintiff’s trade secrets and confidential information obtained during the course and scope of her employment at The Cupcakery to develop a competing cupcake business," the suit charged. "Upon information and belief, Defendant Ballus procured her employment with The Cupcakery under false pretenses and in order to obtain such confidential information and other trade secrets regarding Plaintiff’s business model to aid in the development of her own gourmet cupcake business."

Friday, May 08, 2009, 5/08/2009 02:55:00 PM


By Todd

Okay - this has nothing to do with trade secrets or law but the co-authors of WombleTradeSecrets are hockey fans and we're going to Game 4 tonight between the Carolina Hurricanes and the Boston Bruins at the RBC Center in Raleigh. The Hurricanes lead the best of 7 series right now 2-1. The RBC Center is one of the loudest arenas in hockey and we're looking forward to a great game - LET'S GO HURRICANES!!!!

Thursday, May 07, 2009, 5/07/2009 09:42:00 AM

Swedish Hacker Charged With Trade Secret Theft at Cisco, Data Theft at NASA

By Todd

Well, he allegedly did it in 2004 but . . .

Philip Gabriel Pettersson, aka "Stakkato," 21, a Swedish national, was indicted today on intrusion and trade secret theft charges, announced the Justice Department's Criminal Division and U.S. Attorney Joseph P. Russoniello for the Northern District of California.

The five-count indictment includes one intrusion count and two trade secret misappropriation counts involving Cisco Systems Inc. (Cisco), of San Jose, Calif., which is a provider of computer network equipment and producer of Internet routers. According to the allegations in the indictment Pettersson intentionally committed an intrusion between May 12, 2004, and May 13, 2004, into the computer system and network of Cisco. During the alleged intrusion some Cisco Internetwork Operating System code was allegedly misappropriated.

The indictment also charges two intrusion counts involving the National Aeronautics and Space Administration (NASA), including computers at the Ames Research Center and the NASA Advanced Supercomputing Division, located at Moffett Field, Calif. The indictment alleges Pettersson committed these intrusions on May 19, 2004, May 20, 2004 and Oct. 22, 2004.
Cisco and NASA cooperated in the government's investigation. Following the incident, Cisco reported that it did not believe that any customer information, partner information or financial systems were affected.

The Department of Justice will continue to work cooperatively with the Swedish authorities on the case.

The prosecution is the result of an investigation by the FBI; U.S. Secret Service; NASA Office of Inspector General, Office of Investigations, Computer Crimes Division; and numerous additional federal agencies. Mark L. Krotoski, presently at the Criminal Division's Computer Crime and Intellectual Property Section (CCIPS), is prosecuting the case with the assistance of Paralegal Lauri Gomez and Assistant Netterie Lewis. CCIPS Senior Counsel Kimberly Peretti also assisted in the prosecution. The Criminal Division's Office of International Affairs has assisted on international coordination issues in the case.

New Developments in Marvell Trade Secrets Voice Mail

Here’s how we wrote about it just over a year ago:

There are dumb mistakes, and then there are really dumb mistakes. Four years ago Matthew Gloss, the general counsel of Marvell Semiconductor Inc., and two of his colleagues phoned the legal chief of a rival company, Jasmine Networks Inc. The call went straight to voicemail, so Gloss left a message and hung up.At least, he thought he did. Though the Marvell officials didn't know it, the Jasmine lawyer's voicemail was still taping them as they continued to talk on speakerphone – allegedly about how they were stealing their rival's trade secrets.

After many twists and turns in Jasmine’s trade secrets lawsuit against Marvell, a California appellate court found the voice mail was not privileged.

Now, with the trial about to start, Marvell’s lawyers are seeking to impeach the famous voicemail as impermissibly edited.

As The Recorder puts it:

"Audio forensic expert Bruce Koenig found that 'there are a number of instances where there is a complete loss of signal which would be most consistent with editing the original source of the recordings,'" according to a motion in limine asking the court to once again exclude the evidence.

The Recorder thinks that the motion to exclude is a long shot, but we’ll see.

Monday, May 04, 2009, 5/04/2009 11:54:00 AM

Massive Trade Secrets Case Pits Lockheed Martin Against L-3 Communications in Atlanta Courtroom

By Todd
According to The AmLaw Litigation Daily, a big trade secrets trial is set to begin in Atlanta federal court this week.

Lockheed Martin, the largest defense contractor in the world, is seeking $689 million in compensatory and punitive damages from America's sixth-largest defense contractor, L-3 Communications, and its subsidiary L-3 Communications Integrated Systems, for allegedly stealing trade secrets related to its line of marine patrol, anti-submarine aircraft. Lockheed sued four years ago after it lost to L-3 in the bidding for a $427 million contract with the government of South Korea to refurbish eight of these Lockheed anti-submarine planes. Lockheed alleged that L-3 illegally took proprietary information about its planes to get the work.

L-3, represented by Martin Rose of Rose Walker in Dallas, tells the Daily Report that this case ain't about trade secrets. It's about Lockheed's desire to take market share in the business of refurbishing military aircraft. "The trade secret thing is a ruse, frankly," said Rose. "L-3 was the big player--and we still are--in international aircraft refurbishment. Lockheed decided it wanted to get in on that action." Bryan Cave-Powell Goldstein is serving as local counsel to L-3. Lockheed is represented by attorneys from Kilpatrick Stockton in Atlanta and Venable in Washington, D.C., who declined to comment.
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