BLOGS: Trade Secrets Blog
Friday, July 31, 2009, 7/31/2009 02:27:00 PM
Wednesday, July 29, 2009, 7/29/2009 01:05:00 PM
Tuesday, July 28, 2009, 7/28/2009 09:50:00 AM
"There is nothing in the complaint suggesting that Teza or any of the individual defendants is engaging in any trading activities, investment activities, or other business activities conducted by Citadel," says the complaint.
Thursday, July 23, 2009, 7/23/2009 08:14:00 AM
Doh!!! ClearOne Trade Secrets Defendant Loses At Trial, Drops His Attorney and Asks for Stay of Judgment - But Is Told "Sorry"
Wednesday, July 22, 2009, 7/22/2009 02:19:00 PM
The lawsuit by the Atlantic Research Marketing Systems, or A.R.M.S. Inc., was lodged against Stephen P. Troy Jr. and his company, Troy Industries Inc., of Lee. You can find Troy Industries' version of G.I. Joe on its website here: http://troyind.com/.
Originally filed in August 2007, the claim by A.R.M.S. Inc. alleged that its former employee of seven months, Troy, had stolen trade secrets for a product used on certain military rifles and incorporated those trade secrets in a system that was being offered and sold by Troy Industries after he was fired from A.R.M.S.
On June 26, after a two-week trial in federal court, a nine-member federal jury found Troy and his company liable for misappropriation of trade secrets and breach of fiduciary duty.
Some other issues in the case remain pending before the court, the company said.
Monday, July 20, 2009, 7/20/2009 11:28:00 AM
"The allegation that a so-called Chinese person stole trade secrets in the United States and gave them to China is purely a fabrication made up out of ulterior motives," the foreign ministry said in a short statement.
The ministry refused further comment on the case.
It’s not clear what the ulterior motives are, but the motives for denying it are fairly clear.
Now the defendant, Luna Innovations, has filed for bankruptcy protection in federal court in Virginia. As you might understand, the filing of the bankruptcy petition effectively stays the court proceedings in California where the trial court judge was supposed to consider post-trial motions to reduce, or increase, the jury verdict awarded. We understand that Hansen is claiming as much as $6 million in attorneys' fees in connection with the jury verdict. Instead of awaiting those decisions by the trial court, Luna Innovations decided to change the playing field from California to Virginia. What's interesting, to us at least, is that the $36 million verdict has not been entered a final judgement against Luna Innovations - thus Luna Innovations is going to be asking a federal bankruptcy judge in Virginia to examine and reduce the California state jury verdict which has not even been entered yet or appealed to the California appellate courts.
Luna Innovations motion to reduce the trial verdict can be reviewed here: http://newsroom.law360.com/articlefiles/112052-Luna_Motion.pdf.
We'll continue to report regarding this case.
Thursday, July 16, 2009, 7/16/2009 05:29:00 PM
IN THEFT OF SPACE SHUTTLE SECRETS FOR CHINA
SANTA ANA, Calif. - A former Rockwell and Boeing engineer from Orange County, Calif., was remanded into custody this morning after a federal judge convicted him of charges of economic espionage and acting as an agent of the People's Republic of China, for whom he stole restricted technology and Boeing trade secrets, including information related to the Space Shuttle program and Delta IV rocket.
Dongfan "Greg" Chung, 73, who was employed by Rockwell International from 1973 until its defense and space unit was acquired by Boeing in 1996, was found guilty by U.S. District Judge Cormac J. Carney, who presided over a three- week bench trial last month.
In his ruling read this morning in court, Judge Carney found Chung guilty of conspiracy to commit economic espionage, six counts of economic espionage to benefit a foreign country, one count of acting as an agent of the People's Republic of China and one count of making false statements to the FBI.
Immediately following the reading of the verdicts, Judge Carney remanded Chung into custody, where he will remain until his sentencing, which was scheduled for Nov. 9, 2009. Chung had been freed after being arrested by special agents with the FBI and investigators with NASA in February 2008.
Chung, a native of China who is a naturalized U.S. citizen, held a " secret" security clearance when he worked at Rockwell and Boeing on the Space Shuttle program. He retired from the company in 2002, but the next year he returned to Boeing as a contractor, a position he held until September 2006. At trial last month, the government proved that Chung took and concealed Boeing trade secrets relating to the Space Shuttle and the Delta IV rocket, materials he acquired for the benefit of the PRC.
David Kris, Assistant Attorney General for National Security, said: " For years, Mr. Chung stole critical trade secrets from Boeing relating to the Space Shuttle and the Delta IV rocket - all for the benefit of the government of China. Today's verdict should serve as a warning to others willing to compromise America's economic and national security to assist foreign governments.
The many agents, analysts and prosecutors who worked on this important case deserve special thanks for their efforts."
"Mr. Chung stole restricted technology for the benefit of a foreign nation, and as a result he has lost the freedom he was offered by this nation," said U.S. Attorney Thomas P. O'Brien. "The stolen technology compromised not only the American company that developed and owned the trade secrets, but national security as well because the secrets could be used by the PRC to develop its own military technology."
Salvador Hernandez, Assistant Director in Charge of the FBI in Los Angeles, stated: "The cost of Mr. Chung's traitorous actions to American security and the economy cannot be quantified, but have now been exposed, and his ability to exploit critical technology has come to an end. FBI counter- intelligence agents and NASA received the full cooperation of the Boeing Company in building this three-year investigation, the successful outcome of which marks the first conviction by trial under the Economic Espionage Act of 1996. I'm confident this milestone conviction will serve as a deterrent to would-be spies contemplating theft of precious U.S. secrets."
The case against Chung resulted from an investigation into another engineer who worked in the United States and obtained sensitive military information for the PRC. That engineer, Chi Mak, and several of his family members were convicted of providing defense articles to the PRC. Chi Mak was sentenced last year to more than 24 years in federal prison (see: http:// www.usdoj.gov/usao/cac/pressroom/pr2008/032.html).
According to the evidence presented during the trial, individuals in the Chinese aviation industry began sending Chung "tasking" letters as early as 1979. Over the years, the letters directed Chung to collect specific technological information, including data related to the Space Shuttle and various military and civilian aircraft. Chung allegedly responded in one undated letter that "I would like to make an effort to contribute to the Four Modernizations of China." In various letters to his handlers in the PRC, Chung referenced engineering manuals he had collected and sent to the PRC, including 24 manuals relating to the B-1 Bomber that Rockwell had prohibited from disclosure outside of the company and "selected federal agencies."
Between 1985 and 2003, Chung made multiple trips to the PRC to deliver lectures on technology involving the Space Shuttle and other programs, and during those trips he met with PRC government officials, to include agents affiliated with the People's Liberation Army. Chung and PRC officials exchanged letters that discussed Chung's travel to China and recommended methods for passing information, including suggestions that Chung use Chi Mak and his wife Rebecca to transmit information. A May 2, 1987, letter from Gu Weihao, an official in the Ministry of Aviation and China Aviation Industry Corporation, discussed the possibility of inviting Chung's wife, who is an artist, to visit an art institute so that Chung could use her trip as an excuse to travel to the PRC. This same letter suggested that passing information to the PRC through Chi Mak would be "faster and safer" and concluded with the statement: "It is your honor and China's fortune that you are able to realize your wish of dedicating yourself to the service of your country."
On Sept. 11, 2006, FBI and NASA agents searched Chung's house and found more than 250,000 pages of documents from Boeing, Rockwell and other defense contractors inside the house and in a crawl space underneath the house. Among the documents found in the crawl space were scores of binders containing decades' worth of stress analysis reports, test results and design information for the Space Shuttle.
Each charge of economic espionage carries a maximum possible penalty of 15 years in federal prison and a $500,000 fine. The charge of acting as an agent of a foreign government carries a maximum penalty of 10 years imprisonment and a $250,000 fine. The charges of conspiracy to commit economic espionage and making false statements to federal investigators each carry a maximum possible penalty of five years imprisonment and a $250,000 fine.
In this morning's ruling, Judge Carney acquitted Chung of one count of obstruction of justice.
The investigation in this case was conducted jointly by the FBI and NASA Counterintelligence. The case was prosecuted by Assistant U.S. Attorneys Greg Staples and Ivy Wang.
Wednesday, July 15, 2009, 7/15/2009 08:32:00 AM
Tuesday, July 14, 2009, 7/14/2009 01:29:00 PM
First Goldman Sachs, Now UBS: Another Allegation of Departing Employee Trade Secret Theft of Source Code
The bank is charging three former employees in the firm’s algorithmic trading group of having “collectively coordinated and planned together” to move to new jobs at New York-based Jefferies & Company while still technically in the employee of UBS, taking with them UBS trade secrets, breaching their employment contracts and fiduciary duties and resulting in unfair competition.
Monday, July 13, 2009, 7/13/2009 11:58:00 AM
The San Francisco Chronicle is reporting that two men have been indicted by a federal grand jury on charges that they stole arcade-game software belonging to a San Jose company.
Thursday, July 09, 2009, 7/09/2009 03:18:00 PM
Citadel Investment Group Sues Three Former Employees for Noncompete Breach and Trade Secrets Misappropriation Risk
Malyshev, a Russian emigre with a doctorate in astrophysics from Princeton, left Citadel's quantitative trading unit in February after the funds he helped run returned about 40 percent last year. Their performance stood out at a time when most hedge funds lost money and Citadel's flagship portfolios tumbled 50 percent.
Wednesday, July 08, 2009, 7/08/2009 10:36:00 AM
Courthouse News Service is reporting that Hollywood actress Lindsay Lohan has been sued for trade secret misappropriation.
Lindsay Lohan "publicly proclaimed" that she invented a sunless secret" tanning spray, but she actually swiped the formula from White Wave International, the skin-care company claims in a complaint filed in federal court in Tampa, Florida. White Wave owner Jennifer Sunday says she sent samples of her spray to Lohan's business partner, Lorit Simon, when the defendants were researching sunless tanning formulas.
After executing a confidentiality agreement, White Wave says, Simon discussed buying a shipment of Sunday's spray, but the deal fell through when they couldn't agree on the price.
Later, Simon and Lohan announced the release of Sevin Nyne, a self-tanning mist with identical ingredients to Sunday's formula, according to the complaint. Lohan and Simon, a Las Vegas businesswoman who air-brushes tans for celebs, launched Sevin Nyne in May, claiming it took them three years to create it.
Simon and Lohan allegedly issued press releases claiming that they created the product together.
White Wave also sued Simon's company, Lorit LLC, Crossheart Productions, and Shawn Lampman, alleging theft of trade secrets, unfair and deceptive trade and interference with contract.