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Friday, May 28, 2010, 5/28/2010 11:44:00 AM

Where Trade Secrecy Meets Environmental Risk: Determining Whether to Use Certain Oil Dispersants in the Gulf

By Todd

Andrew Schneider of has written an interesting piece regarding the potential use of a certain oil dispersant in the Gulf of Mexico. He reports that scientists in the U.S., Canada, South America and elsewhere have pleaded with the government not to approve one option for dealing with the massive oil spill: a dispersant that contains unidentified and possibly untested nanoparticles.

The scientists are particularly concerned about nano-based dispersant produced by Green Earth Technologies. He explains the company is not at all subtle about lobbying hard to obtain expedited approval for the use of the nano-dispersant. The company's green logo is a large G with wings with "Save the Earth" on one side and "Sacrifice Nothing" on the other.

But before we throw millions of gallons of this dispersant onto the spill and affected areas - don't we need to know what is actually in this stuff?

That's the focus of this piece and the letter the scientists wrote to the EPA.

"We should not blindly trust a company that will not disclose the exact nature of the manufactured nanomaterials it proposes to dump into the sea. You or I wouldn't trust a stranger who wanted to dump undisclosed chemicals in our backyards, and the EPA shouldn't trust this corporation," said Ian Illuminato, health and environment campaigner for Friends of the Earth, which distributed the letter to EPA.

Apparently in the case of this nano-dispersant, the governement does not know what the ingredients are because the company claims a legal privilege of keeping its composition secret so as to protect their 'confidential business information'. And that's the crux of the dilemma. Doesn't the government and the broader global scientific community have a right to know what exactly they're about to throw in the ocean before they throw it?

This is an interesting piece detailing a rare conflict between trade secret interests and the public interest. You can read it by clicking on the title to this blog post.

Wednesday, May 26, 2010, 5/26/2010 09:28:00 AM

Rare Economic Espionage Act Prosecution Fails in California

By Todd

Well, we'd already told you that Economic Espionage Act prosecutions were rare: It certainly won't help future prosecutions that these claims have been thrown out by the federal judge and all that is left is a potential re-trial on theft of trade secrets grounds.

According to, the judge reasoned "The government must present evidence that defendants intended to confer a benefit on the [People's Republic of China], not receive a benefit from it," Ware wrote. "The court finds evidence that defendants intended to apply for a grant from the PRC is insufficient to satisfy the statutory requirement that the government prove that the defendants intended to provide a benefit to the PRC, or one of its instrumentalities or agents."

Call your next case.

Monday, May 24, 2010, 5/24/2010 09:51:00 AM

Trade Secrets of Oil Spill Remediation?

By Todd

Are the particularized explanations a private company provides to a government agency as to why they are using certain remedial measures to fix a problem possibly a trade secret?

There are numerous reports (see, e.g., alleging BP continues to use a highly toxic dispersant, Corexit 9500, to help break up the oil slick.

On Thursday, the Environmental Protection Agency gave the firm 72 hours to stop using the controversial product. BP allegedly refused, and was still using it on Friday. So far, 715,000 gallons have been pumped on to the slick.

BP is now allegedly objecting to the EPA from publishing the reasons it has given for refusing to stop using Corexit, citing commercial confidentiality and trade secret rationales.

One wonders: how successful will the argument be that a regulated company's remediation tools and the particulars of those tools are commercially valuable trade secrets? We'll have to see. We'll keep an eye on this one for you.

Thursday, May 20, 2010, 5/20/2010 01:29:00 PM

Unreleased Video Game Trade Secrets Allegedly Downloaded by Geek at Video Game Expo: Criminal Charges Brought in Boston

By Todd

Okay - you're twenty years old. You attend the "Penny Arcade Expo East" gaming conference in Boston. You're handy with a laptop. You are surrounded by a bunch of young people checking out new video games on display.

What do you do? Well, if your name is Justin May, you allegedly use that laptop to hack into the new video game being developed by Destineer Computer Company and you download data onto your drive.

Where do you do that? On the floor of the convention. Apparently, and we were surprised to read this, the Boston Globe is reporting that Mr. May allegedly used a laptop on the floor of the "Penny Arcade Expo East" to download this video game data. Right in broad daylight.

Generation Y is nothing if not audacious. Mr. May was arrested by the Boston Police Department and charged with receiving stolen trade secrets. We'll follow this one to see how Mr. May fares in the criminal court.

Wednesday, May 19, 2010, 5/19/2010 08:53:00 AM

Utah Supreme Court Says Power Generation Plant Trade Secret Case Goes to Trial

By Todd

The Salt Lake Tribune has published an interesting story regarding the Utah Supreme Court's decision that a trade secret theft claim made by a power plant construction company called USA Power. Seems USA Power approached another company, PacifiCorp, in 2002 with a proposal to build a natural gas based power plant in Utah and then sell the plant to PacifiCorp upon completion. The parties agreed to look at USA Power's plants and signed an NDA covering what would be shared and spent months talking about the possibilities. After six months or so, according to USA Power, they got the "not interested" notice from PacifiCorp and further explanation that PacifiCorp was going to put the project out for bid.

But PacifiCorp won that bidding process THEMSELVES and built the plant approximately one mile from the USA Power site they had previously been shown. USA Power did not convince the trial court that their trade secrets had been stolen - but the Utah Supreme Court decided that the matter could go to the jury. We'll keep an eye on this one for you as USA Power claims damages of up to $500 million.

Tuesday, May 18, 2010, 5/18/2010 09:26:00 AM

Legal Reporter Explains the Lockheed Trade Secret Post-Trial Situation: Excellent Analysis

By Todd

We first blogged about the extraordinary remedy taken in the $37 million trade secret verdict obtained by Lockheed Martin here: A new trial was ordered in light of significant discovery and disclosure abuses.

Now, in a twist that should make all trade secret litigators take note, is reporting that the court has granted the request of the Fulton County Daily Report and ordered the release of certain litigation documents previously filed under seal. And the online legal news agency has done some excellent work deconstructing the issues in the case and how things went so utterly wrong. Here's a long snippit of this fine piece of legal reporting by R. Robin McDonald:

Last month, after reviewing the sealed pleadings, Pannell ordered a new trial, saying Lockheed had failed to turn over e-mails that would have shown it knowingly allowed a competitor to use its proprietary data in performing a contract for Brazil to upgrade Lockheed P-3 aircraft -- the bomber at the heart of the trade secrets case -- that the U.S. Navy intended to sell as surplus to Brazil in 2004.

According to L-3 pleadings, Lockheed was bested in the Brazilian bid by a Spanish company, EADS-CASA, that previously had refurbished Lockheed P-3s for the Spanish government. When it won the Brazilian bid, CASA didn't have a license to use proprietary engineering data that Lockheed asserted was critical to safely refurbish and modify the planes.

"Early on in the Brazil program we informed the Brazilian govt [sic] that either they or their selected subcontractor would have to secure permission to use LM [Lockheed Martin] proprietary data. Our standard fee for this is 7.5 percent of the contract value," stated one Lockheed e-mail. Brazil, according to the e-mail, subsequently notified all the bidders that they were responsible for securing the proprietary data needed to complete the contract.

But CASA, according to an e-mail from Lockheed executive Richard Kirkland, took the position "that they have enough data thru [sic] other sources that they do not need an agreement with LM [Lockheed Martin]. We knew all along that they were planning to use (without legal permission) all the data they have gathered from performing maintenance on the Spanish Air Force P-3s. Hence after Brazil ... selected CASA as the winner, we formally re-reminded them of the fact that CASA had not secured permission to use our data. Our line is the sand is pretty firm. They need to pay in some way for the usage of our data."

Internal Lockheed e-mails also showed that a CASA executive had threatened Lockheed over the company's trade secret claims and its insistence that it be paid royalties, saying he would make certain that the American aircraft company "paid a price here in Spain" if Lockheed didn't back off.

At the time Lockheed had a large sale pending with the Spanish government that, according to one of Lockheed's internal e-mails, "has been politically difficult and highly visible."
Citing the internal Lockheed e-mails, L-3 attorneys argued in their new trial motion that Lockheed's solution to its Spanish dilemma "was to draft a sham letter for CASA to send back to Lockheed making it appear as though Lockheed was protecting its P-3 data when in fact it was doing no such thing."

In an e-mail chain that included Katz, Lockheed's in-house lawyer "reveals that, in order to give the impression that Lockheed was protecting its data rights, Lockheed actually drafted the CASA letter to send back to Lockheed making it appear as though CASA was not misusing P-3 data," L-3 attorney Ross Cunningham, a partner at Rose Walker in Dallas, wrote in an affidavit included in the unsealed pleadings.

During the Atlanta trial, Lockheed introduced the letter -- which offered written assurances, but no independent documentation, that CASA was not using Lockheed's proprietary data -- and testimony, based upon the letter, that Lockheed had sufficiently protected its proprietary data, thereby maintaining its trade secret status.

"It was Lockheed -- not CASA -- who drafted the CASA letter, knowing that it was a fig leaf designed to conceal Lockheed's intentional release of its P-3 trade secrets in order to accommodate a foreign government who might purchase Lockheed's products and services in the future," one L-3 pleading stated.

That pleading also claimed that the e-mails L-3 discovered after the Atlanta trial showed that Lockheed executives who testified at the trial "knew that the sham CASA letter did not represent the good-faith diligence to protect its P-3 trade secrets that they testified about at trial."

L-3 also claimed that while Katz testified as to how Lockheed diligently protected its trade secrets by requiring the vendors, contractors, subcontractors and competitors who used them under licenses to execute non-disclosure agreements, "he failed to tell the jury, however, that Lockheed violated the same processes and procedures in its dealings with CASA."

Cunningham wrote in his affidavit that, during the Atlanta trial, "Katz did not mention his involvement in the CASA letter, and L-3 did not know to cross-examine Katz regarding the CASA letter because Lockheed withheld evidence of Katz's involvement."

Cunningham argued that those omissions "affected the trial in its entirety," and would have been "instrumental" in L-3's opening statement and closing argument.

Thursday, May 13, 2010, 5/13/2010 12:34:00 PM

Hog-Stunning Trade Secrets

A scary trade secrets story from the Austin version of the Rochester (MN) Post-Bulletin.

It seems that in September 2008, Hormel Foods Corp. entered into an agreement with a New Hampshire company, Ferrite Co., to develop a hog-stunning system. Hormel claims it paid a deposit and also provided Ferrite with various proprietary and confidential materials consisting of trade secrets.

Ferrite didn’t deliver and now Hormel is seeking at least $30,000 in court.

According to the PB, part of the alleged violations stem from a mutual confidential disclosure agreement entered into on Dec. 1, 2008 to protect trade secrets and other data owned by Hormel and given to Ferrite for the stunning-system project.

Wednesday, May 12, 2010, 5/12/2010 09:29:00 AM

Mesirow Financial Wins $1.9 Million FINRA Award from Former Employees and New Company

By Todd

The Wall Street Journal is reporting that two financial advisers have been ordered to pay nearly $1.9 million to the advisers' former employer, Chicago-based Mesirow Financial Holdings, Inc., and two of its divisions that alleged breach of contract and theft of trade secrets.

The award by an arbitration panel of the Financial Industry Regulatory Authority included a rare dissent by the three-person panel's chairman. The dissent appears to be regarding the panel's conclusion that "tombstone announcement" mailings constituted improper solicitation in violation of the financial advisors' employment agreements with Mesirow Financial.

Mesirow filed the case after David Copeland and Neal Price left in 2008 to form Strategic Wealth Partners, LLC, a registered investment adviser in Deerfield, Ill., according to a 2009 order in a related court proceeding.

The company accused Copeland, Price and their firm of breaching their employment contracts and fiduciary duty, stealing trade secrets, taking its staff, and other misdeeds, according to the arbitration award. It said Copeland and Price also used confidential information to transfer away business.

In an unusual one-sentence dissent, panel chairman Richard Belmonte said the award was "grossly contrary to the manifest weight of the evidence and the applicable Illinois law." As is typical in securities arbitration, the award didn't provide any reasoning for the decision by the panel's other two members.

Copeland and Price's counterclaim against Mesirow in the case, seeking $615,000 for deferred compensation and unpaid wages, was rejected.

The award highlights the diverging outcomes that can occur in a case that is heard by both an arbitration panel and in court.

An Illinois state court judge, in a related proceeding between the parties, ruled in 2009 that "information contacts," such as announcement cards and follow-up telephone calls to Mesirow clients that the advisers serviced, "do not constitute solicitation," according to a 23-page decision. Mesirow's attempt to portray the advisers' organized approach to contacting the individuals as evidence of solicitation wasn't "persuasive," according to that ruling.

The Illinois court declined to temporarily bar the advisers from continuing to contact clients and certain other activities while the Finra arbitration was pending. It ordered the advisers, however, to return certain confidential information to Mesirow, and for a computer forensic expert to be allowed to search the advisers' computer systems.

Dissenting opinions in securities arbitration cases are "uncommon but not unheard of," says Thomas K. Potter III, a securities arbitration lawyer in Nashville, Tenn. An arbitrator's dissent can be used to provide a basis for the losing party to ask a state court to overturn an award. Arbitration is typically binding, but courts can overturn the awards in limited circumstances, such as when arbitrators don't properly apply the law.

A Finra spokesman said that arbitration panels rule unanimously in about 95% to 98% of cases.
Gene Ullrich, a spokesman for Strategic Wealth Partners, says the company and two advisers "strongly disagree with the outcome" and will continue to evaluate their legal rights and possible options. The dissenting arbitrator's view and conclusions of the state court judge, he says, are significant. Two Mesirow employees now work at Strategic but in administrative positions, he said.

The award, said Ullrich, is a fraction of the amount sought by Mesirow. Ullrich declined to specify that amount.

A Mesirow spokeswoman said the company is "very pleased with the result." She declined further comment on other specifics of the case or ruling.

Monday, May 10, 2010, 5/10/2010 12:33:00 PM

Trade Secrets on Copy Machine Hard Drives?

From CBS News via, a video report that suggests that most digital copy machines created since 2002 contain hard drives which, in turn, could contain thousands of images representing every copy made on the machine.

When returning or disposing the machine, those hard drives should be destroyed or wiped clean or their users run the risk of having their proprietary confidential information floating around in the world.

Another good cautionary tale.

Ipreo Sues Goldman Sachs For Alleged Trade Secret Theft

By Todd

Business Week is reporting that Ipreo Holdings LLC, a New York-based provider of software and market intelligence services for investment banking and corporate clients, has filed a lawsuit against financial giant Goldman Sachs alleging copyright infringement and theft of trade secrets.

The lawsuit, filed in U.S. District Court for the Southern District of New York on Thursday, charges several unidentified employees of Goldman Sachs with illegally accessing an Ipreo database and stealing data from it.

The lawsuit seeks at least $1 million in compensatory damages and another $2 million in punitive damages from Goldman Sachs.

A spokeswoman for Goldman said the claims were without merit but offered no other comment.

Ipreo said at least two Goldman Sachs employees, and possibly several more, illegally accessed the Bigdough database on dozens of occasions in 2008 and 2009. In its complaint, Ipreo alleged that its database had been illegally accessed at least 264 times by Goldman employees using login credentials belonging to someone else.

The company claimed that Goldman employees downloaded substantial amounts of data from its database during these illegal visits. Ipreo claimed that Goldman tried to play down the seriousness of the situation when informed about the illegal access.

Goldman admitted that the IP addresses associated with the illegal logins belonged to it, but tried to portray it as the act of a lone employee, the complaint noted.

"Defendants knew they lacked Ipreo's permission to use or license the contacts, annotations or other copyrighted protected expression in the database," the complaint.

It sought to hold Goldman vicariously liable for allowing its employees to use company systems and infrastructure to illegally access Ipreo's database. The company had the right and the ability to monitor its employees and control what they do on the network, but failed to do so, the complaint said.

Friday, May 07, 2010, 5/07/2010 01:34:00 PM

Talent Agency Claims Trade Secrets of Representing Celebrities Stolen

By Todd

Matthew Futterman has written an interesting piece in The Wall Street Journal regarding a departed talent agent and we've copied the relevant portions below:

"Hollywood agency CAA has raided rival IMG Worldwide of agents and top executives, rising to challenge IMG's primacy in sports. In the process, stars have followed. IMG lost baseball's Derek Jeter when talent agent Casey Close jumped ship and moved to CAA. Similarly, it lost football's Tony Gonzalez and LaDainian Tomlinson when talent agent Tom Condon moved to CAA from IMG.

Litigation erupted when a $90,000-a-year junior agent named Matthew Baldwin defected to CAA last month. IMG alleges in a lawsuit against Mr. Baldwin that not only is he violating a non-compete clause in his contract, but that he took some 7,000 confidential files.

Mr. Baldwin denies the allegations, contending that what he took from his laptop was personal, including photos and music, or included information, such as coaches' salaries, that's largely available to the public. Mr. Baldwin, who was part of IMG's team in Minneapolis representing several top coaches, also has moved across the country to California, where he says state law makes IMG's non-compete clause unenforceable.

IMG says it is suing to mitigate the damage from the loss of trade secrets and proprietary information. "If they want to be in the businesses we are in they should start their own," said Jim Gallagher, a spokesman for Cleveland-based IMG. "They can't hire our junior agents in an attempt to steal our clients, our trade secrets and our clients' confidential information."

CAA declined to make Mr. Baldwin available for comment but Jeffrey Kessler, a lawyer for Los Angeles-based CAA, said the agency has the right to hire whomever it wants, and California law doesn't allow employers to prevent their former employees from making a living in whatever industries they choose. CAA itself isn't named in the litigation.

After working for five years in Minneapolis under Gary O'Hagan, the director of IMG's coaches division, Mr. Baldwin, age 32, began discussing a position with CAA earlier this year, according to court papers filed by Mr. Baldwin in federal district court in Ohio. During his time at IMG, he helped Mr. O'Hagan represent some of the biggest names in coaching, including the NFL's Mike Shanahan, college football coach Mike Leach, and Villanova University's head basketball coach Jay Wright.

According to Mr. Baldwin's sworn declaration, on March 29 he signed a lease on an apartment in Los Angeles. He also stated that on March 31 he collected his 2009 bonus of $15,000. According to sworn declarations by both men, on April 1 Mr. Baldwin promised Mr. O'Hagan that a rumor of his imminent departure for CAA was not true. On April 2, while Mr. O'Hagan, was on a plane, Mr. Baldwin left him phone and email messages announcing his resignation effective immediately after nearly six years at IMG, the declarations say.

That same day, Mr. Baldwin began to work for CAA and sued IMG in federal district court in California to void the clause in his contract barring him for two years from soliciting IMG clients he had represented. In court papers, Mr. Baldwin argued that as a resident of California—with the lease to prove it—he was entitled to the state's protections against such covenants.
IMG executives say Mr. Baldwin has a right to continue his work, he just can't solicit IMG clients for two years.

In addition to the employment debate is the controversy surrounding some 7,400 documents that IMG claims include proprietary information and trade secrets. The documents include contracts and personal information of numerous coaches, and commissions, IMG alleges in its suit filed in Ohio.

IMG's computer forensic experts stated in sworn testimony in the Ohio litigation that Mr. Baldwin downloaded the documents from his laptop to a portable USB drive, then uploaded the information to other terminals in subsequent days.

After Mr. Baldwin sued IMG in California, IMG went to federal district court in Ohio seeking a temporary restraining order that would stop Mr. Baldwin from soliciting IMG clients and force him to return all the files he took from IMG.

Mr. Kessler, CAA's lawyer, said the allegations about the documents are baseless, adding: "It's an issue that IMG has manufactured because they can't enforce what they really want to enforce, which are the covenants that would restrict Matthew Baldwin's employment."

Now judges in Ohio and California must determine the appropriate venue for the dispute. A ruling could come any day in the Ohio case and a hearing is scheduled for May 23 in the Los Angeles case. If Ohio law rules, the case tips in favor of IMG. If the case goes to California, it tips in favor of Mr. Baldwin."

Thursday, May 06, 2010, 5/06/2010 09:36:00 AM

iPhone Trade Secrets Matter Sheds Light on Investigative Resource

By Todd

Interesting piece linked above in the Silicon Valley Mercury News regarding the REACT outfit in California:

The Rapid Enforcement Allied Computer Team operated out of publicity's glare until last month, when armed with a search warrant, its investigators broke into the Fremont home of a blogger-editor for the website Gizmodo.

Members of the Silicon Valley high-tech law enforcement task force were looking for evidence about a secret, next-generation iPhone prototype left in a Redwood City bar by an Apple engineer. Gizmodo, which paid a source $5,000 cash for the phone and blogged about it on its website, said the search violated its journalistic privilege.

Investigating the theft of trade secrets is one of the missions of the Silicon Valley task force, spelled out in state statutes, but media watchdogs were outraged that a journalist's home was searched in a probe launched on a complaint by Apple.

The Rapid Enforcement Allied Computer Team, or REACT, is one of five regional interagency task forces formed in 1997 by the Legislature in response to a growing number of high-tech thefts and other complex tech crimes such as hacking and identity theft. The other task forces are in San Diego, Los Angeles, Sacramento and Marin County.

The founding statute allocates roughly $12 million to $13 million a year to the task forces from the vehicle license tax. Some of that is spent on training in areas such as computer forensics.
The cases are often complex, require specialized training and many hours to investigate, said Ralph Sivilla, the state deputy attorney general who prosecutes many REACT cases.

Working in conjunction with the FBI, REACT helped crack a major LexisNexis hacking case in 2005. It has helped break up several identity theft rings. It assisted in nabbing someone burglarizing Yahoo's and other corporate campuses last year.

Recently, it tracked down a teenager in North Carolina who boasted on an Internet bulletin board: "Today at 11:30 EST I will attack my school with grenades and other forms of violence." That case — like the Gizmodo search — was handled by the San Mateo County Sheriff's Office REACT team.

"We deal with a lot of high-tech crime," said Mike Mattocks, REACT operations chief and a San Jose police sergeant. "We get lot of thefts still going on in industry, large thefts of high-tech components. We also have our normal day-to-day stuff — a lot of identity theft, where people's accounts are compromised."

The law provides for each task force to be directed by a local steering committee composed of representatives of participating agencies and members of the local high-tech industry. Critics have said this affords Apple — which is on the local steering committee — more law enforcement protection than the average citizen.

"I'm very concerned of REACT being a tool of large corporations, more than I realized before," said attorney Tom Nolan, who is representing Jason Chen, the Gizmodo editor-blogger whose home was searched.

"This group almost looks like they were behaving as if they were Apple's private police force," technology analyst Rob Enderle said.

The San Mateo District Attorney's Office, which issued the search warrant, insists that Apple got no special treatment.

"We're thinking of Apple no differently than we do when a Target or Nordstrom calls us up and says we have an employee embezzling $5,000 from us," said Steve Wagstaffe, San Mateo chief deputy district attorney.

"I know some people are saying, are they getting special treatment? They are just victims," Wagstaffe said. The only issues were, "Was there a crime? Who committed it, if there was one?"

Wednesday, May 05, 2010, 5/05/2010 03:08:00 AM

Fed Wants En Banc Ruling on Bailout Disclosure Decision

By Todd

BloombergBusinessWeek is reporting that the Federal Reserve Board asked an appeals court to reconsider a ruling requiring the agency to disclose documents identifying financial firms that might have collapsed without the largest U.S. government bailout ever.

Attorneys for the Fed yesterday asked the full U.S. Court of Appeals in New York to reconsider a unanimous ruling by a three-judge panel. If the court refuses, the Fed can appeal to the U.S. Supreme Court.

“The decision is of exceptional importance,” the Fed’s lawyers wrote in a legal brief. “The real-world consequence of the panel’s decision will be serious, perhaps irreparable harm to the institutional borrowers whose information will be revealed.”

The Court of Appeals panel ruled March 19 that the Fed must release records of the unprecedented $2 trillion U.S. loan program launched primarily after the 2008 collapse of Lehman Brothers Holdings Inc. The ruling upheld a decision of a lower- court judge who in August ordered that the information be released. The Fed argued in the case that disclosure of the documents threatens to stigmatize borrowers and cause them “severe and irreparable competitive injury,” discouraging banks in distress from seeking help. The three judge appeals court panel rejected that argument.

Freedom of Information

The U.S. Freedom of Information Act, or FOIA, “sets forth no basis for the exemption the board asks us to read into it,” U.S. Circuit Chief Judge Dennis Jacobs wrote in the March 19 opinion. “If the board believes such an exemption would better serve the national interest, it should ask Congress to amend the statute.”

The court was asked to decide whether loan records are covered by FOIA. Historically, the type of government documents sought in the case has been protected from public disclosure because they might reveal competitive trade secrets.

The Fed argued that it could withhold the information under an exemption that allows federal agencies to refuse disclosure of “trade secrets and commercial or financial information obtained from a person and privileged or confidential.”

The Clearing House Association, which processes payments among banks, joined the case and sided with the Fed. The group includes ABN Amro Bank NV, a unit of Royal Bank of Scotland Plc, Bank of America Corp., Bank of New York Mellon Corp., Citigroup Inc., Deutsche Bank AG, HSBC Holdings Plc, JPMorgan Chase & Co., US Bancorp and Wells Fargo & Co.

Clearing House Petition

The Clearing House yesterday also filed a petition asking the full court to reconsider the decision.
Bloomberg, majority-owned by New York Mayor Michael Bloomberg, sued after the Fed refused to name the firms it lent to or disclose loan amounts or assets used as collateral under its lending programs. Most of the loans were made in response to the deepest financial crisis since the Great Depression.

Lawyers for Bloomberg argued in court that the public has the right to know basic information about the “unprecedented and highly controversial use” of public money.

In its new court papers, the Fed argued in a 16-page brief that the three-judge panel made two “significant but erroneous” legal rulings in March.

First, the panel created a conflict among circuit courts of appeals by refusing to consider the potential harm to the agency’s “ability to carry out its functions” and to “manage the national economy.”

Fed Arguments

“Disclosure of the identities of borrowers using the emergency lending facilities will dramatically reduce the effectiveness of those facilities,” the Fed argued. “Borrowers will be deterred by the stigma associated with use of these facilities, and will avoid using them, as is evident from the very high interest rates banks are willing to pay to borrow in the private federal funds markets, rather than come to the discount window.”

Second, the Fed said, the three judges were incorrect in March when they ruled that the documents reflected the agency’s own actions. In fact, the documents were obtained from the borrowers themselves and should not have been made public under exceptions to the federal disclosure rule, the Fed argued.

Tuesday, May 04, 2010, 5/04/2010 02:07:00 PM

Swoosh! Oregon Attorney General Orders University of Oregon to Disclose Terms of Deal with Nike

By Todd

Rachel Bachmann of The Oregonian has just detailed the back-and-forth nature of the University of Oregon's protestation that its deal with Nike was a trade secret.

She explains: "The university initially argued that financial figures of its Nike deal were "trade secrets" and thus exempt from disclosure under Oregon's open-records law -- an argument supported by a ruling from the office of former attorney general Hardy Myers.

In the Nike deal Oregon gets: $16.85 million to outfit the Ducks’ athletic teams : $1.375 million for personal use of Nike product: $4.5 million in cash - all in the 2010-18 contract period.

But an April 26 ruling from the office of current attorney general John Kroger said that even if the contract's financial details were considered trade secrets, the public deserved to see them.

"We will now be making the information available," UO spokesman Phil Weiler said. Lariviere, who was unavailable for an interview, previously pledged greater transparency in university operations in the wake of the March 19 revelation of a $2.3 million secret severance agreement for former athletic director Mike Bellotti.

On March 26, just two days after a request by The Oregonian, Oregon released a copy of the Nike contract. It included an amendment showing that more than a year earlier, the Ducks had quietly extended their all-sports outfitting agreement with Nike through 2018. But university officials had redacted the dollar amounts for current and future years of the contract. The Oregonian appealed the redactions to the attorney general, citing a previous version of the contract that was released in 2006 with no information withheld.

The AG's office overturned the decision under Myers on the trade-secret question and ordered the university to release an uncensored copy of the contract to The Oregonian within seven days. Monday was the last day for Oregon to comply. The ruling, written by deputy attorney general Mary H. Williams, reads in part, "Regardless of whether the requested information could qualify as a trade secret, we conclude that the public interest requires disclosure of the price at which UO agreed to confer the various marketing rights to Nike."

Athletic shoe and apparel deals in recent years have become a growing source of income for top athletic departments nationwide, bringing in mountains of free gear and cash payments of up to several million dollars annually. In exchange, universities grant to the companies certain marketing and exclusivity rights. In 2009-10, Oregon athletics received more than $2 million in gear and $500,000 in cash from Nike -- increases over the previous agreement's $1.5 million in gear and $250,000 in cash. Oregon's athletics budget is $66 million this year.

But the contract's value goes beyond dollars. Having its teams outfitted in exclusively designed Nike uniforms has become one of the Ducks' hallmarks. The Oregonian has requested from the seven other public schools in the Pacific-10 Conference, including Oregon State, information regarding their contracts with athletic shoe and apparel companies. Those requests are pending.
Many schools routinely share the details of their outfitting/marketing deals, which gained prominence in the late 1990s. The University of North Carolina in 2008 issued a news release to announce its 10-year contract with Nike worth $37.7 million. The nation's top contract appears to be the University of Michigan's eight-year agreement with Adidas, signed in 2007 and worth $60 million in cash and merchandise plus an unprecedented $6.5 million signing bonus. The college-sports giant left Nike to make the deal.

Monday, May 03, 2010, 5/03/2010 09:27:00 AM

Citigroup Sues Former Executive, now with Deutsche Bank, in Singapore

By Todd

BusinessWeek is reporting that Citigroup has sued its former executive-level employee, Gautam Hazarika, for allegedly transferring Citigroup's trade secrets to his new employer, Deutsche Bank AG, before joining the latter firm.

Citigroup’s suit comes after Merrill Lynch & Co. sued Deutsche Bank for allegedly raiding its bankers and misappropriating trade secrets last year and Royal Bank of Scotland Group Plc fired its Singapore-based chief currency trader in May last year for sending e-mails allegedly containing confidential data.

The cases highlight the intense rivalry among banks for bankers who can “bring across a decent book of clients,” said Siraj Omar, head of litigation at Premier Law LLC in Singapore, who isn’t involved in the suit. “The idea is to make things as difficult as possible for the bankers who are leaving, which is only logical from the banks’ perspective.”

Hazarika worked for Citigroup for 15 years, starting in India in 1994 before moving to Singapore in 2002, the court papers showed. He joined Deutsche Bank as the Singapore-based head of corporate flow sales for Asia, excluding Japan, from Citigroup, where he was Asia sales head of transactional foreign exchange, Deutsche Bank said in a Dec. 1 statement.

Citigroup’s Singapore-based spokesman Adam Rahman declined to comment, as did Deutsche Bank’s Mark Bennewith. Hazarika couldn’t immediately be reached for comment.

There was “nothing sinister” in the e-mails Hazarika sent to himself nor did the clients’ list sent to Deutsche Bank contain privileged banking information, his court filing shows.

E-mails sent to the personal account were to facilitate working after office hours, Hazarika said in his affidavit.

“In my mind, I had done nothing wrong,” Hazarika said in the papers. “The e-mails I forwarded to my personal e-mail account would not have caused the plaintiff any damage tomorrow, or the day after or at any time in the future.”

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