Ex-Biotech Executives Sentenced for Genentech Trade Theft

Two co-founders of a Taiwan biotechnology company were sentenced Tuesday for plotting to steal trade secrets from Genentech in a $101 million scheme, prosecutors said.

Racho Jordanov, former CEO of JHL Biotech Inc., and former chief operating officer Rose Lin were sentenced in San Francisco federal court to a year and a day each in federal prison, the U.S. attorney's office said. more  original press release. 

A year and a day in prison over a $101 million scheme to steal trade secrets?!?! Doesn't seem like much of a deterrent for stealing trade secrets. Companies with trade secrets have to be more self-reliant. Consider adding Technical Surveillance Countermeasures (TSCM bug sweeps) to the security program.

Attorney Deborah S. Brenneman at Thompson Hine LLP explains some fine points of U.S. trade secret law...

Reasonable Efforts to Protect the Secrecy of Trade Secret Information
When prosecuting a trade secret claim, a company must not only demonstrate the value of the information at issue, but also that it exercised “reasonable efforts under the circumstances” to protect the information. In effect, courts will not step in to help if the owner has failed to help itself with security measures that match the business risk. 

In DePuy Synthes Prods. v. Veterinary Orthopedic Implants, Inc., 990 F.3d 1364 (Fed. Cir. 2021), the issue was whether to seal a court filing that contained confidential information about a manufacturer’s identity. There was no NDA or other contract establishing confidentiality; instead, the litigant relied on proof that it had kept the information confidential through its own internal security policies and protocols, but this was held to be insufficient. 

Similarly, the plaintiff in ASC Engineered Sols., LLC v. Island Industries, Inc., 2021 U.S. Dist. LEXIS 117177 (WD Tenn), sought summary judgment on the question of whether its efforts to protect its trade secrets were reasonable. The employer pointed to its policies and practice to inform employees about confidentiality and its marking of emails and documents with secrecy legends. The court was not persuaded. It held that such information could be considered but was not decisive because the company’s employees had denied seeing the security policies.

These cases highlight the need for companies to audit and evaluate the steps they take to protect their trade secrets. Policies are important, but practices are determinative. more