Trade Secrets Audits: Strengthening Your Company’s IP Protection

via Sefarth Shaw, LLP...

In a world where corporate espionage and data breaches are increasingly common, protecting your company’s intellectual property is more vital than ever. 

Recent developments surrounding the FTC’s Non-Compete Ban, currently stalled in litigation, highlight the need for proactive measures. This webinar will help you navigate these regulatory shifts and strengthen your IP protection strategies.

Join Lauren Leipold, Eddy Salcedo, and James Yu for the next installments of Seyfarth Shaw’s 2024 Trade Secrets Webinar Series. This webinar offers crucial insights into enhancing your IP defenses and preparing for future regulatory changes.

How to Fight a Corporate Espionage Accusation

via SPODEK LAW
What Constitutes Corporate Espionage Fraud?
Corporate espionage fraud involves illegally obtaining confidential business information from a competitor to gain an unfair advantage. This can include:

• Stealing trade secrets or proprietary technology
• Hacking into computer systems to access sensitive data
• Using deception to obtain confidential documents
• Bribing or blackmailing employees to reveal inside information
• Industrial sabotage to damage a competitor’s operations

Common Defenses Against Corporate Espionage Charges
1. Lack of Intent
2. Information Was Not Actually a Trade Secret
4. Public Availability
5. Whistleblower Protections
6. Statute of Limitations

Key Legal Precedents in Corporate Espionage Cases

• United States v. Hsu (1999): Established that attempted corporate espionage is prosecutable, even if no actual trade secrets were obtained.
• United States v. Chung (2011): Clarified that the government must prove the defendant knew the information was a trade secret, not just confidential.
• United States v. Aleynikov (2012): Found that software source code did not qualify as a trade secret under the Economic Espionage Act (later overturned).
• United States v. Nosal (2016): Ruled that the Computer Fraud and Abuse Act applies to theft of trade secrets by former employees.

Strategies for Defending Against Corporate Espionage Charges

• 
  Challenging the evidence: 
• Scrutinize how the evidence against you was obtained and push to suppress any improperly gathered information.
• Negotiating with prosecutors
• Presenting alternative explanations:
• Demonstrating lack of economic benefit
• Highlighting inadequate security measures
• Leveraging expert witnesses
• Pursuing civil resolutions

Greater detail appears in the original article, here.

Security Director Alert: China Enforcing Electronic Device Inspection Law

China is enforcing a new law on Monday that allows national security authorities to inspect electronic devices on suspicion of espionage.

The Ministry of State Security is implementing the legislation that stipulates powers to crack down on spying.

The law states procedures to inspect mobile phones, personal computers and other devices of individuals and organizations. more

Caught on Spycam: Lawmaker Pours Water into Colleague's Bag

A Republican state legislator in Vermont awkwardly apologized on the House floor on Monday after she was caught on hidden camera repeatedly pouring water into a Democratic colleague’s tote bag. 

State Rep. Mary Morrissey said she was “truly ashamed” of childishly targeting state Rep. Jim Carroll, who dealt with a soaked bag on numerous occasions over the last several months, in what he called “torment.”

“I have given my sincere apology to Jim directly and publicly and will be working towards resolution and restoration through our legislative process,” Morrissey said in front of fellow lawmakers. more

Police Can No Longer Request Ring Doorbell Videos via App

Amazon-owned Ring will stop allowing police departments to request doorbell camera footage from users, marking an end to a feature that has drawn criticism from privacy advocates.

In a blog post on Wednesday, Ring said it will sunset the “Request for Assistance” tool, which allows police departments and other public safety agencies to request and receive video captured by the doorbell cameras through Ring’s Neighbors app. The company did not provide a reason for the change, which will be effective starting this week. more

5 Steps for Preventing & Mitigating Corporate Espionage

via Evan Gibbs, Will Taylor, Partners, Troutman Pepper
There has been a steady increase in the volume of incidents involving corporate espionage, especially matters in which an insider is the bad actor. In an era when such risks are escalating, protection of sensitive corporate information has become paramount.

Here are five key strategies companies should implement to prevent and mitigate corporate espionage. (summary...)

1. Insist on Nondisclosure Agreements
2. Know and Control Your Trade Secrets
3. Perform Due Diligence
4. Train Your Employees and Independent Contractors
5. Promptly Investigate Suspected Activity

Preventing and mitigating corporate espionage requires a multifaceted approach. By implementing rigorous legal safeguards, conducting thorough due diligence, using secure communication practices, providing comprehensive employee training, and responding promptly and effectively to suspected activity, companies can significantly enhance their protection against corporate espionage and safeguard their assets. more

Controversial Clothes Hook Spy Cameras for Sale on Amazon

Spy cameras disguised as clothes hooks are for sale on Amazon, despite the firm being sued over the gadgets. One clothes hook camera listing seen by the BBC features a picture of the device positioned in a bathroom.

A US judge recently ruled the retail giant must face a case brought by a woman who alleges she was filmed in the bathroom using a clothes hook camera purchased on Amazon.

A privacy expert has said the misuse of such devices may break British laws. Amazon declined to comment on the issue.

The US legal action against the company was brought by a foreign exchange student and aspiring actress... more

Helpful links...
Hidden Camera Detectors – Do They Work?
Spycam Detection Training for Businesses and Individuals (with Spanish, Korean and English closed captions)

Philadelphia Lawyer Advice: Fighting Accusations of Corporate Espionage

Summary of the Spodek Law Group blog post...

Getting accused of corporate espionage can be scary. It can feel like your career or even freedom is on the line. But with the right legal help, you can get through this. In this article, we’ll break down what corporate espionage is, what the consequences can be, and most importantly—your defense options...

What Should You Do if Accused?
First, don’t panic. Just because you’re accused doesn’t mean you’ll be convicted. About half of economic espionage cases end in plea bargains or dismissals. With an experienced legal team, you can avoid the worst outcomes...

• Don’t try to handle this alone. 
• Remain silent. 
• Act quickly.
• Do comply with orders. 
• Watch what you say. 
• Begin gathering evidence.
• Consider independent analysis. 
• Look closely at the motives. 
• Highlight your character. If you have a long career with no prior offenses, that works in your favor. Judges go easier on first-time offenders. more

Why You Really Need a Technical Information Security Consultant

The non-existence of a trade secret asset: ‘confidential’ information
by R. Mark Halligan 

FisherBroyles LLP

For years, there has been a debate whether “confidential” information is analogous to a “trade secret.” It is not. Information is either protected as a “trade secret” or not protected as a “trade secret.” Any other characterization of “confidential” information undermines the protection of trade secret assets and interferes with lawful and fair business competition.

There is no such thing as non-trade secret “confidential” information.

There is no such thing as “confidential” information that does not rise to the level of a trade secret.

There is no middle ground: Either the information is a “trade secret” (and protectable) or not a trade secret (and not protectable).

A “trade secret” is an intellectual property asset that requires reasonable measures to protect the information as a “trade secret” and proof that such information derives an actual or potential economic advantage from the secrecy of the information. more

Your business is based on information and conversations considered confidential, sensitive, or intellectual property. These create your competitive advantage. No less important than trade secrets, and yet, not protected under trade secret law. 

So, what protection do you have? 

Start by adding a Technical Information Security Consultant to your team. Their proactive surveys can spot espionage issues like electronic eavesdropping, information security risks, and employee compliance with information security policies—before they become losses.

Alert: Not All Documents Labeled Confidential Actually Are

A Harris County Texas District Court jury found a telecom company acted in bad faith by filing a $23 million trade secret misappropriation lawsuit against a rival where the underlying technology was found to not actually be a trade secret...

As Texas courts have noted, and Liquid Networx cited in its motion for directed verdict, affixing a confidentiality label to a document does not necessarily make the information within a trade secret. See Providence Title Co. v. Truly Title, Inc., 547 F. Supp 3d 585, 609 (E.D. Tex. 2021) (“[B]usiness information is not necessarily a trade secret simply because it is confidential.”)...

It is important to always consider the nature of the document, how it was created, what value comes from keeping it confidential, what efforts are made to keep it from third parties, and what safeguards are used when it is disseminated to third parties, in analyzing trade secrets. more

Note: TSCM information security surveys are used by savvy businesses to show serious trade secret protection efforts. 

NJ Makes It Harder for Police to Snoop on Social Media

New Jersey is known for many things, from delicious bagels to the heated pork roll vs. Taylor ham debate... But the Garden State deserves a new accolade: defender of digital privacy rights.

In an important decision that has seemingly flown under the radar, late last month the Supreme Court of New Jersey decided Facebook Inc. v. State, which puts much-needed guardrails on police conduct in the state when it comes to law enforcement’s access to digital communications. more

US Spies Issue Warnings Over Risks of Doing Business in China

US intelligence officials renewed warnings for American companies doing business in China, citing an update to a counterespionage law that’s due to take effect (today, July 1, 2023).

A bulletin issued by the National Counterintelligence and Security Center on Friday warns executives that an update to China’s counterespionage law, which comes into effect on July 1, has the “potential to create legal risks or uncertainty” for companies doing business in China.

It adds that the law broadens the scope of China’s espionage law and expands Beijing’s official definition of espionage. “Any documents, data, materials, or items” could be considered relevant to the law due to its “ambiguities,” the bulletin says. more

Corporate Espionage - Legal or Illegal? (The Full Story)

Corporate espionage, or economic or industrial espionage, involves stealing or illegally acquiring trade secrets and confidential information from a company or organization. This process, which may also include practices such as bribery, blackmail, and surveillance, is a growing concern for businesses in various industries. Companies may engage in such activities in an increasingly competitive global market to gain a competitive advantage or undermine competitors.

The legality of corporate espionage is a complex subject, as it encompasses various actions and laws depending on the jurisdiction. Corporate spying may be considered illegal under various statutes that protect intellectual property, trade secrets, and economic interests. However, there are instances where certain espionage activities may fall within legal limits, especially in cases where information is obtained from public sources or through legitimate means... more

(Now that you know, protect yourself.)

China’s ‘Men in Black’ v. Foreign Corporate Sleuths

In China, foreign consultants are learning to expect a knock on the door. 

First, police raided the Beijing office of US due diligence group Mintz in March. Weeks later, there was a similar visit to the Shanghai premises of Bain, the blue-chip US consultancy. Police have also visited one of the China offices of expert network Capvision, according to at least four people familiar with the matter, as part of an emerging number of raids on international consultancies operating in the world’s second-largest economy...

While Bain is known for its management consulting work, the incidents at Mintz and Capvision — a network whose members are available for chats with clients about an industry they have worked in — have thrown the spotlight on the world of corporate investigations in China, which also includes companies such as Control Risks, Kroll, FTI and Blackpeak... Even in ordinary times, due diligence is inherently risky in China. more

---
One person prevented from leaving China this year is a Singaporean executive at the US due-diligence firm Mintz Group, after a raid in March that led to its Beijing office being shut down, according to three people familiar with the matter. The company, the executive and China’s Public Security Bureau did not respond to requests for comment. more

Companies Doing Business in China Need to be Aware of New Espionage Laws

China's updated law on espionage could be the latest point of concern for foreign companies. The amended anti-espionage law broadens the definition of national security. But it falls short of defining what exactly constitutes "National security". 

China's expansive anti-spying law to take effect July 1

Wider scope of national security puts foreigners at greater risk, analysts say. more

China has widened its already sweeping counter-espionage law. Experts say foreign businesses should be worried. more

China widens ‘already breathtaking’ scope to arrest foreigners for espionage
Authorities can swoop over anything they deem relevant to national security in toughening of law already used against expatriates or Chinese contacts. more

Florida Grounds Drones over Fears of Spying

Police, fire and other government agencies across Florida must ground millions of dollars in aerial drones because of a new state rule banning the agencies from using devices made by China-based DJI. 

The DJI drones are among the most widely used in the world, but Gov. Ron DeSantis’ administration said they pose a security threat and did not include them on a list of approved drone manufacturers. more

A New Wave of Lawsuits - Wiretapping Litigation for Website Analytics

2022 saw a new wave of class action lawsuits targeting companies that use technology to track consumers’ interfaces on their websites...

Plaintiffs often ground their claims in the electronic interception provisions of federal and state wiretapping laws. Under the Federal Wiretap Act of 1968, a person is prohibited from “intentionally intercept[ing] … any … electronic communication.” 18 U.S.C. § 2511(1)(a) (2022). The FWA and many state statutes define “interception” as “acquiring the contents of that electronic communication.” Id. § 2510(4). “Content” is defined as “any information concerning the substance, purport[] or meaning of that communication.” Id. § 2510(8). 

Under the FWA, a court may require a defendant to pay $10,000 per violation. Id. § 2520(c)(2). Fines under similar state laws range from $1,000 to $50,000 per violation, depending on the state. more

Arizona Bill to Make Drone Spying a Crime Moves Forward

AZ - State lawmakers are moving to ensure people don’t get too nosy with their new drones.

In a party-line vote on Wednesday, members of the House Commerce Committee approved legislation that would make it a criminal offense to intentionally photograph, tape or otherwise observe someone else in a private place where that person has a “reasonable expectation of privacy.”

The only thing is that there hasn’t been a consensus as to when exactly someone crosses that line. more

A New National Cybersecurity Strategy

State-sponsored cyberattacks and corporate espionage are becoming a bigger concern with each passing year, often resulting in millions of dollars in damages. Attackers are making off with critical data as governments, businesses, and cybersecurity experts struggle to protect citizens and customers. As of now, individuals and small businesses are on their own when attacked, but the Biden administration wants to change that and make multibillion dollar tech firms more accountable for Americans' digital safety.

The White House on Thursday unveiled a new National Cybersecurity Strategy to make cyberspace more secure for Americans. The new policy puts the onus on tech firms and large organizations to make their systems more secure, so that they are better able to resist the increasingly more sophisticated cybersecurity threats from around the world.

Explaining its stance, the Biden administration said that the "organizations that are most capable and best-positioned to reduce risks" should do more to ensure the online safety of American citizens rather than shifting the burden of cybersecurity to individuals, small businesses, and local governments. more

My 2012 cunning plan to really protect sensitive information may be catching on... 

"Impose a legal responsibility to proactively protect National Interest Assets. Hold the corporate caretakers of our economic future accountable for protecting their valuables. Create standards of protection. Provide penalties for inadequate or negligent protection. Enforce compliance before the theft occurs."

Green Bay City Hall Surveillance Recording

FOX 11 has obtained 90 minutes of video and audio from Green Bay City Hall’s surveillance system, which has been the subject of controversy and accusations of invasion of privacy.

...obtained the city hall surveillance recordings through an open records request...to confirm Green Bay’s use of audio surveillance at city hall...

Green Bay city administrators have said they installed microphones for safety reasons. However, some city council members and outside attorneys claim the surveillance violates state and federal laws...

In the last week, the city denied requests to disable the microphones and delete any recordings...

One party consent is the law in Wisconsin. more