$2 billion Corporate Espionage Verdict Overturned by Appeals Court

Software company Pegasystems convinced a Virginia appeals court on Tuesday to throw out a $2 billion jury verdict for rival Appian in a court battle over Pegasystems’ alleged theft of Appian’s trade secrets.

The award from 2022 had been the largest damages verdict in Virginia court history, the Court of Appeals of Virginia said in the decision...

McLean, Virginia-based Appian had said in a 2020 lawsuit that Pegasystems hired a contractor to steal confidential information from Appian’s software platform in order to improve its own products and better train its sales force...

Appian said that Cambridge, Massachusetts-based Pegasystems referred internally to the contractor as a spy and to its scheme as “Project Crush,” with Pegasystems employees using fake credentials to access Appian’s software. Pegasystems characterized “Project Crush” as competitive research in a 2022 statement...

Pegasystems’ CEO said in a statement following the verdict that Appian’s CEO “could not identify one trade secret that Pega had allegedly misappropriated” during the trial. more

Moral: Make sure your "trade secrets" meet the requirements of, and can be clearly identified as, Trade Secrets. more

Trade Secret Cases On the Rise

Barnes & Thornburg LLP - Mitchell Berry

In recent years, there has been a noticeable uptick in trade secret litigation, signaling a shift in how businesses safeguard their valuable intellectual property...

Clients are increasingly turning to trade secrets as a means of protecting their innovations, particularly in sectors where rapid technological advancements and short product life cycles render patents less effective. Trade secrets offer perpetual protection as long as the information remains confidential, providing a valuable alternative for companies operating in dynamic and fast-paced markets.

The rise of trade secret litigation also highlights the need for robust internal policies and procedures to safeguard confidential information proactively. Companies must invest in measures such as employee training, restricted access controls, and non-disclosure agreements to mitigate the risk of inadvertent disclosure or theft of trade secrets. more

Did You Know: The legal system does not automatically protect Trade Secrets just on your say-so. You need to prove a history of special protections, like TSCM.

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. 

Trade Secret Litigation 101

Trade secrets, and their associated value, are an understated facet of commercial activity. The intellectual property owned and protected by businesses carry with them enormous economic weight and are often the target of inappropriate corporate activities such as espionage and theft. 

Too often, these pieces of property are insufficiently protected, misunderstood, and do not get the attention they deserve. As such, trade secret litigation has evolved into a niche, but growing area of law practice.

Below, we will explore some of the key elements of trade secret litigation, its scope and magnitude, distinctions between trade secrets and other types of intellectual property, as well as several other important considerations... more

What You Should Know About Trade Secrets

A Webinar Series for Start-ups: Part I & II

Part I - Introductory Session

Partners Melanie Seelig and Mauricio Uribe kicked off a two-part, comprehensive discussion on trade secrets. The presentation served as an introduction to the topic and provided more general information.

View live presentation: Video Link

View on SlideShare: Knobbe Martens Webinar Series for Start-ups: What You Should Know About Trade Secrets - Part I

Part II - Detailed Discussion

Partners Melanie Seelig and Mauricio Uribe continued the two-part, comprehensive discussion on trade secrets. The presentation focused on a more detailed exploration of the topic and strategic implications for various scenarios.

View live presentation: Video Link

View on SlideShare: Knobbe Martens Webinar Series for Start-ups: What You Should Know About Trade Secrets - Part II

View and download the full presentation below. Knobbe Martens Webinar Series for Start-ups: What You Should Know About Trade Secrets - Part I and II

View more webinars on our Vimeo home page: Knobbe Martens on Vimeo

View more Knobbe Martens slide presentations here.

Aerospace Company Accuses California Aviation Start-Up of Stealing Trade Secrets

Aerospace supplier Moog Inc. said stolen trade secrets and an all-out raid of its flight software employees by an aviation startup in California have jeopardized its foray into unmanned helicopter aviation.

The Elma company called the data allegedly stolen by a former employee "breathtaking in its scope."

Moog, in a federal lawsuit filed this week in Buffalo, said a software engineer who quit the company's Los Angeles-area office in December took more than 136,000 digital files related to flight control software to her new employer, Skyryse, a six-year-old startup.

Moog accuses Misook Kim, a former employee, of copying to an external hard drive files that contained the source code of Moog's proprietary software programs, which it said took more than 15 years to develop by dozens of Moog engineers at a cost of hundreds of millions of dollars.

Moog said it is not aware of any other instance where a Moog employee copied to an external hard drive even a fraction of the data it said Kim did in November.

According to the lawsuit, "What Kim did is entirely without precedent at Moog." more

Weird, Unusual & Interesting - Spy News Clickbait

Venice, Italy - The city’s leaders are acquiring the cellphone data of unwitting tourists and using hundreds of surveillance cameras to monitor visitors and prevent crowding. Next summer, they plan to install long-debated gates at key entry points; visitors coming only for the day will have to book ahead and pay a fee to enter. If too many people want to come, some will be turned away. more

Banksy's Spy Booth Brick + NFT Auction Crashes Servers with Overwhelmingly Heavy Web Traffic more

Australia - An ABC News drone took the brunt of the bite force when a saltwater crocodile leapt up and plucked it from mid-air while filming in Darwin. video

Top 9 Surveillance Videos of the Week video  

How Jamie Spears Spied on Britney Spears Through iCloud - A security firm spied on Britney Spears through her iCloud account. Here's how to figure out if someone is doing that to you, and how to stop it. more & more & more & bugsweep

ShadowDragon: Inside the Social Media Surveillance Software That Can Watch Your Every Move - The tool is the product of a growing industry whose work is usually kept from the public and utilized by police. more & more

Florida - New Law – Corporate Espionage (HB 1523): Sponsored by Republican Rep. Mike Beltran, the new law creates the crime of “trafficking in trade secrets” and enhances criminal penalties under certain circumstances. If the trafficking of trade secrets benefits a foreign government or company, the offense is now a first-degree felony. more

Florida - Surveillance Drone Assists in Search for Brian Laundrie more 

Security researchers think Amazon's Astro bot isn't safe. more

Don't Own the Trade Secret But Still Want to Sue for Misappropriation?

You may be able to bring a misappropriation of trade secrets claim even if you do not actually own the misappropriated trade secret. A growing number of federal cases indicate ownership of a trade secret may not be required in order for a plaintiff to sue for misappropriation; possession alone may be enough to confer standing.

In Advanced Fluid Systems, Inc. v. Huber, the Third Circuit affirmed a district court ruling holding that a plaintiff suing for misappropriation under the Pennsylvania Uniform Trade Secrets Act (“PUTSA”) need only demonstrate lawful possession of the trade secret at issue, and not legal ownership, to maintain a claim. There, Advanced Fluid Systems (“AFS”), a designer and installer of hydraulic systems, filed suit against defendants alleging they had conspired to misappropriate AFS trade secret information to divert business to a competitor.  

In a twenty-six page opinion, the Court concluded that fee simple ownership of a trade secret is not a prerequisite to recover for its misappropriation. more

Sir Frederick Barclay's Nephew 'Caught with Bugging Device' at Ritz Hotel

The footage is at the centre of a bitter legal row between the families of the billionaire Barclay twins.

Sir Frederick, 85, and his daughter Amanda are suing three of Sir David Barclay's sons for invasion of privacy.

They claim the surveillance gave the men commercial advantage and they sold the Ritz for half its market value.

The Barclay brothers' businesses include the Telegraph Media Group, the online retailer Very Group, the delivery business Yodel, and - at the time of the bugging - the Ritz hotel in London.

Sir Frederick, the elder twin by 10 minutes, and his daughter Amanda are suing Sir David Barclay's sons - Alistair, Aidan and Howard, Aidan's son Andrew, and Philip Peters, a board director of the Barclay group for invasion of privacy, breach of confidence and data protection laws.

The claim stems from a falling out between the children of the famously private twins...


The CCTV footage allegedly shows Alistair Barclay handling a bugging device at the Ritz hotel on 13 January this year. The recording shows Mr Barclay inserting a plug adaptor, which is claimed to contain a listening device, into a socket.

In court documents lodged by Sir Frederick and Amanda Barclay, it is claimed the bug - which was placed in the hotel's conservatory where Sir Frederick liked to conduct business meetings and smoke cigars - captured more than 1,000 separate conversations amounting to some 94 hours of recordings.

The pair claim the recordings amount to "commercial espionage on a vast scale"....

Voice Activated Wireless GSM Spy Bug SIM Mains 2 Way Adapter Plug Doubler Surveillance Adaptor

Second bug

It is also claimed a separate Wi-Fi bug was supplied by private investigation firm Quest Global. Its chairman is former Metropolitan Police commissioner Lord Stevens.

The claimants' documents say that Quest invoiced for 405 hours of listening and transcribing.

The recordings, it is alleged, captured "private, confidential, personal and Sir Frederick's privileged conversations with his lawyers, and with his daughter's trustees, bankers and businesspeople".  more

Oddly, there is no mention of the video bug which recorded the incident. It does however make the nephew eligible for our Darwin Award for capturing himself with his own bug. ~Kevin

Trade Secret Protection in a Nutshell

Trade Secret Law in a Nutshell (book)

The federal Defend Trade Secrets Act and similar laws in most states let employers seek injunctions for the return of certain business information if three things are true: 

1. The information is actually secret,  
2. the business has taken "reasonable measures" to keep it so, 
3. and the information has "independent economic value" because it's unknown to others who could profit from it.

These cases often turn on what an employer did to protect its alleged secret. If security was tight, it stands a good chance at getting an injunction; if it was lax, it'll likely lose. more

Gad Zoox - Tesla Settles Trade Secret Theft Law Suit

Zoox Inc. said on Tuesday it had settled a lawsuit with Tesla Inc. after admitting that some new hires from the electric carmaker were in possession of certain Tesla documents when they joined the U.S. self-driving car startup.

Tesla lawyers filed a lawsuit in March last year against four former employees and Zoox, alleging the employees stole proprietary information and trade secrets for developing warehousing, logistics and inventory control operations.

Zoox said the settlement required it to pay Tesla an undisclosed amount and undergo an audit to ensure that none of its employees had retained or are using Tesla's confidential information. more

Spy Fail: Alleged Huawei Spy Caught Disguised as 'Weihua' Employee

If you're going to steal trade secrets for your employer, you might want to do a little more to hide your identity than simply rearrange the letters of your company's name.

That's apparently all one Huawei employee spy did to disguise himself during a late-night attempt to steal technology from a U.S. competitor.

Needless to say, it wasn't exactly successful.

This hilarious new detail emerged as part of the United States government's indictment of the Chinese firm on charges of racketeering and conspiracy to steal trade secrets. The indictment lays out how the company sought to steal the intellectual property of six different U.S. tech companies — though not every attempt was particularly sophisticated. more

Book: Chinese Communist Espionage: An Intelligence Primer

Chinese Communist Espionage: An Intelligence Primer
 
Chinese espionage hinges on a sophisticated network of spies focused on state-sponsored tech theft, according to a new book that dispels outdated theories of how Beijing collects intelligence around the world.

Why it matters: Old tropes cast all ethnic Chinese as potential amateur spies, a belief which has led to racial profiling. In reality, China's intelligence agencies employ highly trained professionals who operate much like spies from any other country.
 
Details: Published late last year by the Naval Institute Press, doubles as an explainer of how Chinese espionage works and as a brief encyclopedia of key figures.

• The book's authors are Peter Mattis, a former CIA counterintelligence analyst, and Matthew Brazil, a former US Army officer and diplomat.
• Their main message: That Chinese espionage is neither mysterious nor totally different than that practiced by other nations. more

Espionage Weekend Movie: "The Current War"

Don't let the fancy attire and the Gilded Age setting fool you, there is nasty business afoot in "The Current War."

It's a power struggle, both literal and societal, with Benedict Cumberbatch as inventor Thomas Edison on one side, Michael Shannon as industrialist George Westinghouse on the other, Nicholas Hoult as eccentric visionary Nikola Tesla in the middle and the future of electricity in America hanging in the balance.



In theaters Friday, Oct. 25, the film is a tale of innovation advanced via moral compromise. There are dead animals, corporate espionage, even the invention of the electric chair all deployed in the battle to determine whether Edison's direct current or Westinghouse's alternating current would light up the nation.

It's a story rife with tragedy and squandered potential. more

Massive Corporate Espionage Attack: 'One million pages stolen'

Australian blood giant CSL has been rocked by an alleged corporate espionage attack, with a former "high level" employee accused of stealing tens of thousands of its documents - including trade secrets - in order to land a job at a key competitor...
CSL’s allegations are expected to reverberate through the highly competitive global drug making industry where trade secrets are the most prized possession of the companies. more

It's never this obvious.

Any pharmaceutical company without: 

• a robust Information Security Policy, 
• Recording in the Workplace Policy, 
• IT Compliance and Surveillance program, 
• regularly scheduled Technical Surveillance Countermeasures (TSCM) inspections (with an Information Security Survey component)

is an easy target. Sadly, they won't even know they have had their brains picked until the damage is done.

CSL had protection measures in place. Thus, this discovery, and recovery. ~Kevin

U.S. Tour Guide Accused as Spy for China's Security Service

Watch Surveillance Video of Alleged Spy’s ‘Dead Drop’ at Hotel 

The U.S. arrested a California man accused of spying for China’s security service while working as a tour guide in the San Francisco area. U.S. agents secretly monitored drop-offs of packages at a hotel in Newark, California, that were traced to Peng, according to the complaint.

China’s Ministry of State Security schemed “to use an American citizen to remove classified security information to the PRC,” U.S. Attorney David Anderson said at a press conference.

Peng’s activities for the company where he worked, U.S. Tour and Travel, “went far beyond innocent sight-seeing,” Anderson said. more

Supreme Court Relaxes the Confidentiality Standard... but you have to do your part!

via Blank Rome LLP - Robyn N. Burrows

The Supreme Court in Food Marketing Institute v. Argus Leader Media, No. 18-481 (U.S. June 24, 2019) recently relaxed the standard for withholding confidential information under Exemption 4 of the Freedom of Information Act (“FOIA”)—a major win for contractors that regularly submit sensitive business information to the government...

To take full advantage of the Court’s holding, companies doing business with the government should keep in mind the following practical tips:

• Carefully document all efforts to keep information private.* This includes updating internal policies on maintaining the confidentiality of company records, increasing security features limiting access to certain sensitive data, and providing additional training to employees on how to properly handle confidential business information.

• In submissions to the government, clearly indicate which information is to be kept confidential. This includes marking the data with a protective legend identifying it as subject to Exemption 4 protection. Be aware that certain statutes and regulations may require specific language to be used.

• To the extent possible, obtain written assurances from the agency that the information will be kept confidential and will not be released to third parties absent the contractor’s consent. Contractors may also be able to negotiate contractual provisions protecting the data to be submitted to the government. more

* An independent consultant specializing in quarterly holistic information security audits can do this for you. 

Killed for Spying: The Story of the First Factory

Piedmont, in north-west Italy, is celebrated for its fine wine. But when a young Englishman, John Lombe, traveled there in the early 18th Century, he was not going to savoir a glass of Barolo. His purpose was industrial espionage. 

Lombe wished to figure out how the Piedmontese spun strong yarn from silkworm silk. Divulging such secrets was illegal, so Lombe snuck into a workshop after dark, sketching the spinning machines by candlelight. In 1717, he took those sketches to Derby in the heart of England.

Local legend has it that the Italians took a terrible revenge on Lombe, sending a woman to assassinate him. 

Whatever the truth of that, he died suddenly at the age of 29, just a few years after his Piedmont adventure. more

Porcelain — An Industrial Espionage Story

1712 A.D. ...a French Jesuit priest named François Xavier d’Entrecolles pioneered industrial espionage by recording the secrets of porcelain making while on a trip to China and sending them back to Europe...

Another remarkable use for porcelain is the lithophane, a sheet of porcelain so thin as to be translucent, with artwork etched into it. The lithophane is thin enough that the art can only be seen when backlit, but just thick enough that the image can have depth. Lithophanes began to appear in several parts of Europe in the 1820s, but they’re believed to have originated in China a millennia earlier during the Tang Dynasty. Later Ming Dynasty scholars wrote of Tang bowls “as thin as paper” that included secret images.