The ASML Case - Trade Secret Theft - Sometimes the Good Guy Wins

Following a jury verdict rendered months earlier, a California court entered a final judgment for $845 million in favor of semiconductor maker, ASML, in its suit against rival, XTAL, for stealing trade secrets related to ASML’s lithography technology.

This judgment followed a jury award last year, which had included the potential for punitive damages because the jury found XTAL’s conduct to be malicious. The final judgment, which also reimbursed AMSL for costs relating to its investigation of XTAL’s theft...

AMSL will receive most, if not all, of XTAL’s intellectual property under a settlement agreement... more

Congratulations, ASML! ~ Kevin

Even Popcorn Has Trade Secrets

Caramel Crisp LLC, the owner of Garrett Popcorn Shops (“Garrett”), the renowned Chicago-based purveyor of deliciously flavored popcorn, recently filed suit in federal court in Chicago against its former director of research and development, Aisha Putnam, alleging that she misappropriated the company’s trade secrets, including its recipes for Garret’s famous popcorn...

Garrett alleges that when she learned about the termination, Putnam began downloading “virtually all of [Garrett’s] trade secrets and confidential information in her possession to a personal USB drive, which she took home.”...

This case offers two helpful reminders to employers that seek to protect their valuable trade secrets.  

First, in determining whether something qualifies as a “trade secret,” one factor considered by courts are the reasonableness of the efforts to maintain the confidentiality of the trade secrets...

Second, whenever an employee with access to trade secrets leaves their employment (either voluntarily or involuntarily), employers should consider whether to conduct a forensic review of their computers and other storage devices to determine whether the employee took any confidential information on his or her way out the door. more

This Week in Corporate Espionage

HONDA
Calling corporate espionage a threat to its competitive advantage in the all-terrain vehicle market, Honda of South Carolina is going to court to find out who posted unauthorized photos of its Talon side-by-side vehicles on the Internet...

...photos and detailed, confidential information about the Talon models started showing up on Internet sites hondasxs.com and HondaProKevin.com.

According to Honda’s complaint, someone using the screen name “hondasecrets” posted photos of Talons taken inside the factory. Another using the name “HondaTalon” posted specifications “regarding the horsepower, maximum speed, and measurements, which Honda had not yet released to the public,” the complaint states. more

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TESLA
Tesla Inc. accused one of its former engineers of stealing highly confidential autopilot information before bolting to the Tesla of China, Xpeng Motors, eight months after one of Apple Inc.’s ex-employees was charged with taking sensitive robocar secrets to a new job with Xpeng.

Allegations that a second Silicon Valley giant (see below) was betrayed by one of its own workers bound for the same Chinese startup come amid a major U.S. crackdown on Chinese corporate espionage. more

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APPLE
A former hardware engineer (Zhang Xiaolang) for Apple’s autonomous vehicle development team who went to work for Xpeng is facing criminal charges brought by the U.S. Justice Department. He has pleaded not guilty...

Zhang told Apple he wanted to be closer to his ailing mother in China just before revealing to his supervisor that he intended to work for Xpeng. Apple grew more suspicious after seeing his increased network activity and visits to the office before he resigned, prosecutors said in a criminal complaint. He was arrested after he passed through the security checkpoint at Silicon Valley’s San Jose International Airport to board a flight to China. more

Corporate Security: Will Your "Secret" Status Hold Up in Court?

via Epstein Becker Green - Peter A. Steinmeyer
A federal judge in Chicago recently taught a painful lesson to an Illinois employer: even if information is sufficiently sensitive and valuable that it could qualify as a “trade secret,” it won’t unless the owner of the information took adequate steps to protect its secrecy. 

This doesn't qualify.

In a thorough opinion issued in the case, Abrasic 90 Inc., d/b/a CGW Camel Grinding Wheels, USA v. Weldcote Metals, Inc., Joseph O’Mera and Colleen Cervencik, U.S. District Judge John J. Tharp, Jr. of the Northern District of Illinois explained that “there are two basic elements to the analysis” of whether information qualifies as a “trade secret”:

(1) the information “must have been sufficiently secret to impart economic value because of its relative secrecy” and

(2) the owner “must have made reasonable efforts to maintain the secrecy of the information.” more

Contact a Technical Information Security Consultant if you are unsure about the "reasonable efforts" you should be taking.

The Weed of Crime Bears Bitter Fruits - The Worldwide Huawei Wows

Federal prosecutors are pursuing a criminal investigation of China’s Huawei Technologies Co. for allegedly stealing trade secrets from U.S. business partners, including technology used by T-Mobile US Inc. to test smartphones, according to people familiar with the matter.  

The investigation grew in part out of civil lawsuits against Huawei, including one in which a Seattle jury found Huawei liable for misappropriating robotic technology from T-Mobile’s Bellevue, Wash., lab...

On Wednesday, a bipartisan group of congressional lawmakers introduced legislation that would ban the export of U.S. components to Chinese telecommunications companies that are in violation of U.S. export-control or sanctions laws. Backers said the bill was aimed at Huawei and ZTE Corp...

Last month, Canadian authorities arrested Huawei Chief Financial Officer Meng Wanzhou at the request of U.S. authorities...

In another development, Polish authorities last week arrested Huawei executive Wang Weijing and charged him with conducting espionage on behalf of the Chinese government. more

New Year’s Resolutions for Your Intellectual Property

by Bryan K. Wheelock - Harness, Dickey & Pierce, PLC 
Its the start of a new year, and here are ten things that you should consider doing to enhance your intellectual property in 2019... more

Number 3 is... "Take secrecy seriously. Trade secret protection depends upon whether steps, reasonable under the circumstances, have been taken to protect the secrecy of the subject matter."

The other numbers offer sage advice as well. ~Kevin

Protecting Trade Secrets in Court Requires Special Security, Like TSCM

Federal prosecutors said a Chinese national employed by an Oklahoma petroleum company has been charged with stealing trade secrets.

Authorities said Hongjin Tan, 35, is accused of stealing trade secrets from his unnamed U.S.-based employer that operates a research facility in the Tulsa area.

An affidavit filed by the FBI alleges that Tan stole trade secrets about an unidentified product worth between $1.4 and $1.8 billion to his employer to benefit a Chinese company where Tan had been offered work. more

Gal Shpantzer, SANS NewsBites news editor notes... "Have you discussed the concept of trade secrets with your legal counsel? Trade secrets are only legally protected if you secure them in a certain manner, above and beyond normal confidential data. www.justice.gov: Reporting Intellectual Property Crime: A Guide for Victims of Copyright Infringement, Trademark Counterfeiting, and Trade Secret Theft (PDF)

Judge: "When did you last check for bugs?"

TSCM - Technical Surveillance Countermeasures

Security Director Alert - Well Produced Information Security Awareness Videos for Employees

Foreign intelligence entities, which may include foreign governments, corporations, and their proxies, are actively targeting information, assets, and technologies that are vital to both U.S. national security and our global competitiveness. 

Increasingly, U.S. companies are in the cross-hairs of these foreign intelligence entities, which are breaching private computer networks, pilfering American business secrets and innovation, and carrying out other illicit activities.

The National Counterintelligence and Security Center is dedicated to raising awareness among government employees and private industry about these foreign intelligence threats, the risks they pose, and the defensive measures necessary for individuals and organizations to safeguard that which has been entrusted to their protection.

The following products will enable personnel to better understand these threats and provide guidance and tips for protecting the sensitive information, assets, technologies, and networks to which employees have access. It will also serve to help them protect their personal, confidential information that may be used by others to gain their trust. more

Videos:
Social Media Deception Trailer
Social Media Deception
Social Media Deception Full Video
Social Engineering
Spear Phishing (30 second trailer)
Spear Phishing 2017
Spear Phishing Full Video
Travel Awareness
Human Targeting
Supply Chain Risk Management
Economic Espionage  (True story.)

A First Step Toward Making Counterespionage Actually Work

Pennsylvania High Court Finds Duty to Safeguard Employee Information

In Dittman et al. v. UPMC, the Pennsylvania Supreme Court ruled that employers have an affirmative legal responsibility to protect the confidential information of their employees. In reversing two lower court decisions, the justices ruled that by collecting and storing employees' personal information as a pre-condition to employment, employers had the legal duty to take reasonable steps to protect that information from a cyber attack. more

It's a small step, but... My cunning plan to really protect sensitive information may be catching on. The plan is explained in these two posts from about five and a half years ago...

A Cunning Plan to Protect Us from Business Espionage - March 21, 2012

Espionage Outrage Reaches the Boiling Point ...and a solution. - April 5, 2012

Business Espionage: Ex-Employees Allegedly Steal Trade Secrets Valued At Over $400 Million

Three individuals who worked for DRAM maker's Taiwan subsidiary stole Micron IP to benefit company controlled by China's government, US says in indictment.

Like many other businesses, semiconductor manufacturer Micron Technology employs a range of physical, electronic, and policy measures to protect its trade secrets. Yet all it took for the company to allegedly lose intellectual property worth at least $400 million to a Chinese competitor was two employees with legitimate access to the data.

A federal indictment unsealed this week in the US District Court for the Northern District of California described Micron as the victim of economic espionage involving a Taiwanese semiconductor company, a state-owned company in China, and three individuals who previously worked for Micron. more

Feds Charge 4 State-Owned Companies with Economic Espionage

U.S. Four Chinese state-owned companies were arraigned in federal court in California on charges of economic espionage, prosecutors announced Friday.

Pangang Group Company, Ltd. and three of its subsidiaries allegedly conspired with Chinese nationals Hou Shengdong and Dong Yingjie to acquire stolen or misappropriated trade secrets involving the production technology for chloride-route titanium dioxide, also known as TiO2, from the DuPont company...

TiO2 is commonly used as a white pigment in paints after the use of lead oxide was banned several years ago...It is also used as a pigment in inks, plastics, cosmetics, soap, toothpaste and food.

"DuPont had developed the technology and controlled a significant amount of the world's TiO2 sales," prosecutors said. "The defendants are alleged to have obtained confidential trade secret information including photographs related to TiO2 plant technologies and facilities."

The Pangang companies, along with Hou and Dong, are also accused of paying an Oakland company $27,000,000 between 2006 and 2011 for assistance in obtaining DuPont's trade secrets. more Official Press Release

Industrial Espionage: The Deafening Sounds of a Rip-Off

Apple designed an iPhone. 

Motorola wanted one, too. 

Industrial espionage?!?! 

You decide.

Welcome to the business zoo.

Hackers Selling Access to Law Firm Secrets

...a cybersecurity firm that specializes in monitoring the dark web, showed CNBC a forum post in Russian where the cybercriminal was offering access to a New York City law firm’s network and files, and was willing to send screenshots as evidence he had broken in.

The price for the access was $3,500...

“If you're a law firm that's involved in major transactions, [mergers & acquisitions] of publicly traded companies, you're going to have a lot of sensitive information, inside information before it becomes publicly available,” Dominitz said. “If I'm able to access that, I can trade around that and manipulate stocks and make a lot of money. more

Note: Hacking is only one method used to collect inside information. Close and lock the IT door, but don't leave your other doors and windows open. Engage the services of a Technical Information Security Consultant who also has TSCM expertise.

Combatting Corporate Espionage -- Warning Signs

by Adam Brown
In the modern age of relatively cheap and ever-evolving technology, corporate espionage is a real threat that could be perpetrated by any employee or other insider at any time. 

The term “corporate espionage” covers many different types of behavior, ordinarily taking the form of a malicious company insider secretly stealing confidential company information, usually for use in a competing business. The insider may be planning on joining an existing competitor, or may be planning on founding a new competing business of their own.

Hiding a bug in a book binding.

In essence, however, the term refers to any act of spying that is carried out for commercial purposes. Regardless of the form it takes, the wrongdoer will be looking to exploit the time, money, and hard work you have put in to make your business successful for their own malicious purposes.

Corporate espionage comes in many forms, some more sophisticated than others. While there is no foolproof way to spot all transgressions before it is too late, here are some general warning signs to watch for:

• The employee begins working from home or out of the office more often;
• You see an increase in after-hours work or unusual office or remote computer access;
• The employee begins meeting with customers without recording meetings in company systems;
• The employee knows about business matters they are not directly involved in;*
• The employee becomes disgruntled or has a sudden change in attitude;
• Files or other materials are missing from the office with no explanation;
• The employee unexpectedly resigns without advance notice; and
• The employee refuses an exit interview or does not want to discuss post-resignation employment plans. While not necessarily indicative of any improper actions, any of these behaviors should be considered “red flags” that merit further investigation or research. more

* Electronic eavesdropping.
Time for a technical surveillance countermeasures (TSCM) inspection.

You may also want to read... Business Espionage: The Employee Competitor… and what to do about it.

The Employee Competitor: Spy in the Yogurt

Click here.

The American yogurt market has remained pretty steady over the past few years, yet the yogurt areas in all my go-to grocery stores keep expanding, meaning it’s an increasingly competitive industry, and this fosters the sort of tense environment that sometimes can lead to suspicions of corporate espionage.

On Wednesday, Bloomberg reported that Dannon Co. sued its former senior vice president, Federico Muyshondt, alleging he divulged trade secrets to colleagues at his new job, which is with Chobani LLC. Both of these companies, obviously, are renowned for their yogurt.

According to the complaint—filed in a federal court in White Plains, New York—Muyshondt stands accused of pilfering details of Dannon’s business strategy, plans for forthcoming products, and lists of customers before he left the company in January to take a job with Chobani, which was not named as a defendant in the lawsuit. more

Drama Begins in Waymo v. Uber Trade Secrets Trial

The first day of the Waymo v. Uber trial over self-driving car trade secrets had it all: a packed courtroom, comical technical glitches and the creation of a fake Twitter account in the judge's name.

And that's aside from the testimony.

The high-profile Silicon Valley case pits Waymo -- the self-driving car unit of Google's parent company, Alphabet -- against Uber, the world's most highly valued startup. Waymo claims Uber's former star engineer stole 14,000 "highly confidential" files to develop its own technology. Uber calls the claim "baseless."

Monday was the first day of the trial, which is expected to last at least three weeks. Lawyers for the two companies presented their opening statements, aiming to toss barbs into each other's cases. more

Economic Espionage, Theft of Trade Secrets - 5 Year Sentence

A former software engineer for IBM in China has been sentenced to five years in prison for stealing the source code for highly valuable software developed by the tech company, the U.S. Justice Department announced Friday.

Xu Jiaqiang, 31, was sentenced Thursday by a federal judge in White Plains, New York, months after he pleaded guilty to three counts of economic espionage and three counts of theft, possession and distribution of trade secrets. 

Prosecutors said Xu stole the source code for computer performance-enhancing software while working for IBM from 2010 and 2014, with the intent to benefit China's National Health and Family Planning Commission.

Acting Assistant Attorney General Dana J. Boente of the Justice Department's national security division said the agency “will not hesitate to pursue and prosecute those who steal from American businesses.” Xu, a Chinese national, “is being held accountable for engaging in economic espionage against an American company,” Boente said in a statement. more

What Becomes of Industrial Espionage?

Ever wonder what happens to all the intellectual property that is collected by corporate espionage snoops? An article in Wired Magazine gives some clues in Tesla's Latest Chinese Competitor Takes Screens to an Extreme...

Chinese car startup Byton unveiled an SUV... if the company manages to sell for the quoted $45,000 price, will excite people who can’t wait for a Tesla Model 3...

“What’s significant here is they seem to have done a thorough job of answering all the questions,” said Stephanie Brinley, Senior Analyst at IHS Markit, as we pushed through the crowds trying to take pictures of the crazy interior through the windows. “They seem to have learnt from some of the others who had more ideas, and less detail.”...

The SUV should be good for over 300 miles of range from a 71- or 95-kwh battery back, quite similar to what Tesla offers. The battery can be fast charged to 80 percent in 30 minutes, totally plausible with current technology. It will come with single, or dual motors, just like Tesla cars.

Ostensibly, this is an article about a new car, but the espionage undertones are obvious.

Keep an eye out to see where your intellectual property is popping up. Better yet, keep an eye out for the easiest-to-spot, early warning sign you are under attack, electronic eavesdropping.

Smart businesses conduct regularly scheduled Technical Surveillance Countermeasures bug sweeps, aka TSCM. It's a standard security practice. You can learn more about it, here.

Electronic Eavesdropping & Wiretapping: Two More Reasons Businesses Need TSCM Inspections

There are two different types of wiretapping threats that can harm startups and established businesses alike -- especially if they house proprietary, confidential information.

When espionage hits. It feels like this.

First, there's government wiretapping. You might assume the simplest way to eliminate this threat is to abide by the law, but you’d be forgetting that, aside from the U.S. government, there are plenty of countries that have proven they’re willing to use Big Brother-style surveillance tactics to compromise private companies. If you work with an opposition party or in a sensitive industry in another country, your client’s government might target your business. 

Then, there's old-fashioned corporate espionage. If a competing company is desperate to get an edge over your business, it may use wiretapping to steal your information or otherwise compromise your company to gain an advantage. more

Be Successful Like Apple - Get Serious About Information Security

A recording of an internal briefing at Apple earlier this month obtained by The Outline sheds new light on how far the most valuable company in the world will go to prevent leaks about new products.

The briefing, titled “Stopping Leakers - Keeping Confidential at Apple,” was led by Director of Global Security David Rice, Director of Worldwide Investigations Lee Freedman, and Jenny Hubbert, who works on the Global Security communications and training team...

The briefing, which offers a revealing window into the company’s obsession with secrecy, was the first of many Apple is planning to host for employees. In it, Rice and Freedman speak candidly about Apple’s efforts to prevent leaks...

Director of Global Security, David Rice...“We deal with very talented adversaries. They're very creative and so as good as we get on our security controls, they get just as clever.” more

If your security plan does not include Technical Information Security Surveys, contact me. ~Kevin