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.

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

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.

Corporate Espionage: ASML Claims Employee Stole Chip Secrets–Sold them to China

ASML has a monopoly over the global semiconductor industry, and has currently restricted the sale of its machinery to China. 

ASML claims that in an episode of corporate espionage, an employee stole their chip manufacturing secrets and sold it to China...

Based on its preliminary investigations, ASML believes that the misappropriated data will not have a negative impact on its current operations, although it concedes that some “export control requirements” may have been breached. ASML has subsequently disclosed the data breach to the appropriate authorities, and it is “implementing further corrective steps in light of this event.” more

This Week in Spy News

Swedish brothers face trial on Russia spy charges
Two Swedish brothers accused of selling secrets to Russia's intelligence services have gone on trial in what has been called one of Sweden's worst ever alleged cases of espionage. more

Alleged Chinese spy detained in Quebec seeks bail, wants to clear name
A former employee of Quebec's electricity utility who is charged with economic espionage for the benefit of China denied on Thursday that he was a flight risk and said he wanted to stay in Canada to fight the charges. more

US Senators Reportedly Worried About Foreign Espionage As Chinese Drones Fly Over No-Go Zones In DC
Recreational drones made by Da-Jiang Innovations, or DJI, a Chinese technology company, have been reportedly detected in restricted airspace over Washington, D.C. more

Pakistan appoints ex-spy master Gen. Munir as new army chief
Pakistani Prime Minister Shahbaz Sharif has named the country's former spy chief as head of the military, the information minister said Thursday, ending months of speculation about the new appointment. more

Fear of espionage: USA bans Huawei products from stores
The US government bans the sale and import of communication devices from Chinese smartphone manufacturers and network suppliers Huawei and ZTE. They posed an unacceptable risk to national security, the US telecommunications regulator FCC said on Friday. more

UK bans Chinese surveillance cameras from 'sensitive' sites
Hikvision, a leading Chinese surveillance company, has denied suggestions that it poses a threat to Britain's national security after the UK government banned the use of its camera systems at "sensitive" sites. more

Travelling Australian espionage exhibition reveals double life of post-WWII spies
The touring exhibition is at the Albury Library Museum, on the New South Wales and Victorian border, where it explores espionage and counter-espionage in Australia, from federation through to the present day. more

Bond-inspired watches pay homage to franchise’s 60 years

Swiss watchmaker Omega has released two 007-inspired timepieces.
Photos courtesy Omega

In honour of six decades of high-tech gadgets, espionage, and ‘shaken, not stirred’ martinis, Swiss watchmaker Omega has crafted two new James Bond-inspired timepieces. more

Tough Week for Spies

• Bulgaria expels 10 Russian diplomats on allegations of spying. more
  
  
• U.S. accuses five of spying and harassing China’s critics, effort to smear congressional candidate. more
  
  
• Norwegian photographer arrested in Greece on spying charges. more
  
  
• Reported Detention of Russian Spy Boss Shows Tension Over Stalled Ukraine Invasion more
  
  
• Submarine Spy Couple Tried to Sell Nuclear Secrets to Brazil more
  
  
• Russian spy captain killed on 'top secret' operation in Ukraine. more
  
  
• Spy agencies' leaks of Russian plans point to the future of information warfare. more
  
  
• Slovakia expels 3 Russian diplomats after spy services info. more
  
  
• The long-haul fight over police spying allegations is on. more
  
  
• Muslims Continue Battling FBI For Spying on OC Mosques After Supreme Court Ruling more
  
  
• Russian spy chiefs ‘under house arrest’ as Putin turns on his security chiefs over invasion setback. more
  
  
• New FBI documents link Saudi spy in California to 9/11 attacks. more
  
  
• Cyberspace making Canadian secrets more vulnerable, spy service official warns. more
  
  
• Why 78% Of Employers Are Sacrificing Employee Trust By Spying On Them more
  
  
• Neighbour fed up with spying child: 'I'm entitled to privacy in my own garden'. more
  

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

Investigation-driven Findings Identify Major Spikes in Industrial Espionage Incidents

 Key findings of the DTEX Systems 2022 Insider Risk Report include:

• The ‘Super Malicious Insider’ accounted for 32% of malicious insider incidents...

• 72% year-over-year increase in actionable insider threat incidents;

• 42% of actionable incidents were related to IP and data theft, including industrial espionage incidents related to the theft of trade secrets, source code, and active collusion with a foreign nexus;

• 75% of insider threat criminal prosecutions were the result of remote workers;

• 56% of organizations had an insider data theft incident resulting from employees leaving or joining companies;

• +200% year-over-year increase in data loss associated with users taking screenshots during confidential Zoom and Microsoft Teams meetings; and

• +300% year-over-year increase in employees utilizing corporate assets for non-work activities.

For more than a decade, insider threats have been categorized as either malicious, negligent or compromised. Based on the findings of the DTEX i³ team, a fourth persona has emerged—the Super Malicious Insider. 

The Super Malicious Insider is a technically proficient employee who is acutely aware of an organization’s cyber security architecture, solutions, and processes and who understands both the technical and human analyst limitations in detecting insider threat indicators. more

It is time for your organization to implement a corporate counterespionage plan.

Ex-Monsanto Employee Pleads Guilty to Corporate Spying

A former Monsanto employee pleaded guilty to espionage charges Thursday for stealing trade secrets from the U.S. agriculture behemoth for the benefit of China, prosecutors said.

Xiang Haitao, 44, a Chinese national who resided in Chesterfield, Mo., worked as an imaging scientist for Monsanto and its subsidiary The Climate Corporation from 2008, and was arrested a day after leaving his company in June of 2017 while awaiting to board a flight to China in possession of a one-way ticket and electronic devices...

The Justice Department has said that Xiang had applied for and was ultimately recruited into a Chinese government program that seeks to enlist Chinese academics and scientists working abroad to illegally transfer technology and intellectual property to Beijing. more

Security Director Alert: Millions of Connected Cameras Open to Eavesdropping

A supply-chain component lays open camera feeds to remote attackers thanks to a critical security vulnerability.  

Millions of connected security and home cameras contain a critical software vulnerability that can allow remote attackers to tap into video feeds, according to a warning from the Cybersecurity and Infrastructure Security Agency (CISA).

The bug (CVE-2021-32934, with a CVSS v3 base score of 9.1) has been introduced via a supply-chain component from ThroughTek that’s used by several original equipment manufacturers (OEMs) of security cameras – along with makers of IoT devices like baby- and pet-monitoring cameras, and robotic and battery devices. 

The potential issues stemming from unauthorized viewing of feeds from these devices are myriad.

For critical infrastructure operators and enterprises:

• video-feed interceptions could reveal sensitive business data,
• production/competitive secrets,
• information on floorplans for use in physical attacks,
• and employee information.

And for home users, the privacy implications are obvious. more

Today's Spy Stories

The Spanish judge presiding over the trial of a security firm owner apparently hired to spy on jailed Wikileaks publisher Julian Assange has sent a request to the US Department of Justice for an interview with Zohar Lahav, the Israeli-American vice president for executive protection at Las Vegas Sands. more

The Greek authorities have "prepared a case file that includes the offenses of forming and joining a criminal organization, espionage, violation of state secrets, as well as violations of the Immigration Code against a total of 35 foreigners," reported Greek news agency ANA-MPA... more

A bug recently found in the coding of the Instagram app could give hackers easier access to try to spy on you. more

These days, many people consider their cars to be their safe havens-their sanctuary. Did you know that your car is actually spying on you? You probably already know your phone, your computer, heck, even some running shoes, are constantly collecting and storing information about you. Most of today’s vehicles are doing it, too. Most newer model vehicles collect data and send it wirelessly and surreptitiously to the vehicle manufacturer. more  sing-a-long

Is it time to start spying on your employees? more 

Conspiracy theories are common on social media; in the field of technology, the biggest of recent years proposed that 5G will kill you (it won't). But now Apple and iOS 14 have acquired a viral conspiracy theory of their own...claims that iOS 14's new home screen widgets - specifically the Widgetsmith and Color Widgets apps - contain keyloggers that read everything you type and steal your passwords. more

No Oversight, No Limits, No Worries: A Primer on Presidential Spying and Executive Order 12,333 more

Miss Universe Thailand contestants find a ‘spy’. Another beauty queen came under the spotlight on Monday after the manager of Miss Universe Thailand favourite Chayathanus ‘Cheraim’ Saradatta was found to be doubling up as an employee of the organising company. more

Why Private Eyes Are Everywhere Now - Private investigators have been touted as an antidote to corruption and a force for transparency. But they’ve also become another weapon in the hands of corporate interests. more

Corporate Espionage in the News

RedCurl is its name.
Corporate espionage is its game.

Security researchers today published findings on a new APT group they claim has been stealing data from organizations around the world as far back as 2018. Since then, RedCurl has targeted at least 14 private companies in 26 attacks designed to steal documents containing commercial secrets and employees' personal information.

Its targets span a range of industries and locations. The group has targeted organizations in construction, finance, consulting, retail, banking, insurance, law, and travel...

There is no indication who might have hired RedCurl, where they might be based, or who is behind these attacks, he adds. The group is fairly new, and researchers hope to learn more over time.

"Corporate espionage is not something that we're used to on the cyberscene," Mirkasymov says. Researchers believe the frequency of these attacks indicates it's likely to become more widespread in the future. more

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Three corporate espionage reasons why VW was not a good career choice...

March 14th - Former VW employee says he was fired after questioning deletion of documents. more

June 16th - Former VW employee sought by U.S. arrested in Croatia... more 

August 14th - Former VW employee under investigation for corporate espionage found dead in burned-out car...was investigated by the police on suspicion of violating business secrets. more

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The U.S. National Security Agency and Federal Bureau of Investigation today issued a joint cybersecurity advisory warning on a previously undisclosed form of Russian malware...although the objectives of Drovorub were not detailed in the report, they could range from industrial espionage to election interference. more

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Once again, LinkedIn is the battleground for nation state espionage operations. Every counterintelligence and insider threat professional should be paying attention...The goal of the social engineer is to entice the target to at least take a gander at the job offering being discussed and click the attachment which is provided. This attachment carries the payload of malware designed to compromise the device and network of the target. Once the device is compromised and the group has access to the content, their espionage goals are achieved. more

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...and Corporate Espionage can also be entertaining...

How 'American Ronin' Explores Superhumans and Corporate Espionage
As the conflict between global corporations heats up, one man decides to strike back against the unseen forces that quietly rule the modern world, using an entirely unanticipated weapon — his own mind. That’s the idea at the center of American Ronin...The series is the first collaboration between writer Peter Milligan (Shade the Changing Man, Hellblazer, X-Force) and artist ACO (Midnighter, Nick Fury), with the two playing off each other’s strengths to create a story that’s part-corporate espionage, part-superhuman thriller and unlike anything else on the stands at the moment. 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

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

Guess Who... Offered Bonus to Workers who Stole Confidential Information from Companies Around the World

A 10-count indictment unsealed today in the Western District of Washington State charges Huawei Device Co., Ltd. and Huawei Device Co. USA with theft of trade secrets conspiracy, attempted theft of trade secrets, seven counts of wire fraud, and one count of obstruction of justice.

The indictment, returned by a grand jury on January 16, details Huawei’s efforts to steal trade secrets from Bellevue, Washington based T-Mobile USA and then obstruct justice when T-Mobile threatened to sue Huawei in U.S. District Court in Seattle.

The alleged conduct described in the indictment occurred from 2012 to 2014, and includes an internal Huawei announcement that the company was offering bonuses to employees who succeeded in stealing confidential information from other companies. more

White Paper: Business Espionage: The Employee Competitor… and what to do about it.

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

Second Apple Pickin' Spy Caught in Last 6 Months

The United States FBI this week accused a Chinese citizen working for Apple of attempting to steal trade secrets that are related to the company's autonomous vehicle program, reports NBC Bay Area.

Apple launched an investigation into the employee, Jizhong Chen, when another employee spotted him taking photographs "in a sensitive work space." 

 Apple Global Security employees searched his personal computer and found "thousands" of Apple files, including manuals, schematics, photographs, and diagrams. 

Chen had recently applied for a position with a China-based autonomous vehicle company that is a direct Apple competitor. Chen was arrested a day before he was set to fly to China. 

Apple in a statement said that it is working with the authorities."Apple takes confidentiality and the protection of our IP very seriously," the company said in a statement Tuesday. "We are working with authorities on this matter and are referring all questions to the FBI."

This is not the first time an employee has been caught trying to steal secrets from Apple's car team. Back in July, the FBI charged former Apple employee Xiaolang Zhang with theft of trade secrets for stealing hardware and software that included prototypes and detailed prototype requirements. more

Business Espionage: Fish Settlement Flounders

National Fish & Seafood and Kathleen A. Scanlon, the former employee the seafood processor is suing for allegedly stealing trade secrets for her new employer, had appeared to be heading for a settlement.

Now, not so much.

The Gloucester-based seafood processor last week amended its complaint against Scanlon, its former head of research and development and quality assurance, and her new employer, Tampa Bay Fisheries, by adding more defendants and more details of the alleged conspiracy and corporate theft.

The complaint accuses Scanlon of spending most of her final days at NFS feverishly downloading company trade secrets and emails onto two portable storage devices, video-recording the clam processing line and "granting Tampa Bay's IT director unauthorized access to NFS' computers through remote access software."

The filing includes screen grabs of text conversations from Scanlon's company-issued smart phone, including one from Scanlon to Paterson that read: "I am on my way will be there in 30 minutes. Feel like I need to go to confession. More like a hypocrite."

It also states that on July 10, Scanlon was observed on video surveillance and by other NFS employees "taking video and photographic recordings of the clam production process, including the machinery and ingredient-mixing processes used in producing NFS' clam products, including its Matlaw's Stuffed Clams."

The next day, according to NFS, Scanlon resigned after more than 20 years with the company. more

Cree CEO: 'All technology companies' face espionage

Cree CEO Gregg Lowe said Tuesday that “all technology companies face the same thing” when it comes to the need to protect trade secrets.

“Every day, they are making changes to help protect and secure their technology and I think we’re no different than anybody else,” he said at Triangle Business Journal's Power Breakfast at PNC Arena.

“I think all companies face these challenges. You’ve got technology, you’ve got capability and people want to come after it.”

A former Cree employee, Coy Bell, is alleged to have stolen trade secrets worth millions by downloading classified files onto an SD card, according to a report. more

Corporate Espionage Heats Up as “Made in China 2025” Nears

Corporate espionage is an extremely serious charge in the American technology market. There have been several prominent occasions in which AMD and Intel or AMD and Nvidia have cooperated when an employee was suspected to have engaged in IP theft, precisely because the consequences of bringing a product to market that’s tainted by another company’s IP rights could be so catastrophic.

But in China, there’s a very different system in place — and the way this has played out could be driving China’s investigation of Micron and Samsung’s DRAM pricing.

Here’s what we know. Micron alleges that the United Microelectronics Corporation (UMC), a Taiwanese foundry, cooperated with Fujian Jinhua Integrated Circuit Company to steal Micron secrets.

Jinhua may have been attempting to steal secrets from Micron in a manner similar to that used by the Yangtze Memory Technology Company, or YMTC, which is now building chips that the New York Times reports look suspiciously like Samsung devices.

The Chinese companies are collectively under tremendous pressure to deliver on an initiative China calls “Made in China 2025.”

Made in China 2025 is a comprehensive Chinese effort to increase domestic production of core materials by up to 40 percent by 2020 and 70 percent in 2025.

The impact this would have on existing semiconductor manufacturing can only be described as seismic. more

Important... Made in China 2025 should be a red flag to ALL businesses in the U.S. 
Make sure you understand the impact of this initiative. Make sure you get a competent Technical Information Security Consultant on your team, soon. There won't be enough to go around once the penny drops.