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Thursday Wrap Up (Feb. 16, 2012): Noteworthy Trade Secret, Non-Compete and Cybersecurity Articles from the Web

 
by John Marsh 16. February 2012 11:00

Here are the noteworthy trade secret, covenant not to compete and cybersecurity stories from the past week; as you will see, it was an extremely busy week and a significant number of the posts address China, no doubt because of the U.S. visit of Chinese Vice President Xi Jinping:

Trade Secrets and Non-Competes:

  • Any reversal of the TianRui Group v. ITC decision will have to come from the U.S. Supreme Court as the Federal Circuit just declined to reconsider the decision en banc (thanks to Wil Rao for the update; Wil represented the American company that initiated the underlying ITC action). TianRui Group was one of the most significant trade secret decisions of 2011 as it provided for a remedy (a ban on importation) for products incorporating misappropriated trade secrets overseas.  (A copy of the order entering judgment is attached below).
  • The Delaware Non-Compete Law Blog describes a recent case, Chesapeake Insurance Advisors, Inc. v. Williams Insurance Agency, Inc., that confirms the Delaware Chancery Court's unwillingness to "blue pencil" an overly broad non-compete or non-solicitation provision. Let this serve as a warning to anyone drafting an agreement governed by Delaware law.
  • Hanjuan Jin, a former Motorola Engineer, was convicted last week of stealing Motorola's trade secrets but avoided the more serious economic espionage charges. (I have attached a PDF copy of the 77-page opinion below). In a story that borders on being an urban myth in trade secret circles, Jin was detained by federal agents at Chicago's O'Hare International Airport in 2007 during a random security search before she could board a flight to Beijing on a one-way ticket. That discovery led to the subsequent litigation between Motorola and a number of its former employees, a case that settled last month after the district court denied the former employees' motions for summary judgment and set it for trial.
  • Senator John Kerry apparently gave visiting Chinese VP Xi an earful about the experience of a Massachusetts company that believes its trade secrets were stolen in China and has been frustrated by the Chinese legal system. In a New York Times article entitled "U.S. to Share Cautionary Tale of Trade Secret Theft With Chinese Official," the company, American Superconductors, "saw 70 percent of its business evaporate last year after a Chinese partner enticed one of its employees to steal the crown jewel of its technology." 
  • Seyfarth Shaw's Trading Secrets Blog has a nice summary of the recent decision by the Illinois Appellate Court, Second District, in Hafferkamp v. Llorca retroactively applying the Illinois Supreme Court's holding in Reliable Fire Insurance v. Arrendondo. As readers of this blog will recall, in Reliable Fire Insurance, the Illinois Supreme Court required that a court determine whether there was in fact a legitimate business interest in support of a non-compete.
  • Kenneth Vanko's Legal Developments in Non-Compete Law Blog is reporting that the Illinois legislature is considering leveling the playing field for employees who prevail in non-compete disputes. According to Kenneth, House Bill 5198 would amend the Illinois Code of Civil Procedure to allow a circuit court to shift attorneys' fees to a prevailing defendant if a contract under which a plaintiff sues allows for the plaintiff to recover fees.
  • The Connecticut Supreme Court has sided with the University of Connecticut's decision to withhold information about its boosters. The university said lists naming its donors and other supporters qualify as trade secrets that other institutions could use to lure away its fans' dollars and loyalty and are therefore exempt from public records requests under Connecticut law.

Cybersecurity:

  • Both the New York Times and Wall Street Journal ran stories this week about the present efforts within the Senate to move forward on the Cybersecurity Act of 2012. The New York Times wonders whether the ghosts of SOPA and PIPA will complicate passage of that legislation.
  • The New York Times' Bits Blog entitled "How Much Have Foreign Hackers Stolen?" quotes Mike McConnell, the former director of national intelligence and now vice chairman at Booz Allen Hamilton, as estimating that foreign cyberthieves steal 867 terabytes of data from the United States, or “nearly four times the amount of data collected in the archives of the Library of Congress” on a daily basis. That, my friends, is a lot of data.
  • The Wall Street Journal also ran a major story (it was on the front page in the print edition) describing the nearly-decade long efforts of Chinese hackers directed towards Nortel. According to the article, "Chinese Hackers Suspected in Long-Term Nortel Breach," the hackers had the passwords of Nortel's CEO and six other senior executives and unfettered access to its trade secrets from 2000 to 2009. It is a chilling read.

News You Can Use:

  • Planning on traveling to China anytime soon? In an article entitled "Traveling Light in a Time of Digital Thievery," the New York Times (who else this week?) quotes security experts that recommend leaving laptops, smartphones and other mobile devices behind and bringing "clean" loaner devices. 
  • For those looking to protect their trade secrets in the cloud, David McGrath and Charles Stewart have an interesting article, "Minimizing the Risk of Data Theft Through Cloud Computing."

TianRui Group v. ITC Judgment Issued as Mandate.pdf (85.46 kb)

U.S. v. Hanjuan Jin Memorandum.pdf (2.16 mb)

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About John Marsh

John Marsh Hahn Law AttorneyI’m a Columbus, Ohio-based attorney with a national legal practice in trade secret, non-compete, and emergency litigation. Thanks for visiting my blog. I invite you to join in the conversations here by leaving a comment or sending me an email at jmarsh@hahnlaw.com.

Disclaimer

The information in this blog is designed to make you aware of issues you might not have previously considered, but it should not be construed as legal advice, nor solely relied upon in making legal decisions. Statements made on this blog are solely those of the author and do not necessarily reflect the views of Hahn Loeser & Parks LLP. This blog material may be considered attorney advertising under certain rules of professional attorney conduct. Regardless, the hiring of a lawyer is an important decision that should not be based solely upon advertisements.

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