Peter J. Toren Weisbrod, Matteis, and Copley PLLC 1900 M Street, N.W. Washington, D.C. 20036

1. Peter J. Toren Weisbrod, Matteis, and Copley PLLC 1900 M Street, N.W. Washington, D.C. 20036 202-499-7900 ptoren@wmclaw.com Petertoren.com Weisbrod Matteis & Copley

2. Overview • Social Media • Identification of trade secrets • Preemption • Misappropriation By Departing Employees/Other Agents • Computer Fraud and Abuse Act (“authorization”) • International • Economic Espionage Act Weisbrod Matteis & Copley

3. Social Media Weisbrod Matteis & Copley

4. Social Media • Are employer social networking accounts protectable trade secrets? • E.g., whether a nightclub owner’s MySpace page and its connections could constitute a protectable trade secret Weisbrod Matteis & Copley

5. Social Media • MySpace pages password protected • “Friend” connections for the clubs’ MySpace pages were more than just lists of potential customers • Provided personal information about the “friends” and their preferences • Clubs’ list of friends could not be duplicated without a substantial amount of time and expense. • Sufficient facts to state a claim that those accounts were trade secrets. (Christouv. Beatport LLC, 849 F.Supp. 2d 1055). Weisbrod Matteis & Copley

6. Specificity of Identification of the Trade Secrets Weisbrod Matteis & Copley

7. Trade Secret Identification • CA section 2019: Before commencing any discovery relating to a trade secret allegedly misappropriated, the alleging party must “identify the trade secret with reasonable particularity” Weisbrod Matteis & Copley

8. Identification • What does this mean? • Does not require “every minute detail” or the “greatest degree of particularity possible.” • How is it determined? • Mini-trial not required. • May require an explanation of how the alleged trade secret differs from matters known to skilled persons in the field. • Must be more than a generalized description Weisbrod Matteis & Copley

9. Identification • Composition of Gel Material:Delphon customizes the composition of its gel materials to its customer needs. Specifically, the properties of the gel, including the tackiness can be modified per customer requests. The varieties of Delphon gel materials (i.e., levels of tackiness) and the ingredients, additives or fillers to manufacture each type of Delphon gel are proprietary trade secrets.” Weisbrod Matteis & Copley

10. Identification • “Plaintiff must identify each particular composition, formula, technology and manufacturing techniques, application and manufacture of gel materials without further delay.” Weisbrod Matteis & Copley

11. Other States • Other states have followed California • New York – State court required that a plaintiff specifically plead its trade secrets in detail before proceeding with discovery. • Colo. Dist. Ct. – Before the plaintiffs may compel discovery they must file a complaint that “describes the actual equipment, methods, software or other information” the claim as trade secrets. • General allegations and references to other products or information are not sufficient. Weisbrod Matteis & Copley

12. New York • Must identify specific source codes and their component parts and sequencing that a former employee allegedly misappropriated and shared with his current employer. • Rejected plaintiff’s argument that a cost effective and legally sufficient solution to meet its burden of trade secret identification was to list the source code components that were not subject to trade secret protection – i.e., code that was covered by third-party licenses, in the public domain, or otherwise nonproprietary. Weisbrod Matteis & Copley

13. Preemption Weisbrod Matteis & Copley

14. Preemption • UTSA: Displaces/preempts conflicting state remedies based on a misappropriation of a trade secret. • 3 exceptions – (1) Contractual remedies; (2) Civil remedies that are not based upon misappropriation of a trade secret: or (3) Criminal remedies. Weisbrod Matteis & Copley

15. Preemption • Does the UTSA preempt claims based on the misappropriation of information that does not meet the UTSA’s definition of a “trade secret?” Weisbrod Matteis & Copley

16. Preemption • It depends • “Majority” – Undermine the uniformity and clarity that motivated the creation and passage of the UTSA (preemption) . • Intended result: Otherwise would render the statutory preemption provision effectively meaningless. • “Minority” - Common law/statutory claims are not preempted if they involve information that does not meet the statutory definition of a trade secret. • Preempted by a statute that does not provide a cause of action Weisbrod Matteis & Copley

17. Preemption • Are the other claims dependent on the same facts as the misappropriation of the trade secrets claim? Weisbrod Matteis & Copley

18. Preemption Weisbrod Matteis & Copley • Different Standards: • All claims that are factually related to the alleged misappropriation • Only appropriate where other claims are no more than a restatement of the same operative facts which would plainly and exclusively spell out only trade secret misappropriation • Claims only where proof of a non-UTSA claims would also simultaneously establish a claim for misappropriation of trade secrets.

19. Misappropriation of Trade Secrets By Departing Employees or Other Agents Weisbrod Matteis & Copley

20. Computer Fraud and Abuse Act (CFAA) • Primarily a criminal statute • Damage or loss in excess of $5,000. • Section 1030(a)(2): Prohibits the intentional access of a protected computer without authorization or in excess of authorization for the purpose of obtaining information. Weisbrod Matteis & Copley

21. CFAA Weisbrod Matteis & Copley Used as an entrée to federal court by companies to assert claims against disloyal employees who have stolen confidential info/trade secrets.

22. CFAA • Courts are split about whether it is intended to cover only computer hackers and electronic trespassers or does it also apply to employees who abuse computer access privileges and misuse company information? Weisbrod Matteis & Copley

23. CFAA “Exceeds Authorization” • Does an employee who downloads files shortly before leaving a company for a competitor exceed authorized access or access without authorization if at the time he downloaded the files he had access privileges? Weisbrod Matteis & Copley

24. CFAA “Exceeds Authorization • Exceeds authorized access: “[T]o access a computer with authorization and to use such access to obtain or alter information in the computer that he accesser is not entitled so to obtain or alter.” • Applies to a person who uses a limited level of initial access authority to obtain other, more highly protected information that he or she is not entitled to access • “an authorized user who crosses boundaries set by the system owner.” Weisbrod Matteis & Copley

25. CFAA “Without Authorization” • Not defined • Circuit split on whether an employee who accessed a computer network with an improper purpose acted “without authorization” and may be held liable under the CFAA Weisbrod Matteis & Copley

26. CFAA“Without Authorization” • Fifth and Sixth Circuits • “The employee’s breach of his duty terminates his agency relationship and with it his authority to access the laptop.” (Int’l Airport Ctrs. v. Citrin, 440 F.3d 418 (7th Cir. 2006). • Employee exceeded her authorized access when she accessed confidential customer information in violation of her employer’s computer use restrictions and used that information to commit fraud (United States v. John, 597 F.3d 263 (5th Cir. 2010)). Weisbrod Matteis & Copley

27. CFAA“Without Authorization” • 4th and 9th Circuits • Rejected expansive reading of the CFAA. • Violations of an employer’s computer use policy constituted accessing a computer in excess of authorization. • Intended to punish hacking, not misappropriation of trade secrets. • If Congress meant to expand the scope of criminal liability to everyone who uses a computer in violation of computer use restrictions they would have said so. Weisbrod Matteis & Copley

28. Dissent • “Nothing to do” with minor violations of company’s computer policy • Everything to do with “stealing an employer’s valuable information to set up a competing business with the purloined data, siphoned away from the victim, knowing such access and use were prohibited in the defendants employment contracts. Weisbrod Matteis & Copley

29. International Issues Weisbrod Matteis & Copley

30. International Issues • Complaint pleading requirements • Forum Court • Personal jurisdiction under long-arm statute/due process clause • Discovery pursuant to the Hague Convention • Foreign privacy laws • Inform the government? • EEA • ITC proceedings Weisbrod Matteis & Copley

31. Economic Espionage Act Weisbrod Matteis & Copley

32. Economic Espionage Act • Section 1831: Economic Espionage (benefit a foreign entity) • Section 1832: Theft of Trade Secrets • Common elements • Misappropriation of information. • Knowledge that the information is a trade secret. • Information is in fact a trade secret. • Reaches overseas conduct. Weisbrod Matteis & Copley

33. U.S. v. Aleynikov • Aleynikov encrypted and uploaded thousands of lines source code from GS’ HFT system to an outsider server in Europe, attempted to erase his digital tracks, downloaded the source code to his personal computer in N.J. • Convicted/Sentenced to 97 months. • EEA/NSPA • Imprisonment based on “$7 • to $20 million loss figure.” • Served over 1 year • 2d Circuit overturned conviction. Weisbrod Matteis & Copley

34. U.S. v. Aleynikov • EEA: Trade secret itself is “intended to, or actually move in interstate or foreign commerce. • HFT system was neither “produced for” nor “placed in” interstate/foreign commerce. • “Because the HFT system was not designed to enter or pass in commerce, or to make something that does, Aleynikov’s theft of source code relating to that system was not an offense under the EEA.” • EEA only covers trade secrets that relate to products that are intended for sale in the open market. Weisbrod Matteis & Copley

35. EEA Prosecutions • 9 prosecutions under §1831 • 115 under § 1832 Weisbrod Matteis & Copley

36. Recent Cases • Attempted theft of trade secrets from DuPont relating to technology to produce titanium dioxide. (1st case charging a Chinese company owned or controlled by the state. • Two Chinese nationals charged for attempting to purchase trade secrets from Pittsburgh Corning in Sedalia, Missouri. • South Korean company and five executives indicted on October 18, 2012, for stealing trade secrets from DuPont relating to Kevlar. Weisbrod Matteis & Copley

37. Need More Information? Buy my book: Intellectual Property & Computer Crimes, (Law Journal Press) Coverage includes detailed analysis of the EEA and civil trade secret law Damages and the meaning of unauthorized access under the CFAA Recent prosecutions under the Trademark Counterfeiting Act State prosecutions for computer hacking and theft of trade secrets Analysis of DMCA criminal and civil cases Discussion of general criminal laws used to prosecute intellectual property crimes. Weisbrod Matteis & Copley

38. Thank You! • Questions 202-499-7900 ptoren@wmclaw.com Weisbrod Matteis & Copley