A brazen and sophisticated computer intrusion into the records of over 145 million Americans launched from computer hackers based in China led to recent criminal prosecutions under the Computer Fraud and Abuse Act. [1] Courts are willing to extend American law beyond U.S. boundaries often when criminal misconduct takes place overseas that injures Americans. The Constitution grants Congress broad powers to enact laws with extraterritorial scope.[2] The Computer Fraud and Abuse Act, 18 U.S.C. § 1030 (“CFAA”),  is one such statute that provides criminal and civil remedies resulting from unauthorized access to computers used in interstate commerce or communications.[3]  And, it further provides for extraterritorial jurisdiction for criminal or civil violations of the CFAA. Increasingly, U.S.-based companies have become victims of significant computer misconduct launched from overseas.[4]  And, with the increased widespread use of social media platforms during the Covid-19 pandemic, computer mischief in an effort to gain confidential business information is on the rise.[5]

Continue Reading Extraterritorial Application of the Computer Fraud and Abuse Act

Non-U.S. companies should not assume they are immune from civil claims under the federal Defend Trade Secrets Act of 2016 (“DTSA”) simply because they are not U.S. companies.  Since the enactment of the DTSA four years ago, the statute’s extraterritorial application has not been a heavily-litigated issue; however, a recent series of federal decisions indicate that civil litigants may apply the DTSA to foreign defendants so long as some act in furtherance of the misappropriation occurred in the United States, even if the foreign defendants’ acts took place outside the United States.
Continue Reading Non-U.S. Companies and the DTSA: Parameters of a Developing Reality

Reprinted with permission from the May 21, 2020 issue of The Recorder. © 2020 ALM Media Properties, LLC. Further duplication without permission is prohibited.  All rights reserved.

Video conferencing has been available for years but given its new popularity in these COVID-19 times,[1] it behooves businesses to take care to protect their trade secrets during video conferencing.  Here, we address some potential risks to trade secrets from video conferencing –including hidden ones – and offer some potential measures to limit them.
Continue Reading Who’s Watching? Hidden Dangers To Trade Secrets From Video Conferencing

In a vacuum, the mere notion of giving a rival company access to your business’s confidential and proprietary materials would be unthinkable.  After all, this is the “secret sauce” that has helped expand your company, drive market share, and generate immense value.  If a competitor gained access to your trade secrets, the very foundations of your success could be in peril.
Continue Reading Protecting Trade Secrets During An Acquisition: Showing Off The Goods Without Giving Away The Store

On April 23, 2020, the California Court of Appeals affirmed a trial court decision refusing to order payment of a “reasonable royalty” as damages for misappropriation of a trade secret.  For the first time in a published California appellate decision, the Ajaxo court applied a test used to determine royalties in patent cases to a trade secret misappropriation case. Ajaxo, Inc. v. E*Trade Financial Corporation, 261 Cal. Rptr. 3d 583 (Cal. Ct. App. 2020).

Continue Reading What’s the Value? California Court Applies Patent Royalties Test To Trade Secret Claim

Here, we provide a cautionary tale of what can happen to a business that fails to preserve documents that are potentially relevant evidence to pending or threatened trade secrets litigation, and offer some takeaways for businesses that would like to avoid such dire straits.[1]
Continue Reading A Cautionary Trade Secrets Tale: Failure To Preserve Potentially Relevant Evidence

For the first time, the Supreme Court has agreed to review the Computer Fraud and Abuse Act (CFAA). The Court’s initial review of the CFAA comes in the wake of a federal circuit split as to whether the statute can only be deployed against hackers and unauthorized users of electronic systems, or also against authorized users who use the information for unauthorized purposes. The Court’s decision may significantly affect not only how law enforcement uses the CFAA, but also whether civil litigants, such as employers, may use the CFAA to defend against unauthorized employee activities.
Continue Reading U.S. Supreme Court Case Preview—Van Buren v. United States: Does Use of a Computer for an “Improper Purpose” Violate the Computer Fraud and Abuse Act?

Although employers may not think that the COVID-19 pandemic is threatening their trade secrets, it is.  The massive layoffs resulting from the COVID-19 pandemic[1] place employer trade secrets at risk.  Here, we offer 6 steps employers can consider to protect their trade secrets in these extraordinary times.
Continue Reading 6 Steps to Protect Your Trade Secrets During Covid-19 Layoffs

Companies routinely use Non-Disclosure Agreements (NDAs) to protect confidential information shared with potential acquirers, consultants, and other third parties.  But companies cannot merely rely on stock NDAs to protect that information.  They should understand each NDA’s procedures for designating information as “Confidential” (and ensure compliance with them), and grasp the interplay between NDAs and state trade secret laws in terms of imputing duties of confidentiality.
Continue Reading 4 Steps to More Effectively Use NDAs to Protect Confidential Information

Social media contact lists have become an increasingly important part of a business’s customer lists.  While courts are still grappling with who legally “owns” the data that the employee acquired on the employer’s dime—such as LinkedIn customer connections or access to a list of Twitter-feed recipients[1]—employers can still take steps to bolster the company’s claim of ownership.
Continue Reading Protecting Social Media Contact Lists as Trade Secrets