The Trade Secrets Blog

Following Trade Secrets Litigation

Clear Win for ClearOne

I’m a little late on this one but, better late than never. According to marketwatch.com, ClearOne Communications was awarded in excess of $10 million by a jury in a federal trade secret case in Utah. ClearOne sued BiAmp Systems, WideBand Systems, Dr. Jun Yang (a former employee of ClearOne), Andrew Chiang, Lonnie Bowers and Versatile DSP, Inc. for misappropriation of trade secrets, breach of contract, breach of the covenant of good faith and fair dealing, and breach of fiduciary duty relating to the theft of algorithms and computer code.

Key Graph:

On November 5, 2008, the jury returned a verdict in the Intellectual Property Case in favor of ClearOne and against all of the Defendants. Accordingly, the jury awarded ClearOne approximately $3.5 million in compensatory damages and $7.0 million in punitive damages. Among other things, the jury found that all of the Defendants willfully and maliciously misappropriated ClearOne’s trade secrets. Based on that finding, the court may also award ClearOne exemplary damages and reasonable attorneys’ fees. The court left in place the previously-entered preliminary injunction, pending ClearOne’s application for entry of a permanent injunction against the Defendants.

Big win for ClearOne and congratulations to the Magleby & Greenwood law firm who obviously did an exemplary job of presenting ClearOne’s case to the jury. Big wins like this typically mean that a company has paid attention to its trade secrets protection plan and adhered to its implementation, including, confidentiality agreements, exit interviews, password protections, limited access, etc. Your company should be doing the same thing.

November 21, 2008 Posted by | Intellectual Property, misappropriation, trade secret theft, Trade Secrets | , , , , , , , , | 1 Comment

Ex-Intel Employee Indicted for Trade Secret Theft

Networkworld.com is reporting that Biswamohan Pani, a design engineer at Intel’s Hudson, Massachusetts offices before going to work for AMD, is accused of stealing $1 billion worth of trade secrets to help his new employer.

Key graph: “Pani is accused of accessing Intel’s network remotely and downloading 13 top-secret documents and other proprietary information related to methods for designing microprocessors, “including a document explaining how the encrypted documents could be reviewed when not connected to Intel’s computer system” the Telegram reports.”

Apparently AMD was unaware of the theft. “Prosecutors say Pani planned to use the secrets to advance his career at AMD. The information Pani allegedly downloaded “was worth more than $1 billion in research and development costs,” the Associated Press reported. Pani told investigators he downloaded the top-secret documents to help his wife, who works for Intel, the Telegram reports.”

The defense that he was just helping his wife is an interesting one. It will be interesting to see how it plays. Would the wife need the information that he accessed to do her job? Was the wife cleared to access the allegedly stolen documents? How did Pani access the documents? Using the wife’s clearance or his own clearance from when he used to work for Intel? There are a lot of unanswered questions and we’ll keep an eye out on this one. My guess is that the “I did it for my wife” defense won’t stand up to scrutiny. As far as trade secrets cases go, this is about as big as it gets and will be very interesting to follow.

One word of advice for Intel: If your ex-employees can access over $1 billion worth of information from a remote location after they have started work for your major competitor, your trade secrets protection plan needs some serious work. While it is all well and good to have confidentiality agreements, and the like in the event of something like this, doesn’t it just make sense to ensure that its secure from this type of misapproriation in the first place? $1 billion worth of information was available remotely? It’s an eye-popping amount of information to have floating in cyberspace, ripe for the plucking by ex-employees.

November 7, 2008 Posted by | confidentiality, confidentiality agreement, misappropriation, non-disclosure agreement, trade secret theft, Trade Secrets | , , , , , , | 1 Comment