The Trade Secrets Blog

Following Trade Secrets Litigation

Feds Seizing Laptops at U.S. Customs?

The Reason Foundation has an article by Steven Titch which highlights the increasing likelihood that, upon your return from travel abroad, a U.S. Customs Agent may ask to see your laptop or cell phone in order to inspect and copy the contents, including all business and personal information. You can read the article here.

According to the article, U.S. Customs and Border Protection are equating laptops and cell phones to suitcases (which they are allowed to search). I will not go into the very serious issues these kind of inspections raise–the article does an excellent job. However, I do believe it is important, from a trade secrets standpoint, to be aware of these practices so that we don’t put confidential information at risk.

Key graph: “The searches are becoming common enough that, according to the Washington Post, a number of companies are advising employees who travel internationally to wipe their hard drives before leaving the country in order to prevent disclosure of proprietary or highly secure information.” Very scary.


March 14, 2008 Posted by | confidentiality, Intellectual Property, Trade Secrets | , , , , , | 1 Comment

California Employee Admits to Theft of Trade Secrets

The Sacramento Business Journal reported last week that Allen Cotten, a former employee of Genesis Microwave, Inc., “admitted to stealing trade secrets from Genesis Microwave and offering them for sale to foreign governments.” Notice the emphasis on employee. Regular readers of this website will understand the significance of that fact.

According to the article, “Cotten worked for Genesis Microwave, Inc., in El Dorado Hills, and admitted that beginning in February 2004 he began to steal plans, designs, parts and specifications for components known as logarithmic video amplifiers. The technology has military applications for radar jamming, guidance, countermeasures and locating enemy signals during combat.”

This happens far too frequently–get your trade secrets protection plans in order and make sure they are followed. Your employees are not your friends.

Kudos to the FBI for doing the legwork that resulted in the confession.

March 7, 2008 Posted by | Intellectual Property, trade secret theft, Trade Secrets | , , , | 1 Comment

FBI Arrests Chinese Chemist for Theft of Trade Secrets

In yet another employee misappropriation case, the FBI got involved in the alleged theft of trade secret information for intumescent fire-proofing coating (I don’t know what it is either) from a worldwide paint company with a subsidiary in Houston, Texas. Jensen Zeng was arrested on January 29, 2008, and detained pending further criminal proceedings after being indicted on two counts of trade secrets theft and one count of computer fraud. Although the press release from the FBI doesn’t say it, the charges likely stem from violations of the Economic Espionage Act. Furthermore, there is no indication of a civil suit by the company, I am sure we can expect one.

Based on the brief allegations detailed in the FBI press release, we can begin to pciture the strong case the paint company has made for itself because, if the allegations are proven true, they implemented and sustained an effective trade secrets protection plan (something this blog highly recommends doing if you have any trade secret information which provides value to your company). In the following paragraph from the press release I will highlight the items which are directly related to a trade secrets protection plan.

According to the indictment, Zeng allegedly signed a confidentiality agreement with his employer and was aware of his responsibility to keep and maintain the confidentiality of his employer’s proprietary interest in trade secrets. Between Nov. 1, 2005 and Jan. 29, 2008, Zeng is accused of accessing without authorization his employer’s protected computer system and obtaining the trade secret formula for the intumescent fire-proofing product with the intent to defraud his employer. Zeng is accused of downloading the trade secret formula from the company’s database with the intent to convert the trade secret to the benefit of a person other than his employer on or about Nov. 1, 2005, and again on Jan. 29, 2008, and concealing the formula in a box under the insulation in the attic of his residence. The indictment also alleges Zeng formed his own business in October 2007 for the purpose of marketing intumescent fire-proofing coating.

A trade secrets protection plan is critical to any action for trade secrets whether brought in civil court or pursuant to Federal Laws such as the Economic Espionage Act.

February 25, 2008 Posted by | confidentiality agreement, Intellectual Property, trade secret theft, Trade Secrets | , , , , | Leave a comment