THE BLOG HAS MOVED!

TO ALL MY WONDERFUL READERS:

THE BLOG HAS MOVED TO MY NEW WEBSITE, WWW.IPMADESIMPLE.COM.

I AM LOOKING FORWARD TO CONTINUING THE DISCUSSION, SO PLEASE FOLLOW ME OVER THERE FOR MORE EXCITING POSTS ON INTELLECTUAL PROPERTY STRATEGY AND MANAGEMENT ISSUES.

THANK YOU FOR READING AND FOR YOUR CONTINUED SUPPORT!

Trade Secret Theft is a Real Crime

And those found guilty go to a real jail cell.

Now you know that Trade Secret theft is on the rise and costing US companies billions of dollars in revenues.  You’ve also learned 10 important things about trade secrets and how to protect them.  Now, let’s look at three recent examples of trade secret theft that have made the news.

1.  Sanofi Aventis – Research Scientist.

Who stole what?  A former Sanofi research chemist stole thousands of chemical compounds (a company trade secret) from Sanofi.  The research scientist, a 30 year old Chinese national named Yuan Li, had worked for Sanofi for 5 years developing compounds for use in future drugs.

How did she do it?  Yuan Li downloaded the trade secret information and used personal e-mail or a USB thumb drive to transfer it to her home computer.

What did she do with the trade secrets? She tried to sell the compounds through, Abby Pharmaceuticals, the U.S. unit of a Chinese company.  Yuan Li was a 50% owner in Abby.

What happened to her?  Last month, Yuan Li was sentenced to 18 months in prison by a New Jersey Court.  She must also pay $131,000 in restitution.

2.  Akamai – Finance

Who stole what?  Elliot Doxer, who worked in Akamai’s finance department, contacted the Israeli consulate in Boston in 2006, offering to spy on Akamai and pass secret information to them.  The Israeli government informed the US government, which set up a sting operation.

What did he do with the trade secrets?  Mr. Doxer delivered numerous secret files to an undercover federal agent posing as an Israeli intelligence officer over a period of 18 months.  (No information ever made it into foreign hands.)

What happened to him?  Mr. Doxer pled guilty to foreign economic espionage and was sentenced to six months in prison, six months home confinement, and a $25,000 fine in December, 2011.

3.  Intel – Design Engineer.

Who stole what? A former Intel computer hardware engineer stole 13 secret documents from Intel’s facility in Hudson, Massachusetts. The documents are worth over $1 billion in research and development costs that described Intel’s new microprocessors.  Biswamohan Pani, an Indian national, worked for Intel from May 2003 to June 11, 2008.

How did he do it?  Mr. Pani resigned from Intel in late May, 2008, saying he was going to work for a hedge fund, and took his accrued vacation time until his last official day on June 11.   However, he started working at Advanced Micro Devices, Inc. (AMD), an Intel competitor, on June 2, 2008.  That’s right…he worked for both companies for more than a week.  From June 3 to June 11, 2008, he remotely accessed an encrypted system at Intel, and downloaded the documents to his hard drive.

What did he do with the trade secrets?  Nothing.  Intel discovered the breach very quickly, contacted the FBI who acted fast to stop any information from being used.  It is thought Pani intended to use the information to advance his career at AMD.  It is important to note that AMD denied knowledge of Pani’s wrongdoing, did not ask him to steal the information, and has cooperated fully with federal investigators.

What happened to him?  Mr. Pani pled guilty to 5 counts of wire fraud in US District Court in Massachusetts.  Each count has a possible sentence of 20 years, as well as a $250,000 fine.  The prosecutors are recommending that the judge sentence Pani to six years in jail. Sentencing is scheduled for August 8.

When I see these stories, part of me says “Really, you thought you would get away with this?”, but then I remember that trade secret theft is a real crime.  These are the people who were caught.   How many more are out there have been successful?

Obviously, the examples here involve big name companies with thousands of employees, but don’t think that trade secret theft is merely a problem for big business.  The risk exists for big and small companies, as well as universities, research facilities and non-profits alike.

If you want to protect your organization’s trade secrets, you must be proactive.  Identify them early.  Have a plan to keep them secret.  Educate your employees about intellectual property and what it means to you.  Don’t assume everyone who works for you has your best interests at heart.

Ten Things You Need to Know About Trade Secrets

Trade secrets are what make your business unique.

They are your secret sauce, or ‘Grandma’s Secret Recipe’.

They make your product or service different from everyone else out there.

They are also the most ignored form of intellectual property today.

Here are 10 things you should know in order to start protecting your valuable intellectual property today.

1.  A trade secret is any formula, pattern, device or compilation of information which is used in one’s business to give him an advantage over competitors who do not know or use it.  Trade secrets include special manufacturing methods, processes, techniques, chemical formulas, computer software, data, and customer lists.

2.  Trade secrets are important.  I always like to ask my clients, how they would react if they found out that their #1 sales person just left to work for the biggest competitor and took their customer list and pricing information with them.  How would you react?  Would you get a pit deep down in your stomach?

If that thought scares you, then you know how important your trade secrets are to your business.  Those client lists and that pricing information could be trade secrets, and if you aren’t taking active steps to protect them, then that information could be walking out the door.

Now imagine if that person left with your test data, a prototype, the secret formula to your…I think you get the idea.

3.  Trade secrets are protected by law.  However, trade secret law is not uniform across the United States.  Contact an attorney in your state to understand the specific laws governing trade secrets where you do business.  If you are doing business overseas, contact an attorney in the foreign country to see what you need to do to protect your IP in that country.

4.  Unlike patents, trademarks or copyrights, there is no registration process for trade secrets.  They reside within your business and you must protect them.

5.  Trade secrets don’t expire.  They can potentially last forever if you can keep the secret that long.  There is always the risk that an independent third party may legitimately discover and use the secret.

6.  To protect your trade secrets, you should:

  • Identify them!  (You have to be specific.  Not everything in your business is protected under trade secret law.)
  • Limit employee access.  Disclose your trade secrets on a need-to-know basis.
  • Limit visitor’s access. Have all visitors sign-in.  Provide badges to indicate they are visitors in the building. Don’t let them wander around.  Accompany them around the building.  Avoid showing them sensitive areas.
  • Provide an education.  Make sure your employees understand their obligations when it comes to all of your intellectual property, including trade secrets.
  • Have confidentiality agreements, written policies, and internal procedures for employees.

7.  If you need to disclose your trade secret to a third party, you should take certain precautions before you disclose your trade secret.  Any trade secret disclosure to third parties, i.e., customers, suppliers, consultants, etc., should be limited to only those people who NEED TO KNOW under a written agreement of confidentiality of indefinite length.  (Again, check with an attorney in your state to find out the exact steps you need to take to protect your trade secrets.)

8.  It is a crime to steal a company’s trade secrets.  In the United States, perpetrators of trade secret theft are prosecuted under the Economic Espionage Act of 1996.

9.  With the rise of the internet and technology, it is easier than ever for your employees to steal trade secrets.  What used to be a labor intensive type of theft, think photocopying documents after everyone else goes home, is now easier than ever with the help of technology we use every day.  An employee can simply download files to a thumb drive and walk out the door.

10.  As we discussed last week, trade secret theft is on the rise.  Protect your valuable intellectual property by learning what you need to be doing today to stop trade secret theft in your organization.

Bonus Question.  Can you name the most well-known trade secret in the world?  Let me know your guess in the comments below!

Next week, I’ll talk about some recent high-profile trade secret theft cases.

Did You See this Billboard Recently?

FBI Billboard

If you did, it means you live or work in a city with industries and companies at high risk for trade secret theft.

Last month, the FBI put up these billboards in 9 communities across the nation, including Boston, New York, Washington, D.C., and San Francisco, in an effort to raise awareness about a growing problem: industrial espionage.

What exactly is ‘industrial espionage’?

It’s when foreign governments, corporations, and citizens spy on US companies in an effort to steal information that can provide them with some sort of economic benefit or advantage.  They are often looking for technology, pricing information, test data, or customer lists, a.k.a. the company’s trade secrets.

Why does the US Government care about trade secret theft?

Because it is a big problem for US companies.  The FBI estimates over $13 billion has been lost since October, 2011 due to trade secret theft.  That’s $13 billion in only 7 months!

In fact, state-sponsored espionage targeting the intellectual property of U.S. companies is growing so fast that the FBI considers trade secret theft a national security issue.

To be honest, the Government should be concerned about the rise in industrial espionage, and if you are an innovative company, you should too.  I’m just not sure a billboard campaign is the right approach.

How many people are going to really understand the message behind the billboards?  Seriously, I wish I had seen one in person, but RI didn’t make the cut.  Would the average person driving around in their car, stop and think about whether or not their trade secrets are at risk?  Would they even know what a trade secret is?

I’m not sure they would.

Trade secrets are often afterthoughts in corporate America, and companies with really good trade secret awareness tend to be large.  Most everyone could identify a trade secret when asked (the formula for Coca-Cola usually springs to mind), but most companies can’t identify their own trade secrets, especially small technology firms.

Why?  They don’t understand trade secrets.  They don’t quite know what they are or what they can and should do to protect them.  Which leads to the problem…if companies don’t understand trade secrets, then they can’t identify them and take the necessary steps to protect them.

I’ll continue this conversation next week with a short primer on trade secrets.

Here are a some great resources to get your trade secret education started.

- The FBI Website has some good information on trade secrets and the problem of industrial espionage.

- The National Intellectual Property Rights Coordination Center (IPR Center) is a multi-agency taskforce designed to share information, develop initiatives, coordinate enforcement actions, and conduct investigations related to IP theft.  Check out their website here.

In the meantime, if you think your company could use some help identifying and protecting your trade secrets, call me at (508) 878-3590 or email me at kelli@ipinfocus.com to set up an appointment.

I first wrote about this issue back in 2010 after I attended a workshop on economic espionage.   Click here to check out that post.

A New Guest Blog Post

This week I am honored to have written a guest post over at the Solo Practice University blog.  For those of you unfamiliar with SPU, it is an on-line educational resource for newly-graduated attorneys and their older, more experienced breathren alike, who want to hang out their own shingle.

From the SPU website:

It’s a single online destination where lawyers and law students learn the basics of running a solo practice, take classes and get expert feedback from lawyers and business professionals in specialized fields.

In my post, I talk about my journey so far as a solo attorney.  I am candid about my missteps, how I am taking charge of my career, and redefining my practice on my own terms.

This is such an exciting time for me.  I am gearing up for a big relaunch of my business next month.  Big, new things are on the horizon.

I am so happy that I can tell my story, and show other lawyers how important it is to work on your own terms (because I forgot why I wanted to do this in the first place).

Thank you, Susan, for giving me the forum.

Here’s a link to the blog post.

Twitter, I’m Calling You Out!

It’s 2012.

The so-called “Smart-Phone Wars” rage across the planet.

Global technology giants are all vying for supremacy of entire markets by buying up patents and leveraging their portfolios as they try to knock each other off the mountain.

Then along comes Twitter.

In an attempt to stop the madness, the social media giant announced in late April it will be implementing a new Innovator’s Patent Agreement, a written agreement between Twitter and its inventors.

Under its terms, Twitter says that it will assert its patents only for defensive purposes, or only with the permission of the inventors, supposedly leaving ‘control of patents in the hands of inventors.’

I understand that Twitter is standing on its principles when it announced this move.  With no gun in any pending fight, Twitter is asserting its position on patent litigation to the world loud and clear.

Starting with the Preamble, Twitter wants everyone to notice how noble and egalitarian they are when they state:

WHEREAS Company and the Inventors believe that software patents should only be used to make a positive impact in the world and, accordingly, should only be used for defensive purposes;  (Emphasis added.)

What exactly are “defensive purposes” you might ask?  Paragraph 2 reads as follows:

2.  Company, on behalf of itself and its successors, transferees, and assignees (collectively “Assignee”), agrees not to assert any claims of any Patents which may be granted on any of the above applications unless asserted for a Defensive Purpose. An assertion of claims of the Patents shall be considered for a “Defensive Purpose” if the claims are asserted:

(a) against an Entity that has filed, maintained, threatened, or voluntarily participated in an intellectual property lawsuit against Assignee or any of Assignee’s users, affiliates, customers, suppliers, or distributors;

(b) against an Entity that has filed, maintained, or voluntarily participated in a patent infringement lawsuit against another in the past ten years, so long as the Entity has not instituted the patent infringement lawsuit defensively in response to a patent litigation threat against the Entity; or

(c) otherwise to deter a patent litigation threat against Assignee or Assignee’s users, affiliates, customers, suppliers, or distributors.

If Assignee needs to assert any of the Patent claims against any entity for other than a Defensive Purpose, Assignees must obtain prior written permission from all of the Inventors without additional consideration or threat. An “Entity” includes any related entities, where the entities are related by either ownership, control, financial interest, or common purpose.

All of this would be interesting and meaningful, but for one thing.  Twitter doesn’t have any US patents to assert against anyone.  Do a search for Twitter as Assignee at the USPTO.

They have one published US patent application, and one application came up when I did a search of the assignment database.  That’s it.  (If you can find more, please let me know.)

If this is true, the Agreement is for show.  This is a public image campaign that tries to make Twitter look like the hero.  Twitter is insinuating that it is making a noble choice about when and how to use its patent portfolio when in fact Twitter couldn’t bring a patent infringement suit against anyone even if they wanted to.

If you don’t like patents, patent litigation, or the whole system, just say so.  Don’t make up some holier-than-thou Agreement when you aren’t really doing anything that noble.

I find it odd that a company with no US patents to its name is publicly announcing an Innovator’s Patent Agreement.  Does anyone else find this Agreement a bit disingenuous?  Let me know what you think in the comments below.

My Fabulous Friend Monica and our First Interview Together

Intellectual property can be a difficult subject for creative people.

Copyrights can be confusing.  Contracts can get in the way of getting your art out to the world.

But,authors, artists, and designers need to think about how to protect their creations.

Where should they start?   What should they look out for?

Listen to my interview with Monica Lee and find out…

My friend Monica hosts a show on her website Smart Creative Women.  Normally, she interviews smart, funny, successful women working in creative jobs.  Think artists, illustrators, and designers building businesses and brands from their art.  Her interviews are insightful and bold because she talks about things few dare to discuss in the creative community.  She focuses on topics like their business models, their passions, how they monetize their creative endeavors, and how they balance their lives, all while showcasing her interviewees great passion and creative expression.

A month or so ago, I had the privilege of sitting down with my dear friend for an interview on her show.  I know what you’re thinking, ‘What does non-creative Lawyer Kelli Proia bring to this table?’  Just trust me.  We made it work.

You see.  Monica and I are friends and business buddies.  We met through a mutual friend and discovered that we are both building new businesses that have one important thing in common.   We’re both trying to do something a little different in our little corner of the world.   Monica’s trying to nix the idea of the starving, struggling artist and shed some light on how artists can build money making businesses from their art.  Me?  I’m trying to get businesses, and the lawyers who love them, to rethink the way they talk about IP.   Monica and I spend a lot of time talking about our struggles and triumphs as business owners, our goals, our strategies, our money issues, and the challenges of being wives and mothers.

One of the central themes in our on-going conversation revolves around the concept of ‘value’.  We push each other to recognize and further our value.  When you are sitting by yourself in your home office, it can be pretty difficult to recognize your value sometimes.  She thought it would be great if we could bring our weekly lunch talks to the masses.

While we tried to keep our gossip to a minimum, I think we did a good job talking about knowing your value, standing up for yourself, and recognizing that it is OK to say ‘NO’ to a bad deal.  Of Course, we also discuss how to protect yourself with good contracts and intellectual property.

I hope you enjoy this interview.  It was a pleasure to make.

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