It’s been a hot year in the trade secrets field, with some huge verdicts and settlements, a renewed spotlight on cyberattacks, and an unusual flurry of trade secrets legislation. Trade Secrets Watch’s 2013 Year-in-Review highlights the notable trade secrets activity from the past year.
Legislation and Policy
One of the hottest topics throughout 2013 caught fire when security company Mandiant issued its blockbuster report in February, claiming that state-sponsored hackers in China had been engaged in massive cyberattacks in the United States. This set off a firestorm in Washington, with the White House issuing an Executive Order and five-point plan for combating cybertheft, the Pentagon publicly accusing China of cyberhacking in its annual report to Congress, and Senators calling for the creation of a watch list of foreign countries that engage in economic or industrial espionage.
But the United States lost some moral high ground with Edward Snowden’s now-infamous revelations about NSA surveillance programs, including spying on government leaders. With the NSA fallout, the United States undoubtedly took a credibility hit — after all, it’s hard to complain about others hacking you when you’re monitoring their calls.
Congress nonetheless pushed forward with one of the busiest years ever for trade secret legislation, kicking off the year with two amendments that expanded the breadth and penalties of the Economic Espionage Act. The Theft of Trade Secrets Clarification Act was intended to close a loophole and ensure that the EEA protected against the theft of trade secrets like internal source code, even if the code itself isn’t placed into interstate commerce. And the Foreign Espionage Penalty Enhancement Act increased the maximum fines for stealing trade secrets with the intent to benefit foreign entities from $500,000 to $5 million for individuals and from $10 million to the greater of $10 million or three times the value of the stolen trade secret for organizations. But Congress didn’t stop there, with members introducing an unprecedented number of trade secret bills that are currently under consideration in both the House and Senate.
This year also saw trade secret legislation in the states. Texas became the 48th state to adopt the Uniform Trade Secrets Act, and the Massachusetts legislature currently has two bills (H.27 and H.1225) that would also adopt the uniform act. Massachusetts and New York are the only states not to have adopted some form of the UTSA, which celebrated its 34th anniversary in August.
States were also active in passing trade secrets legislation concerning an oil and gas drilling process called hydraulic fracturing, or “fracking.” These laws regulate whether and to what extent oil and gas companies may withhold public disclosure of proprietary fracking processes on the basis that they are trade secrets. In case you missed it, we put together a handy state-by-state flipbook that highlights key provisions in states requiring disclosure.
Trade secrets fever even caught on across the globe:
The U.S. International Trade Commission also heard trade secrets cases, continuing the trend sparked by the 2011 TianRui decision. One closely watched ITC trade secrets proceeding involves conflicting rulings from the ITC and a Chinese court in a case by chemicals manufacturer SI Group against Sino Legend. Dow also filed an ITC complaint against rivals accused of misappropriating trade secrets in a Dow seed polymer recipe.
Civil Court Filings
The year saw a surge in civil case trade secret filings relating to the alleged theft of technology ranging from antimicrobial compounds to solar panels, demonstrating the increasingly important role of trade secrets protection across all sectors of industry. Some notable civil case filings included:
Civil Verdicts and Settlements
This year Trade Secrets Watch put together Top 10 lists of the largest trade secret verdicts and settlements in history, and a number of our winners claimed their spots in 2013. Some of the more notable trade secrets verdicts and settlements included:
Criminal Trade Secrets Cases
In 2013, the U.S. government continued to file charges in criminal trade secret cases under the Economic Espionage Act and other federal laws:
A number of criminal trade secret cases concluded this year with convictions and the imposition of significant sentences:
Another notable trend in criminal trade secrets cases this year has been decisions by several federal district courts that have blocked trade secret prosecutions on the basis that foreign defendants were not properly served. This has proven to be a significant roadblock to the federal government’s ability to prosecute foreign companies for cybertheft.
Appellate courts also had their fair share of trade secret cases this year. Some of the more notable federal cases included:
State appellate courts also decided some interesting trade secret issues this year:
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We want to thank our readers for making Trade Secrets Watch a success in our inaugural year.