European Union Considering Consolidation of Patchwork of Trade Secret Laws

| December 10, 2013

The European Union is in the early stages of creating a Union-wide law governing the protection of trade secrets. The new law, proposed Nov. 28 and at least a year from possible implementation, would replace a patchwork of individual state regulations and procedures governing trade secrets. This patchwork, observers say, makes the trade waters of Europe difficult to negotiate.

The European Commission as part of its “Innovative Union” initiative, identified the currently uneven protection and enforcement of trade secrets within the EU as a “significant factor inhibiting cross-border research and development as well as general innovation.” Not only is the present situation interfering with intra-Union trade, it also inhibits or drives up the cost of international projects involving the United States, Canada, Japan or other countries wishing to do business with European multinationals.

Observers cite two reasons for the EU’s focus on the problem now. First, the ongoing negotiations among the U.S. and a number of smaller nations around the Trans-Pacific Partnership (TPP) is raising concerns among other nations about America’s participation in ongoing intellectual property protection negotiations. Second, there has been a perceived significant increase in spying, industrial espionage and trade secret thievery, particularly by Asian-based companies and individuals, in recent years.

The proposed new directive can be read and downloaded here.

TPP Treaty May Have Unintended Consequences for Fair Use

| December 5, 2013

If press reports are to be believed — and their increasing number and frequency suggests they should be — the Administration is cooking up some unpleasant surprises in its tightly held (some would say secretive) discussions around the Trans-Pacific Partnership (TPP).  Reportedly, a potential TPP treaty will significantly impact our copyright laws.

Like many trade agreements, TPP has been conducted almost entirely in secret. That’s the nature of such things.  This fact alone really bugs me.

It also bugs me that the Administration seeks to have this treaty fast-tracked when it’s ready to sign. Under fast-track authority, Congress would have very little actual authority over the treaty. No amendments. Limited debate. Straight up-or-down vote by a simple majority. This is in direct contrast to normal treaty advice and consent which requires a ⅔ majority of the Senate.

By all accounts, this particular treaty contains a number of potentially objectionable provisions on intellectual property which should at least be debated.  It is reported that proposed provisions would:

  • increase the liability of Internet intermediaries

  • greatly regulate temporary copies of copyrighted works

  • extend by decades the duration of copyright coverage

  • add further restrictions to the “fair use” doctrine’s definition

  • increase protections for materials secured with so-called “digital locks”

It may seem that for IP holders, these could be good things, but, fact is, the scope of fair use is getting smaller by the day.  This isn’t good for anybody.  What is important is that we have clear rules to ensure some sort of predictability.   A restrictive treaty would handcuff Congress’ ability to legislate balance in this important area.

I’m opposed to fast-tracking the TPP. This potential treaty needs a complete fresh-air hearing and open debate.

WikiLeaks of the IP portion of the TPP is at http://www.wikileaks.org/tpp

Good piece on the IP issues of TPP is at the EFF site https://www.eff.org/issues/tpp

 

Be Sure to Preserve Records Documenting Actual Intent to Use When Filing For a Trademark

| November 19, 2013

Filing for trademark protection in advance of the actual usage of a mark in commerce must be backed by clear documentary evidence of an actual intent to use if you wish to avoid losing the mark in a lawsuit.

The Trademark Trial and Appeal Board (TTAB), in a recent case, sustained opposition to an application based on intent to use (“ITU”) because the applicant offered no tangible proof of actual intent to use the mark when he filed his application and couldn’t produce any in discovery.

In PRL USA Holdings, Inc. v. Young, (Opposition No. 91206846, 10/16/13), opposer was the owner of several well-known trademarks. The applicant had filed an application to register the mark for use on shirts, based on ITU. But during discovery, the applicant produced no documentation of any negotiations, proposals or agreements to market, nor to manufacture any goods under the mark. In response to interrogatories, the applicant did not identify any products to be sold or any market research done in connection with the mark. Whenever he was asked for such proof, the applicant replied that he was in an “intent to use status” and had not done “any business planning yet.”

A PDF of the ruling can be found here.

You May Need to Step Up Monitoring of Employees’ Use of the Cloud

| October 30, 2013

One of the largest potential security holes facing most companies today is employee use of Cloud-based storage services. If your employees are using services like Dropbox and Box even for temporary, intermediate storage of potential trade secrets and other valuable corporate data, they are opening a chasm through which bad actors can retrieve your vital data.

One of the problems with trying to get a handle on this kind of potential security problems is that there are so many Cloud-based services, with more coming online all the time, that it’s all but impossible to institute an IT policy banning access to all of them. They may use different protocols and gateways that make a blanket ban impractical.

This means you should institute a collection of related techniques across the Internet, in-house servers, and database access mechanisms to lock down such access. Providing employees with ready, secure access to your own databases and storage locations may significantly reduce the perceived need to use third-party storage sites for corporate work.

Another potential security hole related to Cloud-based storage involves employee tracking services. Studies suggest that less than 7% of corporations block such services, which makes it trivial for bad actors to find out where your employees are storing potentially lucrative information. Instituting a policy of tight restriction of tracking services will go a long way toward preventing theft from the Cloud.

As in so many areas, it’s essential that your IT department stay on top of new developments in these areas. It may also be appropriate for you to incorporate language in employment agreements and related documents making your policy on off-site storage of corporate data clear.

Bad Faith Applies to Continuing Baseless Suits, Court Rules

| October 29, 2013

In the 47 states that have adopted The Uniform Trade Secrets Act, a plaintiff who files a lawsuit in bad faith for misappropriation of trade secrets can be ordered to pay the defendant’s attorney fees. Until recently, however, it wasn’t clear whether such a right extended to defendants against whom such a lawsuit was maintained after it is clear plaintiff cannot prevail.

The U.S. Court of Appeals for the Seventh Circuit recently ruled in Tradesman International, Inc. v. John Black, et al., (http://caselaw.findlaw.com/us-7th-circuit/1640920.html) that awarding attorney fees to defendants in such cases is called for by “common sense.” The court wrote: “[r]egardless of her intention at the time of filing, surely a plaintiff makes a claim in bad faith if she continues to pursue a lawsuit – even after it becomes clear that she has no chance to win the lawsuit – in order to cause harm to the defendant.”

It would appear, then, that plaintiffs pursuing a trade secrets case should reconsider the good-faith nature of their ongoing claims during discovery and trial to avoid paying the other side’s fees.