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Gibbons Law Alert

Tagged: Trade Secret

U.S. v. Aleynikov Redux: Senate Closes Loophole in EEA

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Posted in Trade Secrets

On December 6, 2012

This past spring, we reported the Second Circuit’s reversal in U.S. v. Aleynikov, where the Court considered violations of the Economic Espionage Act of 1996 (“EEA”), 18 U.S.C. § 1832, and the National Stolen Property Act (“NSPA”), 18 U.S.C. § 2314. In short, the Second Circuit ruled that the EEA pertains to trade secrets “placed in” commerce, and that Aleynikov’s alleged misappropriation of the source code of Goldman Sachs & Co.’s trading system, which was for internal use, therefore was not violative of the EEA or the NSPA.

Trade Secrets Update

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Posted in Trade Secrets

On July 24, 2012

Just as trade secrets cases continue to proliferate in the news, the U.S. Senate introduced legislation last week aimed at streamlining the ability of American companies to combat trade secret theft. Under the proposed legislation S.3389, “Protecting American Trade Secrets and Innovation Act of 2012″(“PATSIA”), a single federal statute would be created under which companies could sue in Federal Court, as an alternative to the existing structure of state or common law statutes. To be eligible, plaintiffs are required under a heightened pleading standard to: “(A) describe with specificity the reasonable measures taken to protect the secrecy of the alleged trade secrets in dispute; and (B) include a sworn representation by the party asserting the claim that the dispute involves either substantial need for nationwide service of process or misappropriation of trade secrets from the United States to another country.” Plaintiffs also are subject to a three-year statute of limitations.

U.S. v. Aleynikov: Second Circuit Reverses SDNY Due to Statutory Interpretation Errors

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Posted in Trade Secrets

On April 20, 2012

Following a jury trial in the United States District Court for the Southern District of New York, Sergey Aleynikov was convicted of stealing and transferring proprietary computer source code used in his former employer’s high-frequency trading system, in violation of the Economic Espionage Act of 1996 (“EEA”), 18 U.S.C. § 1832, and the National Stolen Property Act (“NSPA”), 18 U.S.C. § 2314. On appeal, Aleynikov argued that his conduct did not constitute an offense under either statute because 1) the source code was not a “stolen” “good” within the meaning of the NSPA and 2) the source code was not “related to or included in a product that is produced for or placed in interstate or foreign commerce” within the meaning of the EEA. The United States Court of Appeals for the Second Circuit agreed with Aleynikov and reversed the District Court’s ruling.

New Jersey District Court Enjoins Former Financial Services Employee from Taking Customer Information

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Posted in Restrictive Covenants

On February 17, 2012

In a case to be noted by financial services entities that are signatories to the “Protocol for Broker Recruiting,” a New Jersey District Court issued a preliminary injunction to a financial services employer, Ameriprise Financial Services, Inc. (“plaintiff”) to prevent a former financial advisor employee from retaining certain client information that he downloaded from his computer prior to his departure from plaintiff. Plaintiff was a party to the “Protocol for Broker Recruiting” that prescribes a method for a departing employee to retain certain client information when leaving for another financial services institution. To grant the injunction, the Court found that plaintiff showed it likely would succeed on its underlying breach of contract claim, it would suffer immediate irreparable harm absent the injunction, defendant would not suffer harm if enjoined, and the injunction favors the public’s interest. The Court essentially decided that if the Protocol is not followed in the first instance, a departing financial representative’s subsequent compliance is tainted and insufficient to withstand subsequent legal challenge.

New Jersey Trade Secrets Act Becomes Law

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Posted in Trade Secrets

On January 10, 2012

Yesterday, Governor Chris Christie signed into law the New Jersey Trade Secrets Act, A-921/S-2456 providing state law protection against trade secret misappropriation. Prior to enactment, New Jersey was one of only four states (including New York, Massachusetts and Texas) that had not adopted some form of the Uniform Trade Secrets Act.

New Jersey’s New Trade Secrets Act

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Posted in Restrictive Covenants

On January 10, 2012

New Jersey employers should be aware that yesterday Governor Chris Christie signed into law the New Jersey Trade Secrets Act (“the Act”), which for the first time codifies the law in New Jersey concerning the misappropriation of trade secrets. The new law is derived largely from, although is not identical to, the Uniform Trade Secrets Act, variations of which have been adopted in the great majority of states. New Jersey companies who are concerned about potential trade secret misappropriation by current or former employees should study the new law carefully.

Computer Fraud and Abuse Act Continues to be “Employer Friendly”

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Posted in Policies and Handbooks

On December 29, 2011

The Computer Fraud and Abuse Act (“CFAA”) is a federal law that, in part, makes it a crime to access a computer in an unauthorized manner. In the employment context, the statute has proven valuable in protecting confidential and proprietary information that employees can access on their employers’ electronic systems. Recent decisions by the United States Courts of Appeals for the Ninth and Third Circuits emphasize the breadth of the CFAA’s application to the workplace.

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