Intellectual Property Law

February 29, 2016

United States Intellectual Property Law: Senate Judiciary Committee Approves Trade Secrets Bill

Washington D. C. – The United States Senate Judiciary Committee approved S. 1890, the Defend Trade Secrets Act (“DTSA”). If enacted, the bill would create a private cause of action in the federal courts for trade secret misappropriation.

Under Indiana’s Access to Public Records Act, a trade secret is defined as:

information, including a formula, pattern, compilation, program, device, method, technique, or process, that:

(1) derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by, other persons who can obtain economic value from its disclosure or use; and

(2) is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.

The proposed legislation uses a similar definition:

[T]he term “trade secret” means all forms and types of financial, business, scientific, technical, economic, or engineering information, including patterns, plans, compilations, program devices, formulas, designs, prototypes, methods, techniques, processes, procedures, programs, or codes, whether tangible or intangible, and whether or how stored, compiled, or memorialized physically, electronically, graphically, photographically, or in writing if —

(A) the owner thereof has taken reasonable measures to keep such information secret; and

(B) the information derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable through proper means by, the public.

The DTSA would be the civil counterpart to the Economic Espionage Act of 1996, a criminal statute that uses the same definition of “trade secret” as the DTSA.

This would be the first time that individuals would have a private, federal right of action for theft of trade secrets. Presently, those seeking redress in civil court for theft of trade secrets must resort to claims based on state law or seek to have a claim for injunctive relief filed by the Attorney General.

The DTSA, if enacted, would address the current patchwork of state laws protecting trade secrets. While those state statutes are similar, with many states having enacted some form of the Uniform Trade Secrets Act (“UTSA”), they are not identical.

The DTSA does not preempt any other law. Thus, where a state’s law governing trade secrets is more generous, a plaintiff retains the ability to sue under that state law also, either in state court or as a pendant claim in a federal lawsuit.

The relief offered under the DTSA contains such remedies as monetary damages, including royalty payments, reimbursement of actual losses caused by the defendant and trebling of a monetary award where punitive damages are found to be appropriate. Injunctive relief and attorneys’ fees may also be recoverable.

February 17, 2016

Countering the Growing Intellectual Property Theft Threat by Enhancing Ties Between Law Enforcement and Business

By Overhauser Law Offices, LLC

In 2008, a new federal law creating stricter penalties for criminals who engaged in intellectual property theft was enacted to keep pace with globalization, e-commerce, and technology advances.

Fast forward to 2016: Technological advances continue at an even faster pace, dramatically

Intellectual Property Theft 101

Intellectual property can be an idea, an invention, a design, a business process, or even a creative expression. All are protectable under the law.

Once stolen, intellectual property can generate a great deal of money for the thieves. But there are other consequences. Intellectual property theft, which includes theft of trade secrets, the trafficking of counterfeit goods, and digital piracy, results in billions of dollars in lost profits annually. Failure to protect the nation’s intellectual property undermines confidence in the economy, removes opportunities for growth, erodes America’s technological advantage, and disrupts fairness and competitiveness in the marketplace.

Some intellectual property thefts pose a more far-reaching and serious threat to the U.S. than economic loss to the rights holders. These thefts can also put public safety at risk through the sale of counterfeit pharmaceuticals,
electrical components, and aircraft and automobile parts, as well as through the funding of other kinds of crime.

Within its intellectual property rights violations program, the FBI prioritizes its investigations and focuses the majority of its resources on cases involving theft of trade secrets, counterfeit goods that pose a threat to human health and safety, and copyright and infringement matters with a nexus to national security or organized crime or that pose a significant economic impact.

Along with its partners at the National Intellectual Property Rights Coordination Center, the FBI also participates in several intelligence-driven national initiatives, including:

–
Operation Chain Reaction, which focuses on counterfeit products entering the U.S. government supply chain that pose a threat to human health and safety or national security;

–
Operation Engine Newity, which addresses counterfeit automotive parts that threaten safety, including airbags, brake pads, and steering systems; and

–
Operation Apothecary, which focuses on counterfeit pharmaceuticals that pose a safety threat.

increasing the threat posed by criminals who steal trade secrets, produce and/or traffic in counterfeit products, and infringe on copyrights. One important factor in this increase is the global expansion of online marketplaces, which aids international and domestic criminal organizations in trafficking in counterfeit goods.

The Department of Justice recently announced a new strategy that involves partnering more closely with businesses in an effort to combat these types of crimes more effectively. According to Attorney General Loretta Lynch, “Through this new approach, we intend to provide information and resources to individuals and companies that will help them identify and disrupt attempts on their intellectual property, extend greater protection to American commerce as a whole, and safeguard the health and safety of individual Americans.” The Federal Bureau of Investigations (“FBI”), working with its investigative partners at the National Intellectual Property Rights Coordination Center (“NIPRCC”), will play an integral part in this strategy.

The FBI has already been collaborating for years with brand owners, copyright holders, and trademark holders because in an effort to prevent the harm that intellectual property theft causes: legitimate businesses lose billions of dollars in revenue and suffer damaged reputations, consumer prices go up, the U.S. and global economies are robbed of jobs and tax revenue, product safety is reduced, and sometimes lives are even put at risk. The FBI’s efforts with these businesses to date have involved shared information, aggressive criminal initiatives based on current or emerging trends, and investigations.

The FBI has now begun expanding its efforts to work with third-party entities, such as online marketplaces, payment service providers, and advertisers, that may inadvertently enable the activities of criminals.

Third-party online marketplaces draw consumers to their sites with competitive pricing and a sense of security, but criminal counterfeiters exploit these marketplaces to gain an appearance of legitimacy, access to far-reaching advertising, and efficient sales transactions.

Payment service providers, such as credit card payment processors and related payment alternatives, also give counterfeiters the appearance of legitimacy when they provide payment options that consumers mistakenly interpret to mean that the businesses they service are legitimate.

Online advertising systems and platforms enable website owners to outsource the process of monetizing their website traffic. Criminals have begun exploiting advertising as an alternative revenue stream, drawing traffic to their sites by offering counterfeit products for sale or pirated digital content for download.

The FBI finds that there are significant benefits to working with these third-party entities. According to David Farquhar, who heads up the FBI’s Intellectual Property and Cyber-Enabled Crimes Unit at the NIPRCC, “We’re not only broadening awareness of the crime problem, we can also obtain information about crime trends, get investigative leads that will help us identify criminals, and collect evidence of criminal activity.” Farquhar added that the FBI will assist these companies with refining their own analytical tools and techniques for uncovering fraud.

Also new in its approach to intellectual property theft is an enhanced relationship between the FBI’s criminal and counterintelligence personnel when working theft of trade secrets cases. A trade secrets case worked under the counterintelligence program, which occurs when the involvement of state-sponsored actors is suspected, will be referred to a criminal squad if no state sponsorship is found. And when criminal investigators begin to suspect the involvement of a state sponsor, the case will be referred to the counterintelligence squad.

January 22, 2016

Celebrating Copyright Week 2016

By Overhauser Law Offices, LLC

Almost three years ago, the Electronic Frontier Foundation (“EFF”)

began its efforts to reform the U.S. copyright reform process (see the

Electronic Frontier Foundation’s call to Congress for the Next Great Copyright Act). This week, EFF and others are also celebrating the third annual Copyright Week.

January 21, 2016

Reporting Computer, Internet-related or Intellectual Property Crime

By Overhauser Law Offices, LLC

Internet-related crime, like any other crime, should be reported to appropriate law enforcement investigative authorities at the local, state, federal, or international levels, depending on the scope of the crime. Citizens who are aware of federal crimes should report them to local offices of federal law enforcement.

A guide to reporting intellectual property crime:

Type of Crime	Appropriate federal investigative law enforcement agencies
Copyright piracy (e.g., software, movie, sound recordings)	FBI local office U.S. Immigration and Customs Enforcement (ICE) Internet Crime Complaint Center
Trademark counterfeiting	FBI local office U.S. Immigration and Customs Enforcement (ICE) Internet Crime Complaint Center
Theft of trade secrets/Economic Espionage	FBI local office

The U.S. Department of Justice has also produced a guide, “Reporting Intellectual Property Crime: A Guide for Victims of Counterfeiting, Copyright Infringement, and Theft of Trade Secrets,” available as a PDF file. This guide is contained in Appendix C of the Report of the Department of Justice’s Intellectual Property Task Force (October 2004). The guide also contains the following checklists for reporting intellectual property crime to law enforcement:

Checklist for Reporting a Copyright Infringement or Counterfeit Trademark Offense (PDF)

Checklist for Reporting a Theft of Trade Secrets Offense (PDF)

Other government initiatives to combat cybercrime include:

National Intellectual Property Rights Coordination Center

The IPR Coordination Center’s responsibilities include:

• Coordinating U.S. government domestic and international law enforcement activities involving IPR issues.
• Serving as a collection point for intelligence provided by private industry, as well as a channel for law enforcement to obtain cooperation from private industry (in specific law enforcement situations).
• Integrating domestic and international law enforcement intelligence with private industry information relating to IPR crime, and disseminating IPR intelligence for appropriate investigative and tactical use.
• Developing enhanced investigative, intelligence and interdiction capabilities.

• Serving as a point of contact regarding IPR law enforcement related issues.

The STOP Initiative (www.stopfakes.gov)

The stopfakes.gov website provides information to consumers and businesses on intellectual property, including information on how to report trade in fake goods.

Those with specific information regarding intellectual property crime can submit an IPR Coordination Center Complaint Referral Form.

July 14, 2015

House Judiciary Committee Approves Patent Reform Bill by Substantial, Bipartisan Vote

By Overhauser Law Offices, LLC

Washington, D.C. – The House Judiciary Committee recently approved the Innovation Act (H.R. 9) by a vote of 24-8. This bipartisan bill takes steps to combat the ever-increasing problem of abusive patent litigation. The legislation addresses abusive practices taking place in federal courts.

The Innovation Act is supported by a wide range of groups that include stakeholders from all areas of the economy representing businesses of all kinds from every corner of the United States, including independent inventors and innovators.

Key Components of the Innovation Act include:

May 15, 2015

Congresswoman Susan Brooks of Indiana Listed as one of D.C.’s Top 50 Women in Tech

By Overhauser Law Offices, LLC

Indianapolis, Indiana – Congresswoman Susan Brooks, who represents the northern third of Indianapolis, was recently named as one of the District of Columbia’s Top 50 Women in Tech. Her lawmaking focus includes legislation that will cause “our laws need to catch up with technology.”

Rep. Brooks, the Republican co-chair of the Congressional High-Tech Women’s Caucus, represents a burgeoning area of startups and entrepreneurship in the technology sector. In her first term, Brooks co-chaired a subcommittee focused on emergency preparedness, response and communications. Since then, she’s introduced the Social Media Working Group Act, which passed the House twice, and is awaiting action in the Senate. If passed, the bill would codify the Homeland Security Department’s Social Media Working Group, which meets regularly to improve the department’s social media techniques. The bill would also bring representatives from academia and the private sector into the working group.

“I think our laws need to catch up with technology and some of the other things that we are also focused on,” Brooks said. “Data breach notification is one of the top issues facing companies that hold personal information about our customers and our employees. We need to bring the government up to speed there, too.”

May 12, 2015

Copyright Law: U.S. Copyright Office Publishes Index of Fair Use Decisions

By Overhauser Law Offices, LLC

Washington, D.C. – Register of Copyrights Maria A. Pallante yesterday announced the launch of the U.S. Copyright Office’s Fair Use Index, which is designed to provide the public with searchable summaries of major fair use decisions. The Index was undertaken in support of the 2013 Joint Strategic Plan on Intellectual Property Enforcement prepared by the U.S. Intellectual Property Enforcement Coordinator within the Executive Office of the President.

Although not a substitute for legal advice, the Index is searchable by court and subject matter and provides a helpful starting point for those wishing to better understand how the federal courts have applied the fair use doctrine to particular categories of works or types of use, for example, music, internet/digitization, or parody.

“The doctrine of fair use has been an essential aspect of our copyright law for nearly 175 years,” said Pallante, “but it has too often been a mystery to good-faith users who seek more detail about its application. It has been a pleasure coordinating this practical and important resource with the U.S. Intellectual Property Coordinator’s office.”

February 25, 2015

Indiana University to Host BioPharma/Tech Law Symposium

By Overhauser Law Offices, LLC

Indianapolis, Indiana – The Center for Intellectual Property Law and Innovation of the

Indiana University Robert H. McKinney School of Law will be hosting its Annual BioPharma/Tech Law Symposium on Thursday, March 12, 2015. CLE credit of 7.0 hours is pending approval.

Time: 8:00 a.m. – 5:30 p.m.

February 16, 2015

Third Member of International Computer Hacking Ring Pleads Guilty to Hacking and Conspiracy to Steal Intellectual Property; Charges Against Indiana Defendant Pending

By Overhauser Law Offices, LLC

Delaware – A third member of an international computer hacking ring has pleaded guilty to conspiring to break into computer networks of prominent technology companies to steal more than $100 million in intellectual property and other proprietary data.

Nathan Leroux, 20, of Bowie, Maryland, pleaded guilty to conspiracy to commit computer intrusions and criminal copyright infringement based on his role in the cyber theft of software and data related to the Xbox One gaming console and Xbox Live online gaming system, and popular games such as the “FIFA” online soccer series; “Call of Duty: Modern Warfare 3;” and “Gears of War 3.” Leroux has been in custody since attempting to flee into Canada from Buffalo, New York, on June 16, 2014. A sentencing hearing is set before U.S. District Judge Gregory M. Sleet of the District of Delaware on May 14, 2015.

Sanadodeh Nesheiwat, 28, of Washington, New Jersey, and David Pokora, 22, of Mississauga, Ontario, Canada, previously pleaded guilty to the same conspiracy charge on Sept. 30, 2014. They remain in custody pending their sentencing hearings, which are scheduled for April 2015. Pokora’s guilty plea is believed to have been the first conviction of a foreign-based individual for hacking into U.S. businesses to steal trade secret information. Charges against a fourth defendant, Austin Alcala, 19, of McCordsville, Indiana, remain pending.

According to Leroux’s admissions in connection with his guilty plea, he was part of the hacking conspiracy between January 2011 and September 2012. During that period, hacking group members located in the United States and abroad gained unauthorized access to computer networks of various companies, including Microsoft Corporation, Epic Games Inc., Valve Corporation and Zombie Studios. The conspirators accessed and stole unreleased software, software source code, trade secrets, copyrighted and pre-release works, and other confidential and proprietary information. Members of the conspiracy also allegedly stole financial and other sensitive information relating to the companies – but not their customers – and certain employees of such companies.

Specifically, the data theft targeted software development networks containing source code, technical specifications and related information for Microsoft’s then-unreleased Xbox One gaming console, as well as intellectual property and proprietary data related to Xbox Live and games developed for that online gaming system.

Leroux admitted in court that he and others used the stolen intellectual property to build, and attempt to sell, counterfeit versions of the Xbox One console before its public release in November 2013. In July 2013, the FBI intercepted a counterfeit console built by Leroux, which was destined for the Republic of Seychelles.

Leroux also admitted that he developed a software exploit that allowed him and others to generate millions of “coins” for the FIFA soccer games playable on the Xbox Live platform. These coins are the virtual, in-game currency used to build a “FIFA Ultimate Team” in the games. Without the authorization of Electronic Arts, the intellectual property rights holder to the FIFA games, Leroux and others sold bulk quantities of the “FIFA coins” via online black markets.

The value of the intellectual property and other data stolen by the hacking ring, as well as the costs associated with the victims’ responses to the conduct, is estimated to range between $100 million and $200 million. To date, the United States has seized over $620,000 in cash and other proceeds related to the charged conduct.

This case was investigated by the FBI, with assistance from the Criminal Division’s Office of International Affairs, the U.S. Department of Homeland Security’s Homeland Security Investigations and Customs and Border Patrol, and the U.S. Postal Inspection Service. The investigation also has been coordinated with the Western Australia Police and the Peel Regional Police of Ontario, Canada.

The case is being prosecuted by Trial Attorney James Silver of the Criminal Division’s Computer Crime and Intellectual Property Section and Assistant U.S. Attorney Edward J. McAndrew of the District of Delaware.

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Charles M. Oberly III of the District of Delaware and Special Agent in Charge Stephen E. Vogt of the FBI’s Baltimore Field Office made the announcement.

October 13, 2014

Indiana Teen Indicted for Theft of Intellectual Property Valued More Than $100 Million

By Overhauser Law Offices, LLC

District of Delaware – Four members of an international computer hacking ring were

indicted for stealing gaming technology and Apache helicopter training software. Two have already pled guilty.

Four members of an international computer hacking ring have been charged with breaking into computer networks of prominent technology companies and the U.S. Army and stealing more than $100 million in intellectual property and other proprietary data. Two of the charged members have already pleaded guilty. The alleged cyber theft included software and data related to the Xbox One gaming console and the Xbox Live online gaming system; popular games such as “Call of Duty: Modern Warfare 3” and “Gears of War 3”; and proprietary software used to train military helicopter pilots.