Trade Secrets

July 23, 2015

Indiana Trade Secret Litigation: Angie’s List Alleges Theft of Trade Secrets by Amazon Local and Employees

Indianapolis, Indiana – Indiana intellectual property lawyers for Angie’s List Inc. of Indianapolis, Indiana sued in the Southern District of Indiana alleging theft of trade secrets. The Defendants in this litigation are AmazonLocal LLC of Seattle, Washington, Michael Albo, Kristin Baker, Dan Beary, Colton Bozigian, Jake Connerton, Adam DiVincenzo, Brandon Goodwyn, Kristen Haught, Justin Hillman, Amit Jain, Joshua Keezer, Olivia Landergan, Daniel Malamud, Raissa Masket, Samantha McDonald, Jason Patrao, Sharon Porter, Darren Reinstein, Billy Restrepo, Michael Shmunis, and Jacquelyn Vail.

In its 42-page complaint, Angie’s List alleges that competing business Amazon Local

and some of its employees misappropriated proprietary information belonging to Angie’s List by fraudulently obtaining membership accounts and, using this members-only access, obtained and misused proprietary information about thousands of service providers about which Angie’s List had gathered data.

May 27, 2015

Chinese Professors Among Six Defendants Charged with Economic Espionage and Theft of Trade Secrets

By Overhauser Law Offices, LLC

Los Angeles, California – Chinese professors have been accused of having stolen valuable technology from Avago Technologies and Skyworks Solutions to benefit a university in the People’s Republic of China.

On May 16, 2015, Tianjin University Professor Hao Zhang was arrested upon entry into the United States from the People’s Republic of China (“PRC”) in connection with a recent superseding indictment in the Northern District of California, announced Assistant Attorney General for National Security John P. Carlin, U.S. Attorney Melinda Haag of the Northern District of California and Special Agent in Charge David J. Johnson of the FBI’s San Francisco Division.

The 32-count indictment, which had previously been sealed, charges a total of six individuals with economic espionage and theft of trade secrets for their roles in a long-running effort to obtain U.S. trade secrets for the benefit of universities and companies controlled by the PRC government.

May 20, 2015

Indiana Trademark Litigation: Integrity Trade Services Sues Ex-Employees Alleging Conspiracy and Conversion

By Overhauser Law Offices, LLC

South Bend, Indiana – Trademark attorneys for Integrity Trade Services, Inc. (“ITS”) of Frankfort, Illinois filed an intellectual property complaint in the Northern District of Indiana naming as Defendants Integrity Employment Partners, LLC, Integrity Trade Services, LLC, Janice Hernandez, James Hernandez, Michaela Williams, and Jason Reis, all of Indiana, and alleging multiple claims, including trademark infringement, conversion of ITS trade secrets, breach of contract, and tortious interference with business relationships.

ITS is a national staffing services company, doing businesses in multiple states, including Indiana, Florida, Illinois, and Texas. ITS is wholly owned by John E. Cumbee, III. In 2008, ITS acquired all of the operational assets of the Knox, Indiana branch of a staffing company owned by CES America, Inc. ITS also hired most, if not all, of the CES employees then working at the Knox facility, including defendants James and Janice Hernandez.

ITS contends that, since purchasing the Knox facility, it has invested well over $1 million to build the Knox business and the ITS brand as it is related to that facility. It asserts in this federal lawsuit, inter alia, that Defendants conspired to convert ITS’ customers, employees and trade secrets for their own use.

The accused in this case are husband and wife Janice Hernandez and James Hernandez; several family members of Janice Hernandez, including Michaela Williams, and Jason Reis; and two entities apparently owned by the Hernandezes, Integrity Employment Partners, LLC, Integrity Trade Services, LLC.

Defendant James Hernandez (“James”) worked for ITS from the time that ITS acquired the business until April 30, 2015 when he was fired. ITS asserts that James engaged in a conspiracy to solicit away and convert (a) ITS’ office employees at the Knox location, (b) at least the active ITS field employees servicing the Knox location, and (c) customers comprising the Knox-area business. He is accused of attempting to transfer them to Integrity Employment Partners, LLC, an Indiana limited liability company formed to process the Knox business converted from ITS for his benefit and the benefit of the other co-conspirators.

Defendant Janice Hernandez (“Janice”), also became employed by ITS when ITS was acquired from its prior owner. She has been accused of not only being an integral part of the alleged conspiracy but also of being “likely its “‘mastermind.'” Defendant Michaela Williams is Janice’s daughter. Defendant Jason Reis is the ex-son-in-law of James and Janice, having been married to another of Janice’s daughters.

ITS states that, in the last two weeks in April 2015, it discovered various anomalies in the Knox business. These anomalies alerted ITS to the activities that triggered this federal lawsuit. They included a drop off in weekly gross sales, the formation of Integrity Employment Partners, LLC (“IEP”), and checks issued by existing ITS customers made payable to IEP (and not ITS).

Defendants are accused of orchestrating a scheme to confuse ITS’ customers and employees regarding with which staffing businesses using the name “Integrity” – Plaintiff’s firm or Defendants’ firms – those customers and employees were transacting business. In doing so, ITS contends, Defendants attempted with some success to convert ITS’ business assets and relationships for Defendants’ benefit. Allegations of criminal conduct by Defendants were also made. In a 48-page complaint, filed by trademark lawyers for Plaintiff, those claims and others are made:

• Count I: Federal Trademark Infringement
• Count II: Federal Unfair Competition
• Count III: Illinois Deceptive Trade Practices Act
• Count IV: Breach of Fiduciary Duty
• Count V: Breach of Agreement
• Count VI: Tortious Interference with Contract
• Count VII: Tortious Interference with Business Relationships
• Count VIII: Conversion
• Count IX: Computer Fraud and Abuse Act
• Count X: Uniform Trade Secrets Act
• Count XI: Civil Conspiracy
• Count XII: Unjust Enrichment

• Count XIII: Breach of Contract

Plaintiff asks the court for, inter alia, injunctive relief, compensatory damages, punitive damages, attorneys’ fees, interest and costs.

April 16, 2015

Indiana Trade Secret Law: Think Tank’s Information Was Not a Trade Secret as a Matter of Law

By Overhauser Law Offices, LLC

Indianapolis, Indiana – The Court of Appeals of Indiana affirmed the directed verdict of Special Judge William E. Alexa of Porter Superior Court. Writing for the Indiana appellate court, Judge John Baker concluded that the trial court had not erred in ruling that Defendants’ information was insufficiently private to constitute trade secrets.

Appellant-Plaintiff Think Tank Software Development Corporation, d/b/a Think Tank Networking Technologies Group and Think Tank Information Systems (“Think Tank”) is engaged in computer-related business activities, including systems and network engineering, problem solving, systems design, implementation, sales, client training, and computer maintenance. During 2001 and 2002, multiple employees left Think Tank and joined its competitor, Chester, Inc.

In 2002, Think Tank sued Chester as well as former Think Tank employees Mike Heinhold, John Mario, Joel Parker, Thomas Guelinas, Jon Meyer, Daniel Curry, Eric M. Wojciechoswki, Michael Gee, Philip Ryan Turner and Carl Zuhl alleging: 1) breach of the covenant not to compete, 2) breach of the confidentiality clause, 3) breach of the agreement not to solicit its employees for other work, 3) tortious interference with contracts, 4) misappropriation of trade secrets, 5) tortious interference with business relationships, 6) unjust enrichment, and 7) defamation. Think Tank also included a claim for unfair competition against Chester.

After much litigation, including two prior appeals to the Indiana Court of Appeals, this Indiana trade secret lawsuit was again heard by the trial court on the remaining claims: misappropriation of trade secrets, tortious interference with contracts, and breach of the covenant not to compete and confidentiality provisions.

The most interesting of the claims in this lawsuit is Think Tank’s assertion of misappropriation of trade secrets. Defendants moved for a directed verdict on that count, as well as all other claims against them. The trial court granted the directed verdict on Think Tank’s claim for misappropriation of trade secrets, reasoning that, “[it] is a question of law for the Court relative to what is and what is not a trade secret. Plaintiff has failed to show that the information obtained was ever, in law, a trade secret.”

Shortly after this ruling, Think Tank sought review a third time from the Indiana Court of Appeals. It claimed that its trade secrets included: 1) the nature and design of its technical solutions; 2) the design of its customers’ computer systems; 3) pricing; and 4) customer identities. Think Tank further argued that the trial court could not determine as a matter of law whether information was a trade secret under Indiana Code section 24-2-3-2, which defines a trade secret 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 Indiana appellate court declined to address Think Tank’s argument whether a trial court could determine as a matter of law whether information was a trade secret under Indiana law. However, it concluded that Think Tank had failed in its burden to avoid the directed verdict: “as a matter of law, Think Tank failed to produce enough evidence to allow a reasonable fact finder to determine that the proffered information was trade secrets.” Specifically, it found that Think Tank failed to show that any of the information alleged to be trade secrets was not generally known to or ascertainable by the public.

The appellate court agreed with the Indiana trial court that: 1) the computer certifications and intellectual capital that Think Tank possessed was readily available information; 2) knowledge of customers’ computer systems and current or future needs was readily ascertainable, as such information belonged to the customers in question; and 3) pricing information did not constitute a trade secret, as it too was readily available from the customers. Thus, the information was not a trade secret.

The Indiana appellate court continued that Think Tank appeared not to be trying to protect its trade secrets, but instead to prevent competition. Such a goal, the court said, might be effectuated by a non-competition agreement. However, the use of Indiana legislation designed to protect trade secrets could not properly be stretched to hinder the use of information that appeared to be generally known or readily obtained from another source.

April 10, 2015

Indiana Trade Secret Litigation: College Retailers Sue for Full Access to Purdue-Amazon Agreement

By Overhauser Law Offices, LLC

Tippecanoe County, Indiana -An Indiana trade secret attorney for the National Association of College Stores Inc. (“NACS”), an Ohio-based organization, sued Purdue University of West Lafayette, Indiana in Tippecanoe Superior Court seeking full disclosure of an agreement between Purdue and Amazon.com Inc.

Earlier this year, Amazon opened its first brick-and-mortar store on the campus of Purdue University. This store, which allows merchandise to be both picked up and dropped off, was promoted as a way to save Purdue students money. Initial estimates suggest that the Purdue-Amazon partnership has resulted in savings of more than 40% for students.

In response to this addition to Purdue’s campus, NACS requested a copy of the agreement between Amazon and Purdue under Indiana’s Access to Public Records Act (“APRA”), codified as Ind. Code § 5-14-3-1 et. seq. Purdue released only a redacted copy, stating that Amazon considered the omitted material to be protectable as trade secrets, which are defined under APRA as:

March 27, 2015

Indiana Trade Secret Litigation: Precision Drone Sues Channel Masters for Misappropriating Trade Secrets

By Overhauser Law Offices, LLC

Indianapolis, Indiana – Indiana intellectual property lawyers for Precision Drone, LLC of Hamilton County, Indiana (“Precision”) commenced trade secret litigation in Hamilton County Superior Court alleging that Channel Masters, LLC of Wisconsin (“Channel”) breached its contract with Precision by improperly misappropriating and revealing trade secrets belonging to Precision.

Precision designs, engineers, manufactures and sells drones for use by farmers to monitor crops. It also develops and sells related software. Defendant Channel connects companies offering products to dealers of those products.

According to the complaint, in September 2014, Precision engaged Channel to sell the PaceSetter™ Drone to dealers of such products. To assist in Channel’s sales efforts, Precision provided Channel with equipment and training, some of which Precision contends is protected by Indiana trade secret law. As part of the sales agreement that the parties entered into, Precision states that Channel was prohibited from disclosing any of Precision’s confidential information without written authorization. The agreement also prohibited Channel from adversely interfering with Precision’s customers and prospective customers.

Plaintiff Precision alleges that, while Channel was working for Precision, it was also promoting and selling crop-imaging drones offered by AgriImage, a company that competes with Precision. Plaintiff also contends that Channel used Plaintiff’s images and training manual to demonstrate the competing AgriImage drones.

Precision claims copyright protection for the website that it uses to promote and advertise its products, as well as contending that at least one of its images was improperly displayed at a trade show by Channel, but the complaint listed no overt assertion of copyright infringement. The complaint, filed by Indiana intellectual property attorneys for Precision, instead alleges the following:

• Count I: Breach of Contract

• Count II: Misappropriation of Trade Secrets

Precision seeks judgment in its favor including damages, attorneys’ fees and costs.

Indiana copyright lawyers for Channel have removed the case to the Southern District of Indiana, arguing that such a removal is proper based both on federal question jurisdiction and diversity of citizenship.

March 16, 2015

Indiana Trade Secret Law: Court Declines to Enter Protective Order Stipulated by Parties

By Overhauser Law Offices, LLC

Fort Wayne, Indiana – In the matter of CCT Enterprises, LLC v. Kriss USA, Inc., trade secret lawyers for the parties agreed to a protective order and submitted it to the court pursuant to Federal Rule of Civil Procedure 26(c). United States Magistrate Judge Susan Collins of the Northern District of Indiana denied the parties’ request for a protective order, holding that the proposed order was overly broad and, thus, invalid.

Magistrate Judge Collins first noted that Rule 26(c) allows the court to enter a protective order for good cause shown. For material to be protected, it “must give the holder an economic advantage and threaten a competitive injury…business information whose release harms the holder only because the information is embarrassing or reveals weaknesses does not qualify for trade secret protection.”

In the parties’ proposed order, no categories of material were provided to restrict what discovery materials would be treated as confidential. Instead, it allowed either party “in good faith” to deem any discovery materials to be confidential. Magistrate Judge Collins held that this was overbroad and that a protective order must extend only to “properly demarcated categor[ies] of legitimately confidential information.” Moreover, a mere assertion of harm to a litigant’s competitive position would not suffice but rather “the motion must explain how.” Consequently, the court held that because a showing of good cause had not been made, the proposed protective order could not issue.

The court also noted that the proposed order provided that it would continue to be binding after the conclusion of the litigation, thus implying that the court would retain jurisdiction after the lawsuit had been resolved. The court refused to enter an order that would have such an effect. Instead, it suggested that the parties should agree contractually among themselves for the return of sensitive documents.

March 13, 2015

Intellectual Property: Patents, Trademarks, Copyrights and Trade Secrets

By Overhauser Law Offices, LLC

How should I protect my intellectual property?

Different types of intellectual property are protected by different means.

In the United States, patents may be available to any person who “invents or discovers any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof.” Patent protection must be sought by application with the U.S. Patent and Trademark Office (“USPTO”). There are three types of patents:

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.

January 30, 2015

Indiana Trademark Litigation: Archetype Sues Alleging Trade Dress Infringement

By Overhauser Law Offices, LLC

Indianapolis, Indiana – An Indiana intellectual property attorney for Archetype Ltd. (“Archetype”) of Short Hills, New Jersey sued in the Southern District of Indiana alleging that LTD Commodities LLC (“LTD”) of Bannockburn, Illinois infringed the trademark PathLights™.

Plaintiff Archetype contends that it has been marketing a distinctive and famous battery-operated motion-detection lighting system under the PathLights trademark since at least as early as 2009. It states that the overall look and feel of the PathLights product is non-functional and serves as a source identifier. In this Indiana lawsuit, Archetype accuses LTD of trade dress infringement, false designation of origin or sponsorship, passing off, and unfair competition.

Archetype indicates in the complaint that LTD is marketing, selling, and promoting a battery-operated motion-detection lighting product that is almost identical to Archetype’s PathLights product. It further claims that the accused LTD lights illustrated on LTD’s website are actually images of Archetype’s PathLights product and that the lighting products that consumers actually receive from LTD upon purchase of the LTD product are not an Archetype’s PathLights product but are, instead, a different, lower-quality light.

Defendant LTD is accused of “intentionally, willfully and deliberately pull[ing] a ‘bait and switch’ on consumers” and, in doing so, damaging Archetype’s sales volume and business reputation.

In this lawsuit, filed by an Indiana intellectual property lawyer for Archetype, the following counts are asserted:

• Count I: Trade Dress Infringement

• Count II: False Designation of Origin or Sponsorship and Passing Off

• Count III: False Advertising

• Count IV: Trade Dress Dilution

Archetype asks the court for judgment that LTD’s acts constitute trade dress infringement, unfair competition, false designation of origin and/or sponsorship, false advertising and trade dress dilution; for an award of LTD’s profits and actual damages, including corrective advertising, as well as trebling those damages pursuant to 15 U.S.C. § 1117; for an order that all accused LTD products and other accused materials be surrendered for destruction; for an injunction; and for an award of Archetype’s attorneys’ fees, costs and expenses.

The case was assigned to Chief Judge Richard L. Young and Magistrate Judge Denise K. LaRue in the Southern District of Indiana and assigned Case No. 1:15-cv-00106-RLY-DKL.