While companies are often focused on outsider risks such as breach of their systems through a stolen laptop or hacking, often the biggest risk is from insiders themselves. Such problems of access management with existing employees, independent contractors and other persons are as much a threat to proprietary information as threats from outside sources.

In any industry dominated by two main players there will be intense competition for an advantage. Advanced Micro Devices and Nvida dominate the graphics card market. They put out competing models of graphics cards at similar price points. When played by the rules, such competition is beneficial for both the industry and consumers.

AMD has sued four former employees for allegedly taking “sensitive” documents when they left to work for Nvidia. In its complaint, filed in the 1st Circuit District Court of Massachusetts, AMD claims this is “an extraordinary case of trade secret transfer/misappropriation and strategic employee solicitation.” Allegedly, forensically recovered data show that when the AMD employees left in July of 2012 they transferred thousands of files to external hard drives that they then took with them. Advanced Micro Devices, Inc. v. Feldstein et al, No. 4:2013cv40007 (1st Cir. 2013).

On January 14, 2013 the District Court of Massachusetts granted AMD’s ex-parte temporary restraining order finding AMD would suffer immediate and irreparable injury if the Court did not issue the TRO. The TRO required the AMD employees to immediately provide their computers and storage devices for forensic evaluation and to refrain from using or disclosing any AMD confidential information.

The employees did not have a non-compete contract. Instead the complaint is centered on an allegation of misappropriation of trade secrets. While both AMD and Nvidia are extremely competitive in the consumer discrete gpu market involving PC gaming enthusiasts, there are rumors that AMD managed to secure their hardware to be placed in both forthcoming next-generation consoles, Sony PlayStation 4 and Microsoft Xbox 720. AMD’s TRO and ultimate goal of the suit may therefore be to preclude any of their proprietary technology from being used by its former employees to assist Nvidia in the future.

The law does protect companies and individuals such as AMD from having their trade secrets misappropriated. The AMD case has only recently been filed and therefore it is unclear what the response from the employees will be. What is clear is how fast AMD was able to move to deal with such a potential insider threat. Companies need to be aware of who has access to what data and for how long. Therefore, in the event of a breach, whether internal or external, companies can move quickly to isolate and identify the breach and take steps such as litigation to ensure their proprietary information is protected.

Computer programs are protected under the U.S. Copyright Act. The owner of the copyright holds the right to exclude others from copying their software, making works derivative of it, and from distributing or using it.

To prove a claim of copyright infringement a plaintiff must demonstrate:

– Ownership of a valid copyright;

– Copying the elements of the work that are original; OR

– Intentionally inducing or encouraging direct infringement of the copyright.

In a copyright infringement lawsuit, a preliminary injunction can be a useful tool to use early in the litigation. To obtain a preliminary injunction a party must show:

– Likelihood of success on the merits of the case;

– That he or she is likely to suffer irreparable harm in the absence of preliminary relief;

– That the balance of equities tips in his favor;

– That the injunction is in the public interest.

While each factor is considered by the court, the likelihood of success is often the most important factor. For instance, the 1st Circuit recently allowed a preliminary injunction which forced a defendant to stop selling certain software as well as recall all existing licensees of the product. See Accusoft Corporation v. Quest Diagnostics, Inc., 2012 U.S. Dist. LEXIS 54216 (D. Mass. Apr. 18, 2012).

In Accusoft, the 1st Circuit held that in a software infringement case, irreparable harm is essentially proven once success on the merits of the case is shown. The Court reasoned that “[i]n an industry where exclusive control of intellectual property is crucial to profitability, it is understandable that plaintiff fears that unchecked distribution of its code will lead to market disadvantages that cannot be corrected.”

The Court has therefore sidestepped the issue presented in ebay Inc. V. MercExchange, L.L.C., 547 U.S. 388, 393 (2006) in which the Supreme Court held that categorical rules regarding the presumption of irreparable harm should not be used in a patent infringement action. While the 1st Circuit has not decided whether ebay “precludes application of the traditional presumption of harm in other fields of intellectual property law,” the recent decision in Accusoft provides insight that, at least in cases alleging software infringement, irreparable harm will be presumed once a plaintiff shows likelihood of success on the merits.

The use of the preliminary injunction therefore allows the party to obtain significant relief at an early stage of the litigation. An experienced attorney can assist you or your company in evaluating disputes surrounding infringement of software code and copyrights.

An issue that often arises is an employee, upon terminating his or her employment, attempting to solicit his former employer’s customers. An employee can plan to go into competition with his employer and may even take active steps to do so while still employed. However, an employee may not use his employer’s confidential information to do so.

A recent decision highlights the perils and remedies of trade secret misappropriation. Under Massachusetts law, trade secrets can include anything tangible or intangible or electronically kept or stored which evidences or records a secret scientific, technical, merchandising, production or management information, design, process, procedure, formula, invention or improvement. While the recent decision by the 1st Circuit Court of Appeals highlights the perils of misappropriating a trade secret in the context of a physical product, trade secret protections extend far beyond physical products to proprietary business information such as customer lists. Confidential information such as customer lists, which companies invest time and money in developing, are protected under Massachusetts law.

The key factor in determining the existence of a trade secret is confidentiality. Factors in determining the confidential nature of business information include:

–          The extent to which the information is known outside the business

–          The extent to which it is known by employees and others involved in the business

–          The extent of measures taken by an employer to guard the secrecy of the information

–          The value of the information to the employer and to his or her competitors

–          The amount of effort or money expended by the employer in developing the information

–          The ease or difficulty with which the information could be properly acquired or duplicated by others

A list of customers is a trade secret and if a former employee utilizes such a list they can be found liable for misappropriation of trade secrets. If you or your company has been the victim of a former employee utilizing your confidential and proprietary information to strike out on their own, an attorney can help you protect your trade secrets and recover damages including lost profits. 

no_copyright.pngIt is no secret that U.S. Copyright law prohibits copying a copyrighted work such as a movie, tv show or music album without the permission of the owner of the copyright. Recently a number of lawsuits have targeted users who have downloaded copyrighted works via torrents.

How is a person identified as having illegally downloaded a copyrighted work?

Typically a person is notified by their internet service provider (ISP) that they have been identified as illegally downloading a movie. There are companies who monitor BitTorrent traffic associated with a particular movie and this is often how your IP address was identified.  

Why were you contacted by your ISP?

If a lawsuit was filed on behalf of a copyright owner in federal court it typically targets users who downloaded and/or shared a specific movie. The plaintiff will then issue a “John Doe” subpoena to the ISP to force your ISP to reveal your identity based upon the list of IP addresses that downloaded and/or shared the torrent.

At this stage, if the subpoena is issued, your ISP will send you a letter alerting you of these facts and advising you that if you do not seek to quash the subpoena they will release your identity to the plaintiff. Once the Plaintiff has your identity they will be able to proceed with the lawsuit and seek damages.

What are you options once you receive such a letter from you ISP?

While it is tempting to ignore such a letter, to do so risks a default judgment being entered against you. Do not panic and do not initiate contact with the plaintiff. Review the details of the letter and identify any factual inaccuracies. You should consult with an experienced attorney who can advise you on potential options and strategy in the lawsuit.