Trade Secret Theft Research Articles

Addressing Criminal Liability for Misuse of Trade Secrets Under Australian Law: Is the Current Legal Framework Adequate to Protect the Interests of Owners of Trade Secrets?

The emergence and dominance of knowledge-based economies have heightened the importance of trade secrets as a “currency” for attaining competitiveness in the market and driving innovation. Yet espousing policies to govern trade secret protection, especially in the criminal law sphere, was not something on which legislative and regulatory policymakers traditionally focused. Recent legislative incentives at a global level have caused the tide to shift and, after decades of being somewhat neglected, the questions pertaining to criminal liability for trade secret misuse are finally gaining attention. The Australian response to recent initiatives ensued in 2018 with the enactment of the National Security Legislation Amendment (Espionage and Foreign Interference) Act 2018 (Cth) (“EFI Act”) which introduced the first statutory provisions dedicated to criminalisation of state-sponsored theft (economic espionage) of trade secrets. This Act, however, does not provide a comprehensive legal framework to address criminal liability for trade secret misuse, as it leaves outside the scope of its regulation the criminalisation of the theft of trade secrets by individuals for their own benefit. This paper analyses the adequacy of the Australian legal regime concerning criminal liability for trade secret misuse. The analysis is informed by a comparison of the legal provisions of the Australian trade secret regime with that adopted in the United States (“U.S.”) which currently offers a comprehensive framework of protection and criminalises economic espionage as well as the theft of trade secrets. This comparative analysis serves to determine: first, whether the “one way” avenue of statutory protection under Australian law suffices to protect the interests of the owners of trade secrets; and, second, whether a potential reform of the regime designed to include dedicated statutory provisions to criminalise the theft of trade secrets, as is the case in the U.S., could potentially afford a more adequate protection of the interests of trade secret owners.

Економічні аспекти посилення захисту прав інтелектуальної власності

The present stage of development of the world economy is characterized by a spread of innovation, a rapid development of global and national protection systems and, especially, the protection of intellectual property. The dynamism of interstate relations is accompanied by an increase of various violations of intellectual property rights, including counterfeiting, falsification, piracy, and plagiarism. The purpose of the study is to generalize the global trends in the violation of intellectual property rights, identify the main problems in the protection of intellectual property rights in Ukraine within the context of strengthening the fight against violation of copyright and industrial property rights by the world's leading countries. Violations of intellectual property rights, including patent theft, trademark counterfeiting, copyright piracy, and trade secret theft, cause considerable material and financial damage to the rights holders. The problem of counterfeiting is currently spreading on a global scale and occurs in the production, transshipment and in the sale of large quantities of counterfeit goods. Counterfeit goods, especially foodstuffs and pharmaceuticals, bear risks to the health and safety of consumers. Online sales have become the newest channel for trading fraudulent and counterfeited goods. The bulk of counterfeited produce originate from a small group of economies, among which China, Hong Kong (province of China), Turkey, Singapore and the United Arab Emirates are in the lead. Escalated violations of intellectual property rights lead to a stronger protection of intellectual property rights in the USA and EU countries, and the appearance of special reports based on the results of monitoring and supervision of violations in trading partner countries. In recent years, Ukraine has been included in the US Priority Watch List of countries that do not ensure a proper protection of intellectual property rights and are monitored by the Office of the US Trade Representative. Besides, this country is in the second category of the European Commission’s Counterfeit and Piracy Watch List, which includes countries with the most serious problems in intellectual property protection. The status of a candidate country for EU membership requires Ukraine to harmonize its national legislation with the EU legislation in the field of intellectual property protection.

New U.S. Law Authorizes Presidential Sanctions for Trade Secret Theft

New U.S. Law Authorizes Presidential Sanctions for Trade Secret Theft

Stolen Secrets: The Effect of Trade Secret Theft on Corporate Innovation

Stolen Secrets: The Effect of Trade Secret Theft on Corporate Innovation

Chemist sentenced for trade secret theft

Chemist sentenced for trade secret theft

Chemist sentenced for trade secret theft

Chemist sentenced for trade secret theft

NN-Lock : A Lightweight Authorization to Prevent IP Threats of Deep Learning Models

The prevalent usage and unparalleled recent success of Deep Neural Network (DNN) applications have raised the concern of protecting their Intellectual Property (IP) rights in different business models to prevent the theft of trade secrets. In this article, we propose a lightweight, generic, key-based DNN IP protection methodology, NN-Lock , to defend against unauthorized usage of stolen DNN models. NN-Lock utilizes SBox, a cryptographic primitive, with good security properties to encrypt each parameter of a trained DNN model with the secret keys derived from a master key through a key-scheduling algorithm. The method ensures that only an authorized user with a correct master key can accurately use the locked DNN model. Evaluation results of NN-Lock on a Google Coral edge device for various DNN architectures on several datasets show that for an incorrect master key, the accuracy of a locked model is that of a random classifier. The dense network of encrypted parameters makes the method robust against the model fine-tuning attack and a novel approximation attack using the Genetic Algorithm, which achieves reasonable success against another recent IP protection scheme called HPNN Chakraborty et al. 2020 . The security evaluation of NN-Lock against other families of attacks demonstrates its soundness in practical scenarios. NN-Lock does not modify any internal structure of a DNN model, making it scalable for all of the existing DNN implementations without adversely affecting their performance.

Pfizer sues ex-employees over trade secret theft

Pfizer sues ex-employees over trade secret theft

Trade secret as a factor of ensuring national economic security: the practice of China and the USA (part 2)

The global economic and innovative impact of trade secrets is studied. Trade secrets have a broad reach and support the innovation ecosystem by protecting technological, product, market and organizational innovations, as well as providing a key complement and support to other intellectual property (IP). It is shown that misappropriation or theft of trade secrets from OECD countries is 1–3 % of GDP. The cost of trade secret theft has reached $ 1.7 trillion per year. On the example of the economy of China and the USA, the growing importance of intangible assets, commercial secrets and the increasing threats of their theft are shown. In the US, more than 80% of all economic espionage cases and 60 % of trade secret cases are related to China. Given their negative impact on national security, the US is applying new legislative mechanisms to protect IP and trade secrets. The challenges and risks associated with Ukraine’s cooperation with China are analyzed. Recommendations for their minimization and countermeasures against threats are given.

Trade secret as a factor in ensuring national economic security: Chinese practice (part 1)

The paper examines the growing importance of intangible assets, trade secrets, its global economic and innovative impact and increasing threats of abduction. The concept of national economic security, definition of the system of economic security is given. The economic significance of the institute of trade secrets, sources of legal regulation, the role of the revised Law on Unfair Competition of the People’s Republic of China, features of protection of computer software and technology as trade secrets, licensing, calculation of financial compensation are considered. Judicial interpretation for handling civil suits for theft of trade secrets, guidance for companies on taking appropriate measures to maintain secrecy are provided. An analysis of the conduct of cases on trade secrets in China, the conduct of judicial practice, is given.

Memory forensic: Acquisition and analysis mechanism for operating systems

Memory forensics is also known as memory analysis, which deals with the estimation of the changeable data in a system memory repository. In order to investigate and detect the attacks, the professionals perform the memory forensics to interpret the nature of the malware i.e. do not easily traceable on hard drive data. Due to the daily advancement in technological landscape the memory forensic mechanism is emerging trends because the nature of the attacks changing drastically. The general developed defense mechanisms such as anti-malware are not enough capable to deal with the computer threats. Therefore, the latest defense mechanism is directly embedded into the physical memory like RAM and opens the valuable scope of the memory forensic. From last a few decades, the technology and cybercrimes parallelly growing drastically. There are multiple reasons to perform the cyber attacks such as theft and harm the sensitive military data, targeting to ruin the energy system, identity theft of trade secrets, and cyber defamation. Memory-based forensic techniques are becoming very instrumental in digital investigations. This objective of this paper is to help and make it easy to understand the investigator in the process of the developing tools and techniques by considering different aspects of memory analysis and investigation.

Brunelleschi’s Mirror, Perspectival Drawing and the Artful Prevention of Crime

Filippo Brunelleschi (1377-1446), a Florentine architect and Renaissance polymath, not only invented a mirror that allowed artists and draughtspersons to capture linear perspective, he was also the first beneficiary of a modern patent. Governments grant patents as time-limited, monopoly exploitation rights over inventions in exchange for full disclosure of the details of the invention. On the expiry of the monopoly, anyone can use and develop the invention. Perspectival drawings have been used for centuries both to prove and disclose inventions. Patents are items of personal property but patent infringement is not technically theft. However, appropriating trade secrets that could lead to registration of a patent does constitute theft under the Crimes Act 1961. This presentation flips the symposium theme of preventing art crime to consider how art may prevent certain crimes. The presentation considers Brunelleschi’s mirror and the role of linear perspective in permitting the construction of drawings that plausibly represent three-dimensional objects. These drawings are instrumental in proving inventiveness for patent registration purposes, and therefore the creation of property rights. They also constitute evidence that can contribute to preventing theft of trade secrets. Furthermore, they can be instrumental in proving infringement of copyright, registered designs or trade marks.

Criminal Enforcement of Trade Secret Theft: Strategic Considerations for Canadian SMEs

Many innovative small and medium enterprises (SMEs) face unique challenges in protecting their intellectual property (IP). Potential theft of trade secrets is a key feature of these challenges, which arises often in the context of disputes related to employee mobility. Despite the risks these challenges pose, SMEs often confront significant resource barriers in protecting themselves from trade secret theft. The passage of a recent criminal law by the Canadian federal government, section 391 of the Criminal Code, creates a powerful new tool for innovative SMEs to report, investigate, and prosecute theft of trade secrets. It also comes with specific considerations and risks that innovative SMEs should examine and contemplate. This article explores strategies for SMEs in Canada to use section 391 to protect their trade secrets, navigate the legal environment during theft of a trade secret, and remediate such theft.

Securitizing Innovation to Protect Trade Secrets Between “the East” and “the West”: A Neo-Schumpeterian Public Legal Reading

Author(s): Vecellio Segate, Riccardo | Abstract: The first target of today’s global commercial and military espionage, trade secrets, are the only form of intellectual property protection to be based on the necessity of nondisclosure and secrecy rather than on the paradigm of publicity and exploitability, with the obvious consequence that where confidentiality ends, no trade secret factually exists anymore. As such, current judicial remedies to trade secret thefts simply miss the point, treating trade secrets as rights which can be restored, rather than as assets that once stolen, are lost forever. Moreover, trade secrets often represent the “backbone” of a country’s development: an invaluable strategic advantage for entire industrial systems, innovation environments, and national economies. Whereas a trade secret theft occurring within domestic borders transfers exploitability rather than causing damage to the economic ecosystem of the country concerned, international trade secret thefts may jeopardize states’ economy and public security alike. For these reasons, the only way to protect trade secrets by law is through ensuring that their secrecy is reasonably safe by means of compulsory cybersecurity and cyber-hygiene standards to be complied with by their owners. When it comes to this specific form of IP, the only protection is afforded with prevention: injunctions and compensations can work as remedies for other IP rights’ misappropriations and misexploitations, but do nothing to restore the peculiarity of a trade secret which is, indeed, its secrecy. Not only should companies be compelled to adopt and implement reasonable sector-specific IT security measures and procedures, but licensing agreements including know-how should feature a specific cybersecurity clause to be carefully negotiated. The new cybersecurity regimes of world powers like China seem to capture this problem, and to (involuntarily?) provide useful tools for addressing it beyond the schemes of intellectual property or tort (confidentiality) laws. Regrettably, other countries in the Pacific region appear to keep the belief that trade secret thefts are a private affair of the breached companies, which should seek redress via traditional judicial channels. This is to be deemed an outdated, misleading, shortsighted and ineffective approach.

Quantifying Trade Secret Theft

In the modern data-driven economy, trade secrets are becoming a more important part of firms’ intellectual property strategies. For their part, governments worldwide have been introducing new legislation to broaden and toughen the protection for trade secrets citing estimates of the cost of trade secret theft on the order of 1 to 3% of the GDP of the advanced countries. For the United States alone, this would put the cost of trade secret theft on the order of USD 180 to 540 billion. This note considers the “proxy” approach that has been used to generate these widely cited estimates as well as the extent of evidence that actually supports these claims. It concludes that the value of cross-border trade secret theft is much smaller than is suggested by the proxy methodology and suggests a more appropriate methodology to estimate the value of this illicit flow. The note also advances a number of considerations that temper the concern over cross-border trade secret theft.

Ex-Monsanto scientist indicted

A federal grand jury in St. Louis has indicted former Monsanto researcher Haitao Xiang for stealing crop productivity algorithms with the intention of handing them over to a Chinese government research institute. After Xiang quit his job in June 2017, he downloaded the algorithms to a micro-SD card, according to the indictment. He then purchased a one-way ticket to China; federal officials stopped him at the airport and seized the card. If convicted, Xiang faces up to 15 years in prison and a $5 million fine on each of several espionage charges, and up to 10 years for each of several trade secret theft charges.

Olaplex wins case against L’Oréal for theft of trade secrets, breach of contract & patent infringement

Brivanib is a selective inhibitor of vascular endothelial growth factor and fibroblast growth factor (FGF) signalling. We performed a phase II randomised discontinuation trial of brivanib in 7 tumour types (soft-tissue sarcomas [STS], ovarian cancer, breast cancer, pancreatic cancer, non-small-cell lung cancer [NSCLC], gastric/esophageal cancer and transitional cell carcinoma [TCC]).During a 12-week open-label lead-in period, patients received brivanib 800 mg daily and were evaluated for FGF2 status by immunohistochemistry. Patients with stable disease at week 12 were randomised to brivanib or placebo. A study steering committee evaluated week 12 response to determine if enrolment in a tumour type would continue. The primary objective was progression-free survival (PFS) for brivanib versus placebo in patients with FGF2-positive tumours.A total of 595 patients were treated, and stable disease was observed at the week 12 randomisation point in all tumour types. Closure decisions were made for breast cancer, pancreatic cancer, NSCLC, gastric cancer and TCC. Criteria for expansion were met for STS and ovarian cancer. In 53 randomised patients with STS and FGF2-positive tumours, the median PFS was 2.8 months for brivanib and 1.4 months for placebo (hazard ratio [HR]: 0.58, p = 0.08). For all randomised patients with sarcomas, the median PFS was 2.8 months (95% confidence interval [CI]: 1.4–4.0) for those treated with brivanib compared with 1.4 months (95% CI: 1.3–1.6) for placebo (HR = 0.64, 95% CI: 0.38–1.07; p = 0.09). In the 36 randomised patients with ovarian cancer and FGF2-positive tumours, the median PFS was 4.0 (95% CI: 2.6–4.2) months for brivanib and 2.0 months (95% CI: 1.2–2.7) for placebo (HR: 0.56, 95% CI: 0.26–1.22). For all randomised patients with ovarian cancer, the median PFS in those randomised to brivanib was 4.0 months (95% CI: 2.6–4.2) and was 2.0 months (95% CI: 1.2–2.7) in those randomised to placebo (HR = 0.54, 95% CI: 0.25–1.17; p = 0.11).Brivanib demonstrated activity in STS and ovarian cancer with an acceptable safety profile. FGF2 expression, as defined in the protocol, is not a predictive biomarker of the efficacy of brivanib.

UCSB chemists win lawsuit against cosmetics giant L’Oréal

A US district court jury in Delaware has ordered the French cosmetics giant L’Oreal to pay $91 million for stealing the formula for Olaplex’s Bond Multiplier, a favorite of celebrities like Khloe Kardashian and Taylor Swift because it protects hair from damage during bleaching and color treatments. After a trial held earlier this month, the jury found L’Oreal guilty of trade-secret theft, patent infringement, and breach of contract. It ordered L’Oreal to pay Olaplex—a start-up based on the research of two chemists from the University of California, Santa Barbara—more than $22 million for each of the first two offenses, and close to $47 million for the third offense. A few days after the verdict, the judge overseeing the case barred the sale of L’Oreal’s competing products. In a press statement, L’Oreal vows to appeal the verdict and says it expects “to prevail on all counts.” The cosmetics firm adds that

Snatched secrets: Cybercrime and trade secrets modelling a firm's decision to report a theft of trade secrets

Cybercrime and economic espionage are increasing problems for firms. We build on US FBI policy to frame the interaction between a cybercrime victim firm and a government security agency. We bring together several strands in the literature to model the strategies of the firm, which has suffered a cyber breach and theft of trade secrets, and the government security agency, which must investigate and prosecute crimes. We investigate the interactions between these two players, in which the firm has private information about its cybersecurity investment. This investment level is unknown to the security agency, which must nonetheless decide how to prioritize reported crime. We model this asymmetric information problem within a game theoretic signaling framework derived from Becker's work in crime and punishment. We suggest that such a framework can inform policy to encourage security investments by firms and more efficient resource utilization by security agencies. We particularly focus on an illustrative stylized example to highlight how our modelling approach can be helpful. In this example we compare two worlds; one where all security breaches become public knowledge and another where only reported breaches become public knowledge. We then formulate two potentially testable Hypotheses and several implications of these Hypotheses. Case studies and a policy analysis further highlight how our framework plays out in reality.

Employee Theft among College Students in the Workforce

Employee theft costs organizations billions of dollars annually. Despite the severity of employee theft, previous research has not focused on the specific demographics of employees who commit this crime. The number of college students in the workforce has increased over the years; thus, the purpose of this study was to investigate the serious problem of employee theft, particularly in relation to the college student population. A survey was used to collect data from college students to indicate employee theft activities among them. Employee theft activities were categorized as follows: time theft, property theft, embezzlement, pilferage, and data and trade secret theft. Survey responses from 92 students indicated that the majority committed time theft, followed by property theft, pilferage, data and trade secret theft, and embezzlement, respectively. This study adds valuable information for businesses and practitioners to understand the severity of employee theft among the increasing number of college students in the workforce.