Friday, November 2, 2012

Stealing trade secret may push you into involuntary bankruptcy

Perhaps you don’t have any idea how awkward it could be if one is found guilty of stealing trade secret. The theft of trade secret is a federal crime and these days, Dan Roselli – co-owner of Red F Marketing, is feeling the heat. Bridgetree, an eminent software company, is trying to force Red F Marketing into bankruptcy in an attempt to collect on a $4.2 million August jury award following a federal racketeering trial.

Wondering what crime has Dan Roselli committed? Well, in my previous blog post I have talked about it intricately. In brief, Bridgetree filed a lawsuit in federal court against Daniel Roselli – co-owner of Packard Place, Teng Li, Jason Li, Mali Xu, Mark Epperly, Elton T. Scripter, Red F Marketing and Target Point. All of them have been charged with stealing trade secret from Bridgetree.

On August 10, a federal-court jury in Charlotte awarded Bridgetree Inc. $4.2 million after finding that Red F Marketing illegally took software belonging to Bridgetree. In order to force Red F to pay the $4.2 million award, Bridgetree Inc. filed the involuntary bankruptcy petition against Red F and Dan Roselli, in the Charlotte division of the Western N.C. District of U.S. Bankruptcy Court. 

Zynga, renowned provider of social game services, sues its own employee for stealing trade secrets. The company has filed a lawsuit against its former CityVille general manager for stealing documents contained sensitive information about Zynga’s operations. In August, Patmore left Zynga for joining one of its competitors, Kixeye, as the vice president of product. 

I would like to draw your attention to one of the largest-ever trade-secret theft prosecutions the federal government has ever pursued. Last year, DuPont – one of the world's largest chemical companies was awarded almost $920 million in a trade secrets theft case against Kolon Industries Inc. by Department of Justice. The company was accused of stealing information about DuPont's Kevlar brand technology to develop a competing high-strength fiber.

As far as punishment is concerned, individual offenders may face imprisonment for up to 10 years and pay a fine of up to $250,000 upon conviction of the theft of trade secrets, while the court may fine an organization up to $5 million for the same. Both individuals and organization may face a higher maximum fine if the crime is committed for the benefit of any foreign government, instrumentality, or agent.

Friday, October 12, 2012

Why It is Important to Protect Your Trade Secrets

How would you feel, if you find that one of your employees is sharing your trade secrets with your rival companies? You will definitely be surprised and disappointed! And if you are not adequately equipped, even your business could come to a halt as well. Since more and more cases regarding leaking out trade secrets to a third party or rivals and computer fraud are occurring these days, it has become very important to take initiatives to protect your trade secrets. Explore this article and learn more about this.

Let me begin with very interesting article that was published in Charlotte Business Journal on August 17, 2012. According to the news - Bridgetree wins $4.2 million jury award against Red F Marketing of Charlotte and others, including its founder, Dan Roselli, in a software trade-secrets case.

After going through the article, I conducted some online research and found that Teng Li – former vice president of Bridgetree, chief technical officer and chief of privacy and security – left Bridgetree suddenly and without warning, and unlawfully took with him proprietary software from Bridgetree’s computers. That is not all, Li also deleted files that he possessed that were critical to Bridgetree’s business and then he joined Red F, a small advertising agency headquartered in Charlotte NC, along with 17 Bridgetree employees in Xian, China, who Li induced to leave Bridgetree.

What Teng Li and others did, was a very serious case of violation of state and federal laws. Bridgetree filed a lawsuit in federal court against Daniel Rosellico-owner of Packard Place, Teng Li, Jason Li, Mali Xu, Mark Epperly, Elton T. Scripter, Red F Marketing and Target Point and wins $4.2 million jury award at the end.

Since Bridgetree manages the business carefully, and the company has no debt and a strong balance sheet, it helped the company not only to survive the damage that Teng Li and his co-conspirators caused, but it has also grown the business, investing in their infrastructure and recruiting new employees.

Many of you might be quite aware of the fact that in June at the time of a patent lawsuit between Apple and Samsung, the California court granted Apple an injunction against Samsung that banned the sale of the Nexus in the United States. Apple accused Samsung of infringing on seven patents. These include the "pinch and zoom" capability of iDevices and "bounceback" effect.

However, not all companies have the potential to fight these types of evils. Why take chances? Since you invest a lot in your business to perfect certain methods in order to give the business a competitive edge over your rivals, you should take initiatives to protect trade secret. You may consider certain tools in this regard. Some of these are Trade Secret Policy, Non-disclosure Agreements (NDAs), Employment agreement, and Security Systems, etc. Each of these tools will help you to protect your trade secrets from being misappropriated, sabotaged, lost or stolen.