*Previously posted on IPPIBlog.com

WHAT IS THE U.S. CLOUD ACT?

Last year the U.S. passed the Cloud Act which essentially makes it possible for the U.S. to compel a data provider to produce electronic evidence regardless of what country the data is stored.

It also provides for bilateral agreements between the U.S. and other qualifying countries to not restrict access to the data if stored in their country.

WHAT DOES THE WORD “CLOUD’ IN THE CLOUD ACT MEAN?

The acronym C-L-O-U-D stands for, “Clarifying Lawful Overseas Use of Data Act”

WHAT WAS ONE OF THE CATALYSTS FOR THE CLOUD ACT?

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*Previously posted on IPPIBlog.com

As a follow-up to my last post titled, “Know Your Researcher – Academic Espionage – Trade Secrets Theft,” I embedded an FBI Counterintelligence Strategic Partnership Intelligence Note (SPIN) dated September 2015.

If you haven’t had a chance to look it over, it warrants a closer look.

The last two pages of the document provide a blueprint—a list of things for organizations to consider when screening employee candidates and other organizations before collaboration starts. But, even if collaboration has begun, it is still a useful guide in determining if you should continue or end the relationship.

This blueprint is a particularly useful guide for general counsel, human resources and private investigators (retained on behalf of organizations) to conduct enhanced background screening of potential employees.

*All information in italics is extracted from the 2015 FBI handout.

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*Previously posted on IPPIBlog.com

In January of this year (and July of last year) I wrote four (4) posts about “Third-Party Intermediaries” in the maritime, as well as the self-storage/landlord industries that facilitate the transport or storage of counterfeit goods—knowingly or unknowingly.

I provided some context to the problem, a few case studies, as well as suggesting a number of steps these two industries are encouraged to apply in an effort to prevent their services from being used by criminals.

*Links to those posts can be found at the end of this post.

I have since come to learn of comprehensive “Best Practices” strategies laid out for both the maritime transportation and landlord/self-storage industries, respectively, by the “International Chamber of Commerce (ICC)” and their affiliate the, “Business Action to Stop Counterfeiting and Piracy (BASCAP.)”

WHAT IS THE INTERNATIONAL CHAMBER OF COMMERCE (ICC) BUSINESS ACTION TO STOP COUNTERFEITING AND PIRACY (BASCAP)?

If you’re not familiar with BASCAP, the following quote was extracted from their website:

“ICC created Business Action to Stop Counterfeiting and Piracy (BASCAP) to raise awareness of the economic and social harm of counterfeiting and piracy and to petition for greater commitments by local, national and international authorities in the enforcement and protection of intellectual property rights.”

SYNOPSIS OF THE ICC/BASCAP BEST PRACTICES RECOMMENDATIONS

KNOW YOUR CUSTOMER, DUE DILIGENCE AND MARITIME SUPPLY CHAIN INTEGRITY: Best Practices under the Declaration of Intent to Prevent the Maritime Transportation of Counterfeit Goods, ICC/BASCAP

Know Your Customer (KYC):

  • Verify the identity of a potential customer
  • Perform due diligence and ongoing monitoring of their established customers
  • Identify possible counterfeit shipments
  • Reviewing suspected high-risk customers through further validation processes and documenting the outcome of this review with reasons provided for the decision
  • Pre and Post Booking
  • Directly convey to all customers their policy against the shipment of counterfeit goods

MEASURES TO ENGAGE LANDLORDS IN THE FIGHT AGAINST COUNTERFEIT AND PIRATED GOODS: Best Practices for Landlords, Government and Enforcement Agencies, ICC/BASCAP.

Landlords:

  • Implement due diligence checks to ensure a basic understanding of who tenants are
  • Include lease provision prohibiting activities related to counterfeit and pirated goods; and to evict tenants in the event of IPR crimes
  • Maintain a “No Counterfeit and Pirated Products Policy” for markets
  • Perform periodic inspection of tenants’ shops and stalls for obvious counterfeit and pirated goods
  • Establish co-operative working relationships with brand owners

Governments:

  • Clarify the conditions under which a landlord may be held liable for tenants or other temporary occupants that deal in counterfeit and pirated goods
  • Consider alternative approaches to deter landlords who knowingly rent to tenants that deal in counterfeit and pirated goods

Enforcement Agencies:

  • Conduct regular and sustained enforcement
  • Increase landlord education: explain the benefits of participation in voluntary programs to avoid renting to criminals
  • Look beyond retail seller and markets

TARGETING INTERMEDIARIES

In the above-referenced ICC/BASCAP publication, “Measures to Engage Landlords in the Fight Against Counterfeit and Pirated Goods” it says,

“Landlords are becoming more vulnerable as law enforcement officials, supported by new laws and regulations in some areas, are increasingly targeting owners and landlords that support counterfeiting.

“A recent increase in the number of prosecutions confirms that landlords who are not vigilant about the activities that are taking place in their premises, are becoming victims of counterfeiters and incurring a dramatic increase in costs in damage penalties and legal fees.”

And here are a few quotes from an article published in the World Trademark Review titled, Liability of Intermediaries: The Effective Anti-Counterfeiting Tool, written by Greek IP Attorney Michalis Kosmopoulos on May 24, 2018:

“The most effective approach is to target the infrastructure and means used by counterfeiters to supply their products internationally. In this regard, counterfeiters often act through third parties…” [i.e., self-storage facilities, transportation, financial services, open markets, etc.]

“Such third-party engagement renders the liability of intermediaries a cutting-edge matter in IP law worldwide.”

“Targeting intermediaries is vital for enhancing the effectiveness of an anti-counterfeiting program.”[

FINAL THOUGHTS

In considering the essential obligation of “third-party intermediaries” to do more to stem the tide of counterfeit commerce, we need only to reflect on the staggering projection reported on the ICC/BASCAP website:

“The negative impact of counterfeiting and piracy are projected to drain US$4.2 trillion from the global economy and put 5.4 million legitimate jobs at risk by 2022.”

*I highly recommend you visit the links to the ICC/BASCAP sources referenced in this post to get a complete understanding of the pro-active ways for the maritime and self-storage/landlords industries, and others, to keep fighting the good fight against global counterfeiting.

PREVIOUS IP-PI BLOG POSTS ON THIS TOPIC:

Disclaimer: This is offered as a service to the professional IP community. While every effort has been made to check information in this blog, we provide no guarantees or warranties, express or implied, with regard to content provided in this blog. We disclaim any and all liability and responsibility for the qualification or accuracy of representations made by the contributors or for any disputes that may arise. It is the responsibility of the readers to independently investigate and verify the credentials of such person and the accuracy and validity of the information provided by them. This blog is provided for general information purposes only and is not intended to provide legal or other professional advice.

*Previously posted on IPPIBlog.com

It was widely reported a few days ago that a pharmacy professor at the University of Missouri allegedly stole his gifted student’s research, sold it to a pharmaceutical company, and did not credit his student or the university with having made the discovery.

The alleged misappropriation of the student’s research took place sometime between 2008 and 2010.

Here’s one quote from a New York Times article titled, Former Missouri Professor Stole Student’s Research to Sell New Drug, Lawsuit Alleges: “The lawsuit said that Dr. Mitra and Mrs. Mitra [the professor and his wife] … or people responding to their orders, removed or destroyed Dr. Cholkar’s [the graduate student’s] laboratory notebooks that he used to document the experiments…

(more…)

Previously posted on IPPIBlog.com

On January 22nd the arrest of another Apple employee—hired to work on their self-driving program—was made by the FBI the same day he planned to board a flight to China for stealing Apple trade secrets. You can’t help but shake your head over the audacity of this theft especially in view of the other Apple employee arrested only seven months earlier (July) before his plan to get on a flight back to China after his alleged theft. In an effort to better understand and bring more context to what led to this recent (January) arrest, I have reviewed the criminal complaint filed by the FBI against the accused (JIZHONG CHEN).

INSTRUCTIVE

It’s instructive to consider the steps Apple took to protect their IP, as well as their follow-up investigation. *Quoted and italicized information is extracted from the criminal complaint.

WHEN AND WHY WAS CHEN HIRED?

Chen was hired in June 2018… “…Chen was a core employee on the electrical engineering team and had full access to a subset of the Databases related to his job function on the Project.”

APPLE’S STEPS TO PROTECT THEIR INTELLECTUAL PROPERTY

 “…Apple’s Databases are only accessible with Apple employee credentials and password.” “…Apple uses an internal software tool to manage requests for project disclosure and maintains a record of all disclosures.” “…Apple limits access to the building where the Project is developed…limited by badge access.” “…Before starting at Apple, employees must sign an Intellectual Property Agreement (“IPA”)… Chen signed an IPA in 2018. “…even within Apple’s operations, the Project development in the Building is not listed” “Employees disclosed on the Project must also attend an in-person secrecy training for the Project… Chen attended the secrecy training on June 13, 2018 “…The [Secrecy] training also covered Apple’s policy prohibiting employees from storing Apple’s intellectual property on devices over which they [Apple] do not have personal control.”

DID IT TAKE LONG FOR CHEN TO ALLEGEDLY START STEALING?

Well, it seems, no time at all. It appears he felt comfortable enough to start stealing Apple’s self-driving trade secrets the same month he was hired. According to the criminal complaint (as mentioned above), he attended “Secrecy Training on June 13th, and on June 20th, a photograph of “…an assembly drawing of a wire harness for an autonomous vehicle” was stored on his iPhone.

WHAT RAISED SUSPICIONS ABOUT CHEN?

Last month (January) another Apple employee observed CHEN taking wide angled photographs within the Apple workspace and reported it.

WHAT DID APPLE’s SUBSEQUENT INVESTIGATION REVEAL?

 “…Chen admitted to taking photographs in Apple’s workspace.” “…Chen conducted a backup of his entire work computer onto a personally-owned hard-drive” “…Chen’s personally owned computer had over two thousand files containing confidential and proprietary Apple material, including manuals, schematics, and diagrams.” “…hundreds of files on Chen’s personally-owned computer were photographs of computer screens.” “…taking a photograph of the computer screen with Apple’s information would circumvent Apple’s internal monitoring of activity on its network.” “…When Apple’s investigation team went through Chen’s personally-owned phone, with Chen present, they discovered that it had about 100 photographs taken within the interior of Apple’s building. Apple deleted these photographs with Chen’s permission. Chen subsequently kept his personally-owned cellphone.”

QUESTION?

What do you think about the steps Apple took to protect their IP and their subsequent investigation?

Disclaimer: This blog is offered as a service to the professional IP community. While every effort has been made to check information in this blog, we provide no guarantees or warranties, express or implied, with regard to content provided in this blog. We disclaim any and all liability and responsibility for the qualification or accuracy of representations made by the contributors or for any disputes that may arise. It is the responsibility of the readers to independently investigate and verify the credentials of such person and the accuracy and validity of the information provided by them. This blog is provided for general information purposes only and is not intended to provide legal or other professional advice.

Previously posted on IPPIBlog.com

What is any alleged trade secrets thief’s WORST nightmare?

A UK hedge fund company that has a “Zero Tolerance” approach to the theft or attempted theft of its IP; moves wicked fast when that threat rears its ugly head and has the resources to not let up—ever!

That is what has happened to one alleged trade secrets thief in the U.K. named Ke XU. Just when XU might think the nightmare he’d created for himself is over, and return to China, he finds out it’s not over yet.

OBJECTIVE OF THIS POST

For purposes of this post, we will examine the prompt steps  G-Research took in an effort to prevent its trade secrets from being passed on, and its relentless pursuit of justice through the UK’s “private prosecution” procedure.

BACKSTORY

In 2012 XU, a math prodigy was employed by G-Research–a UK hedge fund.

In 2014, so the story goes, because XU was not satisfied with a £400,000 bonus, he chose to move on but not without allegedly leaving with some of the G-Research’s trade secrets.

XU TAKES OFF

One evening, XU abruptly drops a note for his G-Research boss and leaves the facility with a suitcase in which he is videotaped storing a number of documents and electronic devices.

G-RESEARCH REACTS FAST

G-Research reviewed the video of XU departing with the suitcase the next morning and responded so fast it’ll make your head spin:

  • Company lawyers get a court order directing XU to return with their property
  • The court orders XU to turn in his passport (except XU was already on a flight to Hong Kong)
  • Company investigators are waiting for XU at the Hong Kong airport
  • According to news reports, the investigators approached XU but he denied he was their guy. (It appears that since the investigators were unable to confirm his identity he was not put under immediate surveillance.)
  • Hong Kong judge imposes a travel ban on XU.
  • The next day XU tried to leave from the Hong Kong airport but is informed that he couldn’t.
  • He then takes a train to the border and hands-over a desktop computer and 3 laptops to his wife’s parents. (It appears he wasn’t under surveillance when he returned to the airport or on the train to the border, which may have been a missed opportunity.)
  • However, investigators were waiting for XU at his wife’s law firm in Hong Kong where he denied having any devices except his iPhone
  • Back in London, G-Research files a complaint with UK police
  • UK police search his London apartment and appear to come up empty
  • Nevertheless, UK police notify Hong Kong authorities and XU is arrested
  • UK authorities request his extradition back to the UK which XU willingly waives

COURT APPEARANCE #1

  • Under the “proceeds-of-crime” law, the judge orders XU to give up any confidential information, as well to reveal who the information was shared with
  • After an interview by UK detectives, XU refused to provide any constructive information and was sentenced to 13 months imprisonment.
  • The case appeared to have come to an end…except…arriving on the scene is the UK “private prosecution” option

UK PRIVATE PROSECUTION

In the UK if the government chooses to not devote any more public resources to a case for any variety of legitimate reasons, the victim can ‘Privately Prosecute” the case. And, the attorney representing the company is officially acting in the capacity of the “Crown” prosecutor.

Here’s a quote from the South China Morning Post news article titled, “A Chinese Math Prodigy Turned Hedge Fund Coder, and The Stolen Strategies That Cost Him His Freedom” by Kit Chellel and Jeremy Hodges:

“In Britain, aggrieved financial companies have another tool to deploy in defence of their secrets: an ancient quirk of the legal system called a private prosecution. This approach allows the purported victim of a crime to investi­gate and prosecute the perpetrator if the state fails to do so.

In theory, private prosecutions are available to anyone who wants to bring a criminal complaint. They have been launched in the past by the parents of a murdered teenager and a conservative activist who accused a gay media outlet of blasphemy. But building a case is expensive, so the prac­tice is now used mostly by businesses and others with a few million pounds to spare.”

And G-Research, in this case, had the resources to fully utilize this UK procedure.

RELENTLESS AND METHODICAL PRESSURE ON XU

With the assistance of private investigators, lawyers, and IT specialists G-Research started to put a case together against XU.

COURT APPEARANCE #2

One month before XU was to be released, G-Research charged him with five counts that included his refusal to provide a credible explanation of the missing computer(s) location(s) or how the trade secrets were used.

Essentially all he would say is that his parents discarded the computers.

At one point of the trial, XU’s mother testified remotely and claimed that on one particular morning—at the crack of dawn—she and her husband had thrown the computers into a river in their hometown. Except, unbeknownst to her, at the specific time she claimed to have done this, her home was under 24 hours surveillance by private investigators.

The investigators provided documentation and testified that neither XU’s mother nor father had left their home at the time she claimed to have hurtled the computers out for an early swim. In fact, the PIs had rented a nearby flat and had XU’s parents under surveillance for the previous 11 months

XU IS SENTENCED AGAIN

XU is convicted on two counts for not detailing where the trade secrets went and who had access to it. He was sentenced to 18 months.

STRONG SIGNAL TO OTHERS

It is reported that G-Research has a reputation for passionately protecting its IP. As reported in the above article, a G-Research representative allegedly once communicated the following to a former employee:

“We will use every weapon at our disposal to stop you selling what we believe is effectively our system to the street,” Edwards wrote. “Win or lose we will certainly delay you, perhaps considerably, and we will also send a strong signal to others not to mess with our IP.”

This reminds me of how Snapchat is reported to have addressed their employees concerning the leaking of company trade secrets in 2017.

Here is a quote from my January 29, 2018 blog post titled, “Snapchat Employee Leaks–Potential Damage Chronically Misunderstood (Trade Secrets Protection”)

“If you leak Snap Inc. information, you will lose your job and we will pursue any and all legal remedies against you.”

“And that’s just the start. You can face personal financial liability even if you yourself did not benefit from the leaked information. The government, our investors, and other third parties can also seek their own remedies against you for what you disclosed. The government can even put you in jail.”

XU IS RELEASED…WELL…NOT SO FAST…

COURT APPEARANCE NUMBER #3

Toward the end of his 18-month sentence, (for a total imprisonment period of 3 years, seven months,) the employer instituted another legal action for breaching his confidentiality agreement.

In addition, G-Research lawyers filed another action that required XU to stay in the UK.

Plus company lawyers made the argument that XU’s continued failure to reveal what he’d done with the trade secrets was “contempt of court.”

Before the judge sentenced XU to another 13 months, the judge is quoted as saying, “Mr. Xu has neither admitted his contempt nor expressed remorse.”

To my knowledge, as of this posting, XU remains in jail.

FINAL THOUGHTS

This illustrates a number of things. It shows the resolve of one company to fight for their IP and to send a loud and clear message to prospective trade secrets thieves, that if you go that route, they will use all legal means to hold you accountable.

It is a model for all companies that have the financial resources to bear the expense of a thorough private investigation and litigation to follow.

“Zero Tolerance” is key.

Note: Although the U.S. and most other jurisdictions around the world have no “private prosecution” option, the basic premise of developing information through private investigation to present to law enforcement for potential prosecution remains an option. See my previous blog post titled, “Does the IP Industry Reach Out to Federal Law Enforcement Enough?”

Disclaimer: This blog is offered as a service to the professional IP community. While every effort has been made to check information in this blog, we provide no guarantees or warranties, express or implied, with regard to content provided in this blog. We disclaim any and all liability and responsibility for the qualification or accuracy of representations made by the contributors or for any disputes that may arise. It is the responsibility of the readers to independently investigate and verify the credentials of such person and the accuracy and validity of the information provided by them. This blog is provided for general information purposes only and is not intended to provide legal or other professional advice.

*Previously posted on IPPIBlog.com

The following blog post is not about IP per se, however, it does address an alarming fraud scheme that organizations, brands, and IP support professionals need to to have an understanding and awareness of:

It’s called: Business E-Mail Compromise (BEC).

ALARMING TREND

There is an alarming scam-assault on businesses taking place in the U.S. and in Western Europe in which BEC is the weapon-of-choice.

And it demands the attention of management. (more…)

* Previously posted on IPPIBlog.com

RECENT FIVE-PART BLOG SERIES-TRADE SECRETS THEFT ENTERPRISE

In last month’s five-part blog-post series titled, “Composition of a Trade Secrets Theft Enterprise-Case Study” we took a deep dive into how certain GlaxoKleinSmith (GSK – a U.S. pharmaceutical company) employees routinely downloaded trade secrets to their company email accounts then transferred it to their personal email accounts.

Part 1   Part 2    Part 3    Part 4   Part 5

AGAIN and AGAIN and AGAIN…

It just continues to be a common story. Employees (not outsiders!) transfer proprietary information from their company email accounts to their personal email accounts or download trade secrets from their company computers/laptops to the cloud or to a zip drive, and pass it on.

RECENT NOTABLE EXAMPLES

Here are four other recent examples within only the last thirty days: (more…)

* Previously posted on IPPIBlog.com

Last month the U.S. Attorney for the Eastern District of Pennsylvania announced the second guilty plea from one of five individuals charged with conspiracy to steal trade secrets from GlaxoSmithKline (GSK) a U.S. pharmaceutical company. According to the press release the theft occurred in order to benefit a Chinese company backed by the Chinese government. (more…)

* Previously posted on IPPIBlog.com

California IP attorney Scott Alan Burroughs published a recent article in the Above the Law website titled, IP And PIs: How The Right Investigator Can Make or Break Your Intellectual Property Case—PIs can help litigators bridge the gap between vague suspicion and a fact pattern robust enough to support a complaint.

Here is one of his quotes, “Not every infringement case requires a team of investigators, but they can be critical in helping litigators bridge the gap between vague suspicion and a fact pattern robust enough to support a complaint. In fact, the International Trademark Association has stated explicitly that instead of contacting law enforcement, which can be time-consuming and often to little effect, “companies are often better off placing their first call to an IP-PI.”[1]

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