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A business’s trade secrets are an essential component of its foundation, growth, and development. A trade secret is any sort of confidential and proprietary information that a company seeks to protect from unauthorized access.  For example, a trade secret, includes a formula, pattern, compilation, program, device, method, technique, or process (e.g., computer algorithm).  By definition, a trade secret is only valuable so long as it remains a secret.   In recent years, as businesses conduct more transactions over cyberspace, there is a higher probability of trade secret theft or loss. However, the constantly changing nature of cyberspace, and the anonymity users enjoy over the Internet, make protecting trade secrets a complex issue.

What is the Threat to Trade Secrets in Cyberspace?

Trade secrets in cyberspace, which involve software and digital information, can be misappropriated or wrongfully taken and used without detection.  It is also known as “cybertheft.”  For example, an online user has the capacity to view and distribute trade secrets without detection within minutes.   Online message boards allow users to post trade secrets over the web anonymously.  By concealing their identity, it is possible to steal a trade secret without detection.  Indeed, the courts continue to issue decisions that recognize individual privacy rights in digital trade secret misappropriation cases, preventing the trade secret owner from seeking legal remedies. Furthermore, in the past, trade secret theft was intended to secure an economic advantage between competing companies. However, recent cases, such as Ford Motor Co. v. Lane, illustrate that trade secrets are vulnerable to dissatisfied employees who distribute trade secrets only to harm an employer.  On a side note, hackers may even steal and distribute trade secrets simply to show off their technical skills.

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In the aftermath of the Snowden scandal, and an on-going concern for cyber-surveillance practices, the United States Congress and the American people are increasingly concerned that their online privacy is at risk. The government continues to wrestle with the possibility of including mandatory data retention standards for Internet Service Providers (“ISPs”). While this poses a serious threat to individual privacy, supporters of data retention argue that these standards are essential to national and personal safety.

What Is Data Retention?

Data retention is the practice of ISPs monitoring and storing information tied to an IP address, including, but not limited to, browsing history. ISPs that also provide email services may store email logs, but not the content of those emails. ISPs also have the capacity to identify which third-party email service providers are tied to an IP address. Law enforcement agencies could require ISPs to turn over this information in the course of a criminal investigation. PRISM, the National Security Agency’s avenue of access to online data, is similar to traditional data retention practices, except that PRISM targets cloud-based services. Currently, there are no mandatory data retention policies in America. However, governmental pressures and international influences may be pushing America to join Europe in its data retention practices. In March 2013, James Sensenbrenner, Republican House representative from Wisconsin and the author of the Patriot Act, argued that America should adopt ISP data retention laws similar to those in Europe. Indeed, the Justice Department has fully supported data retention policies. The Justice Department argues that the lack of data retention policies dramatically hinders law enforcement efforts. However, regardless of whether the government implements policies requiring ISPs to store personal data, ISPs currently maintain the freedom to monitor and track online activity. Indeed, Time Warner currently retains user data for six months, and Verizon retains data for eighteen months. Then, under the Stored Communications Act, which is codified under 18 U.S.C. § 2701 et seq., the government may access this data.

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In recent times, alternative dispute resolution (“ADR”) is emerging as a favorable option for legal disputes due to rising litigation costs and the strain of growing caseloads for California state and federal courts. While state courts adopted ADR as an option to legal resolution earlier, federal courts are adopting various ADR options now as a means of resolving cases. ADR includes any method of seeking a legal resolution outside of court other than traditional civil litigation, which takes place in court. The various ADR options, include, but are not limited to, early neutral evaluation, mediation, arbitration, and negotiation. As federal courts look to these options to resolve cases, ADR continues to move to the forefront as a viable tool for all types of legal disputes.

What Role Does ADR Play in Federal Courts?

While parties can instigate ADR proceedings on their own, often courts will refer cases to ADR in order to resolve a legal dispute. Indeed, according to a study by the Federal Judicial Center, all federal courts authorize some type of alternative dispute resolution. Today, more than 30% of federal courts allow for various forms of ADR proceedings. Mediation has emerged as the most common form of ADR for federal cases. Courts will refer cases to mediation in an attempt to resolve the conflicting issues outside of court, which also allows a resolution that is mutually-beneficial and less hostile than litigation. Arbitration and Early Neutral Evaluation are also common forms of ADR in federal cases. Most recently, federal courts have adopted ADR programs for pro se litigants, or parties who are not represented by attorneys.

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A federal court recently issued a decision establishing that “abstract ideas” do not enjoy patent protection. In Accenture Global Services, et al. v. Guidewire Software, Inc. the United States District Court for District of Delaware found that a patent for computer software for insurance-related businesses was invalid. Therefore, Accenture did not enjoy exclusive patent-holder rights for the software. Do you own patents that relate to the software industry? Are you looking to secure and protect your exclusive patents rights for an invention? At the Law Offices of Salar Atrizadeh, an attorney with experience and knowledge in the changing field of patent law can help explain the latest developments in this area to protect your intellectual property interests.

What Is Patent Law?

According to Article I, Section 8 of the United States Constitution, Congress has the power to regulate “science and useful arts” by granting exclusive rights for such inventions and creations. Under this constitutional authority, Congress enacted Title 35 of the United States Code as the federal body relating to patents. A “patent” is a set of exclusive rights granted by the United States Patent and Trademark Office to an inventor for a limited period of time. In return, the inventor makes the underlying patented invention available to the public, which promotes intellectual growth and new developments.

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In January 2012, the European Union (“EU”) introduced a draft regulation that would make it more difficult for companies within the EU to gather personal data from consumers. In the wake of recent developments that the National Security Agency has been involved in questionable surveillance practices in the United States, the European Union is certainly taking steps to provide greater individual privacy protections.

What Are the Terms of the New EU Personal Data Directive?

The right to privacy is an important component of the European Convention on Human Rights, a highly developed area of law in Europe. According to the new regulation, institutions may only access personal data if the purpose for gathering the personal data falls within three categories. First, a company or agency may collect and process personal data if the individual is first informed. For example, among other preliminary requirements, the individual must initially be aware of the purpose for gathering personal data. Germany’s chancellor, Angela Merkel, has urged the EU to adopt additional restrictions to require internet companies to reveal details about the companies they will be sharing personal data with. Next, a company or agency may collect personal data if the data is “adequate, relevant and not excessive” in relation to the purpose for the collection. Additional restrictions may apply if the data is more personal, such as when the data goes to religious beliefs, political affiliations, sexual orientation, or racial association. Finally, personal data may be gathered and processed for a “legitimate purpose.” However, this is a very narrow category and the reasoning behind the data collection must be very specific. As an added safeguard, any data collected within the EU may only be transferred to countries outside the EU if those countries provide substantial levels of personal privacy protection as well. This requirement would pose an obstacle for social media websites, such as Facebook, that exist across the world and gather information from users to share with companies that operate under different privacy-protection standards.

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In recent times, the threat of privacy invasions has spread far beyond domestic governmental agencies, but to also include foreign and international governments. Do you travel outside of the United States? Do you travel with electronic devices, such as a cellphone or laptop? Do these devices hold any sensitive information, such as passwords or confidential communications? If yes, then your electronic privacy may be compromised when you travel abroad.

What Is the Threat to Privacy Abroad?

The simple truth is that border patrol agents in countries around the world take data from cellphones, laptops, and other electronic devices as tourists cross their borders. This data can include, but is certainly not limited to, passwords, files, and emails. Although, this is a common practice around the world, most tourists have no idea that their personal information becomes increasingly more vulnerable to invasions of privacy when they leave the United States. Indeed, the threat extends to hotels that may extract information from electronic devices through their free wireless systems.

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On August 14, 2013, the FBI confirmed its investigation regarding a sextortion case involving several women, including the recently-crowned Miss Teen USA, Cassidy Wolf. While the FBI did not release any information regarding the investigation or potential suspects, they did say the investigation has been going on for several months. Do you store personal information and photographs on your computer? Do you or your children use computers with webcam capabilities? If so, you might be at risk for cyber-stalking and sextortion. At the Law Offices of Salar Atrizadeh, an attorney with experience and knowledge in the most recent cyberspace law can help you learn how to protect yourself against cyber attacks such as these.

What Is the Extent of the Sextortion Threat In the Community?

Cassidy Wolf had said in an interview that she had received an email from an anonymous source who claimed to have nude pictures of her. The anonymous source then attempted to extort her, threatening to make the pictures public otherwise. Apparently, a hacker was able to break into Cassidy Wolf’s computer, turn on her webcam, and take pictures of her. For Miss Wolf, this controversy came after the hacker cyber-stalked her through her computer.

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The Federal Trade Commission proposed a revision to the federal Children’s Online Privacy Protection Act (“COPPA”), which became effective as of July 1, 2013. As the FTC and state attorneys become increasingly stricter with online child protection standards, this rule will mean that online activity will be monitored more closely for inappropriate material. Indeed, this new rule has expanded what inappropriate material entails. Do you have a child with access to the internet? Are you a business entity that collects user information over the internet for marketing purposes? In both cases, this new rule may apply to your activities.

What Does the New Rule Add to COPPA?

First, the new rule substantially expands the meaning of “personal information.” Prior to this revision, personal information applied to an online user’s name, physical address, email address, telephone number, and social security number. However, the revision expands this category to include significantly more information. Online contact information will now include identifiers for instant messaging, Voice over Internet Protocol (VoIP), and video chat users. Additionally, online screen names will now be considered “contact information” because such information may be used to locate minors on the web. To this same effect, any online information that can help locate the physical address of a minor will constitute “personal information.” This information will include photographs, videos, and audio files that contain a child’s picture or voice. It will also include information such as an Internet Protocol address (“IP address”) or mobile device identification names, since they can help locate users as well. Indeed, any information that configures with geographic locations, such as street names and cities, will constitute “personal information.” The rule also limits the extent to which companies that gather “personal information” from minors can share this information with third parties.

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Patent law reform has recently moved to the forefront of the federal legislation calendar as the country calls on Congress to protect inventors and consumers from intellectual property trolls (“IP trolls”). IP trolls may also be known as patent assertion entities. These IP trolls include individuals or entities that do not necessarily generate innovations themselves, but rather buy and hold patents, copyrights, or trademarks. Then, the IP trolls instigate infringement litigation against parties who use the otherwise idle intellectual property. Are you in litigation against an IP troll for alleged infringement? Do you have a non-active patent that may interest IP trolls? At the Law Offices of Salar Atrizadeh, an attorney with experience and knowledge in intellectual property law and infringement litigation can help you understand your legal rights and remedies.

What Are the Negative Effects of Intellectual Property Trolls?

IP trolls target idle intellectual property and file lawsuits, which the majority of consumers find to be frivolous and unjustified (i.e. lacking any merit or good-faith cause to sue). Recently, President Obama signed the America Invents Act (“AIA”) into law in an effort to protect against such frivolous litigation. The AIA is the first attempt by the federal government to curtail intellectual property claims by such IP trolls. For example, the AIA requires that IP trolls file individual actions for infringement, rather than a single action against multiple defendants. This requirement will substantially increase the cost of litigation for IP trolls, and, perhaps hinder them entirely. Indeed, some cases may reach extremely high litigation costs. For example, MPHJ Technology Investments, LLC, a Texas-based patent-licensing company, recently sued consumers for scanning any document to send by email. MPHJ sent consumers letters demanding $1,200 to cover the cost of wrongfully scanning documents, which they claim to be a patented process calling for royalties (i.e., payments to the patent holder for using the patented technology). Otherwise, MPHJ threatened the consumers with litigation. A complaint filed in a Vermont state court aims to protect consumers from such patent troll litigation in the first lawsuit of this kind.

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As part of California’s laws against unfair competition, the state provides a remedy to businesses that are victims of trade libel. Trade libel constitutes published false communications regarding the quality of services of products that a business provides, resulting in financial loss to this business. Are you a victim of false representations regarding your products or services? Have you sustained financial damages as a result of these false representations? If you answered “yes” to either question, you may have a claim for trade libel against these false representations! At the Law Offices of Salar Atrizadeh, an attorney with experience and knowledge in business law and trade libel suits can help guide you through the legal remedies.

What Are the Necessary Elements of a Trade Libel Suit?

To maintain a suit for trade libel, a plaintiff must first prove that another party published a false statement. A published statement is not limited to a printed book. Indeed, “published” can include anything from communications over the internet to advertisements. While the specifics of what constitutes “published” is a controversial area of law, courts will generally find that if a third party has access to a communication, that statement is deemed published. Such a communication can be either written or spoken to satisfy this requirement. Next, the statement must actually be false. If a defendant makes a statement about a business that results in financial damages, the business cannot file a lawsuit if the statement was true. Additionally, the defendant must know that the statement is false. While there are remedies available if a defendant negligently makes statements that cause financial harm to a business, to maintain an action for trade libel, the defendant must knowingly make the false statement. The false statement must also cause financial loss to the business. Such a loss can include a loss of reputation if the business can establish that the reputational decline will lead to a loss of future business, and as such, a future financial loss. Finally, a person making a false statement must intend to communicate the statement as a fact, not merely as an opinion. Therefore, a customer who expresses an opinion that a business provides a service of a poor quality is not subject to a trade libel suit.

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