Tag Archives: data security

DTSA (DEFEND TRADE SECRETS ACT) CLAIMS INCREASE DRAMATICALLY IN 2017 AND 2018

FROM DTSALaw®:  As we have previously predicted on these pages (and at www.dtsalaw.com ), the number of DTSA lawsuits has risen dramatically in 2017 and the first two quarters of 2018. Lex Machina and IPLaw 360 report that DTSA lawsuits increased from roughly 900 suits to over 1100 in 2018. In the first two quarters of 2018, the number of filings already is 581. The DTSA is still working its way into the legal community’s knowledge base and many practitioners may still be unaware of the most important benefit – of automatic Federal Court jurisdiction for trade secret cases under the 2016 DTSA that involve interstate commerce. The DTSA was signed into legislation as an amendment to the Economic Espionage Act (EEA) and with EEA is a powerful tool in the arsenal of litigation strategies in both the employment and non-employment arenas. Many DTSA claims are part of claims brought to enforce employment restrictive covenants, which restrictive covenant claims themselves are becoming disfavored by the states and their courts. As “non-compete” claims find less favor with the courts, lawyers should look carefully at the DTSA (and EEA) for civil claims that might apply. IPLaw 360 reports as well that only 19 cases filed to date have reached a conclusion on the merits of trade secret misappropriation. Results were essentially evenly split between plaintiffs and defendants. Houston Harbaugh, P.C. (www.hh-law.com) has an aggressive employment and trade secret practice and Pittsburgh is seeing a number of new cases filed in its Western District Pennsylvania Federal Court. DTSALaw® is a registered trademark of Houston Harbaugh, P.C.

Posted by Henry M. Sneath, Esq.                                             Shareholder and Director;                                                                                      Co-Chair of the Litigation Department;                                                    Chair of the IP Department;                                                                         Houston Harbaugh, P.C.  (www.hh-law.com)                                                    Pittsburgh, Pa.                                                                                                              Please contact Mr. Sneath at 412-288-4013 or sneathhm@hh-law.com

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From Legal Tech/Law.Com news: A Bug Bounty for Discounts on Cyber Insurance

From our friends at Law.Com: In the growing market for cyber insurance, carriers are trying to compete on price.  One carrier, Coalition is offering discounts if your company creates a partnership with a “white hat hacker” and establishes a bug bounty with that hacker. The hacker gets a bounty for finding vulnerabilities. Legal Tech author Rhys Dipshan details the program in the article at this link: http://tinyurl.com/ydck3nxg

Dipshan reports that “bug bounties” are becoming a popular weapon in combating cyber attacks. “Unsurprisingly” Dipshan reports, “bounty programs are becoming increasingly common in the tech and corporate world, with companies such as FacebookMicrosoft and Uber offering compensation for vulnerability disclosures. They also have caught on in the federal government as well, with the Department of Defense launching its “Hack the Pentagon” and “Hack the Air Force” programs.” Do you need a cyber bounty hunter?

Posted by Henry M. Sneath, Esq.  HoustonHarbaugh, P.C. – Pittsburgh, Pa.  https://www.hh-law.com Chair of the Intellectual Property Practice Group and Co-Chair Litigation Practice Group. Contact at: sneathhm@hh-law.com or 412-288-4013

Merger Grows Pittsburgh Business and Litigation Law Firm Houston Harbaugh, P.C.: Expands Litigation Practice

 

Pittsburgh based law firm Houston Harbaugh, P.C. has announced its merger with the former and preeminent litigation boutique Picadio Sneath Miller & Norton, P.C. (PSMN®) effective January 1, 2018. The merger creates a 43 lawyer firm with particular strengths in Business Law and Business Litigation, Employment, Employee Benefits/ERISA, Environmental and Energy Law, Estates and Trusts, Health Care, Insurance Coverage and Bad Faith Defense, Immigration, Intellectual Property, Oil and Gas, Products Liability and Catastrophic Injury Defense, Public Finance and Real Estate. This blog will feature posts on the law and litigation of Patent, Trademark, Copyright, Trade Secrets, Defend Trade Secrets Act (DTSA), Cyber-Security, Technology matters and updates on the tremendous growth of the technology sector in Pittsburgh. Houston Harbaugh is proud to be among the regional law firms which are poised to provide high level, efficient, cost effective legal services for the new Eds, Meds, Energy and Technology economy in Pittsburgh, Ohio and West Virginia.

For more information on the merged firm please contact Marketing Director Anna Marks at 412-281-5060. See News Release regarding the merger here at: https://www.hh-law.com/houston-harbaugh-grows-litigation-practice/

DTSA Cases Being Filed: Defend Trade Secrets Act 2016

Posted by: DTSALAW.Com and DefendTradeSecretsAct.Lawyer Henry M. Sneath, Esq. – Chair of the Intellectual Property Practice Group at Pittsburgh, Pa. law firm Picadio Sneath Miller & Norton, P.C. (PSMN® and PSMNLaw®). Mr. Sneath is also an Adjunct Professor of Law at the Duquesne University School of Law teaching Trade Secret Law, Trademark Law and the Law of Unfair Competition. He may be contacted at hsneath@psmn.com or 412-288-4013. See Websites www.psmn.com or www.DTSALaw.com.

The new DTSA federal civil remedy statute is already generating lawsuits being filed in Federal Courts. Two suits were recently filed in the Southern District of Florida with jurisdiction being claimed pursuant to the Defend Trade Secrets Act 2016 (DTSA). One case was also filed in the Northern District of Texas. See links to the cases below. In each Florida case, the plaintiff not only claimed trade secret misappropriation under the DTSA, but also under the Florida UTSA state statute (FUTSA). The Texas case brings claims under DTSA and the TUTSA along with pendent state law claims. This may become the trend as the DTSA and state statutes modeled after the Uniform Trade Secret Act describe trade secrets and misappropriation somewhat differently and provide, in some cases, different remedies. The differences in “definitions” between DTSA and the UTSA are not major, but they may make a difference if either is left out of a complaint filed in federal court.  We will monitor this trend and post in the future on new filings.

Interestingly, while both Florida cases seek injunctive relief in the complaint’s claims for relief, neither docket shows the filing of a separate Motion for TRO, Preliminary Injunction or motion for other injunctive relief. The Dean case brings only trade secret misappropriation claims under the DTSA and the FUTSA state statute. The Bonamar case brings claims under DTSA and FUTSA and a number of pendent State Law claims that you would expect to see in an employment related, non-disclosure, breach of covenants/contract case. In the Texas case, the plaintiff has filed an emergency motion for TRO under both state and federal law and a hearing is set for May 26, 2016. The motion and brief are linked below. Here are links to the cases on our website.

Florida Cases: Bonamar v. Turkin and Supreme Crab ; Dean V. City of Miami Beach et al

Texas Case: UPS v. Thornburg (Complaint) ; UPS v. Thornburg (Emergency Motion for TRO) ; UPS v. Thornburg (Brief in Support of Motion for TRO)

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Henry M. Sneath, Esq. 412-288-4013 hsneath@psmn.com

Big IP NEWS: Defend Trade Secrets Act 2016 (DTSA) Passes Congress – President to sign

EnrolledTitle_114Posted by Henry M. Sneath, Esq. – Chair of the Intellectual Property Practice Group at Pittsburgh, Pa. law firm Picadio Sneath Miller & Norton, P.C. (PSMN® and PSMNLaw®). Mr. Sneath is also an Adjunct Professor of Law at the Duquesne University School of Law teaching Trade Secret Law, Trademark Law and the Law of Unfair Competition. He may be contacted at hsneath@psmn.com or 412-288-4013. Website www.psmn.com or www.psmn.law

The US Congress has passed the landmark Defend Trade Secrets Act of 2016 (DTSA) and it is set for the President’s signature. It will soon be law. See Link to DTSA Legislation here: https://www.congress.gov/bill/114th-congress/senate-bill/1890/text    Trade Secret law has long been the province of the States, more or less exclusively, and except for criminal protections against trade secret theft and economic espionage, there has been no Federal civil law providing a federal damages remedy for such theft.  Amended will be Crimes and Criminal Procedures – Title 18, Chapter 90, Section 1836 and the key provision is as follows:

“(1) IN GENERAL.—An owner of a trade secret that is misappropriated may bring a civil action under this subsection if the trade secret is related to a product or service used in, or intended for use in, interstate or foreign commerce.”

Congress has now added a civil remedy provision to Federal protection of Trade Secrets wherein prior Federal law only provided criminal sanctions. This has been described as a major new development in Federal IP law and will provide federal jurisdiction for Trade Secret Misappropriation cases. The law will NOT preempt nor change State laws and therefore actions will be brought in both federal and state court jurisdictions. Most states (48) have adopted a form of the Uniform Trade Secrets Act (UTSA) and actions can still be brought under those state statutes, but those statutes vary to some degree. The DTSA is very similar to the UTSA based state court statutes, but there will be differences depending on the state jurisdiction from which cases are brought or removed. DTSA will apply to any acts of trade secret misappropriation that take place AFTER the act is signed into law (not retroactive). The Statute of Limitations will be 3 years according to the actual text linked above, but some commentators have stated that it is 5 years (we will need to check to get accurate information on the SOL and will follow up).

The DTSA contains an important and somewhat controversial “Civil Seizure” provision which renders it different from most state laws and which reads:

“(i) APPLICATION.—Based on an affidavit or verified complaint satisfying the requirements of this paragraph, the court may, upon ex parte application but only in extraordinary circumstances, issue an order providing for the seizure of property necessary to prevent the propagation or dissemination of the trade secret that is the subject of the action.”

This provision is controversial because it can be ordered by a court ex-parte. By amendment, the words “but only in extraordinary circumstances” were added to attempt to mollify some critics of this provision. However, there are some strict limitations to the ex-parte injunctions and a couple of them are below:

“(ii) REQUIREMENTS FOR ISSUING ORDER.—The court may not grant an application under clause (i) unless the court finds that it clearly appears from specific facts that—

“(I) an order issued pursuant to Rule 65 of the Federal Rules of Civil Procedure or another form of equitable relief would be inadequate to achieve the purpose of this paragraph because the party to which the order would be issued would evade, avoid, or otherwise not comply with such an order;

“(II) an immediate and irreparable injury will occur if such seizure is not ordered.”

Such ex-parte injunctions must be very specific and the court must go to great lengths not to overreach or to punish through publicity an accused wrongdoer during the period of seizure. There are other typical requirements for injunctions like posting of security and careful management of the seized materials, and the accused wrongdoer has a right of action back against the claimant if the seizure turns out to be wrongful or excessive.

In an action for misappropriation, a court may order injunctive relief and may

“(B) award—

“(i) (I) damages for actual loss caused by the misappropriation of the trade secret; and

“(II) damages for any unjust enrichment caused by the misappropriation of the trade secret that is not addressed in computing damages for actual loss; or

“(ii) in lieu of damages measured by any other methods, the damages caused by the misappropriation measured by imposition of liability for a reasonable royalty for the misappropriator’s unauthorized disclosure or use of the trade secret;

“(C) if the trade secret is willfully and maliciously misappropriated, award exemplary damages in an amount not more than 2 times the amount of the damages awarded under subparagraph (B); and

“(D) if a claim of the misappropriation is made in bad faith, which may be established by circumstantial evidence, a motion to terminate an injunction is made or opposed in bad faith, or the trade secret was willfully and maliciously misappropriated, award reasonable attorney’s fees to the prevailing party.”

It is unclear as to how this bill will be enforced against foreign Trade Secret theft, or if there will even be jurisdiction under this act for such claims. We will follow up on that issue in future posts. See the Senate and House reports below which contain a substantial amount of background legislative history and commentary. Contact us for additional information. We will continue to study this new law and report to our readers.

Here is a link to the US Senate report on the bill: https://www.congress.gov/congressional-report/114th-congress/senate-report/220/1

Here is a link to the US House report on the bill: https://www.congress.gov/congressional-report/114th-congress/house-report/529/1

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Henry M. Sneath, Esquire – 412-288-4013 or hsneath@psmn.com

Follow me on Twitter @picadiosneath and on Google+: http://tinyurl.com/ktfwrah

 

 

Pittsburgh Court Rules on Data Breach Class Claims – Denying Cause of Action

Posted By Henry M. Sneath, Chair of the Cybersecurity and Data Breach Prevention and Response Team at Pittsburgh, Pa. law firm Picadio Sneath Miller & Norton, P.C.  hsneath@psmn.com or 412-288-4013

537047_70437721A Pittsburgh, Pennsylvania Judge has ruled at the trial court level that there is no private cause of action for the alleged failure of a major hospital network to secure and protect PII and PHI. Denying Class claims, Judge Wettick has ruled that because the legislature has not created such a right, that only the Pennsylvania Attorney General has the right to bring a claim in this circumstance. See the Legal Intelligencer article here: http://tinyurl.com/nphostc  We will get more details on this case and pass them along with our analysis.

Business Leaders Rank Cyber Risk #2 on List of Main Concerns

Posted By Henry M. Sneath, Chair of the Cybersecurity and Data Breach Prevention and Response Team at Pittsburgh, Pa. law firm Picadio Sneath Miller & Norton, P.C.  hsneath@psmn.com or 412-288-4013

Travelers Business Risk ImageTravelers Indemnity and Insurance released its annual Business Risk Index, which is a survey of the concerns of business leaders and decision makers. Not surprisingly, for 2015, Cyber Risk moved up to the number 2 concern on that list, right behind rising healthcare costs. In some industry sectors it is the number 1 concern. The Banking and Financial Services, Professional Services, and Technology sectors each ranked cyber risks as the main driver of sleepless nights.  The chart on page 3 of the survey is very instructional as to the different concerns between small, medium and large businesses. Small businesses have less concern about data breach than larger businesses, but perhaps small businesses are overlooking their vulnerability and attractiveness as targets. If they care less, they will likely protect less, and become easy targets for hackers. It should be a huge concern for all businesses in all industries as no one appears immune. If you data store or deal in Personal Identifiable Information (PII) or Personal Health Information (PHI) as part of your business, then you are a valuable target. If you have financial or credit information, or trade secrets to protect, then perhaps your competitors, foreign governments and political hackers want to look inside your data. Many insurers are now offering Cyber Risk Insurance to provide defense and indemnity against these risks. Every business should have a data breach prevention and response team of employees and outside consultants and lawyers to audit the company’s vulnerability and to set the plan for a response when a breach occurs.  See the complete Travelers Business Risk Index at: https://www.travelers.com/prepare-prevent/risk-index/business/index.aspx

Target Agrees to Settle Class Claims Over 2013 Data Breach for $10M

Posted By Henry M. Sneath, Chair of the Cybersecurity and Data Breach Prevention and Response Team at Pittsburgh, Pa. law firm Picadio Sneath Miller & Norton, P.C.  hsneath@psmn.com or 412-288-4013

Data Breach broken_security_lock photo Target Corp. agrees to settle the 2013 data breach class claims prior to argument on class certification. Lead plaintiff’s counsel admitted the uphill battle he faced to obtain class certification due primarily to the difficulty in these consumer data breach cases of proving commonality of claims. This settlement, which still needs court approval for its proposed $10M payout, will not settle claims by commercial entities, but only individual consumer claims. Here is a good article with more detail from the National Law Journal. We will continue to follow this settlement and the handling of the commercial claims as this blog increases our focus on Cybersecurity and Data Breach Prevention and Response issues.

See this link to the NLJ for more info:  http://tinyurl.com/kxwjrb9

 

 

Cybersecurity (CISA) Bill Moves out of Congressional Committee

j0402514Posted By Henry M. Sneath, Chair of the Cybersecurity and Data Breach Response team at Pittsburgh, Pa. law firm Picadio Sneath Miller & Norton, P.C.  hsneath@psmn.com or 412-288-4013

Privacy concerns continue to dog the CISA (formerly CISPA) bill, but it easily passed out of the  Senate Intelligence Committee yesterday.  Pundits claim that the bill pits “big government – NSA, Homeland Security et al allegedly aided by Big Tech Companies” against privacy advocates who want less regulation of data and the internet. I’m not sure if it lines up that neatly however. See this short article with a summary of the committee process from Wired.Com.

Here is an advocacy website piece which supports defeat of he bill.

We will continue to monitor the path of the bill to see if it makes it to the Senate Floor for a vote. For the complete text of the bill, view it at this link.

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Henry M. Sneath on Google+ or see his PSMN ® bio.