Law Article: Assertion of Military and State Secrets Privilege by Government in Patent Cases on the Rise

     In their forthcoming Berkeley Technology Law Journal article (alternative link), visiting University of Maryland Associate Professor of Law Davida Isaacs and University of Kentucky Assistant Professor of National Security Robert Farley discuss the Military and State Secret Privilege and its negative impact on innovation, the discovery process, and government procurement.  As previously noted on this blog, the counties surrounding Washington, D.C., are home to many government contractors, possibly triggering use of the privilege.

     In the article, Isaacs and Farley review the Federal Circuit's Crater Corp. v. Lucent Techs., 423 F.3d 1260 (Fed. Cir. 2005), cert. denied, 547 U.S. 1218 (2006), case in some depth, suggesting that there are some troubling constitutional issues regarding the assertion of the privilege, and arguing that widespread use of the privilege could have a significant negative effect on military innovation and procurement.  On the former point, where the information involved constitutes “trade secrets”, the authors point out that effective quashing of litigation through invocation of the privilege arguably amounts to an unconstitutional taking. On the latter, the authors note that loose use of privilege endangers the intellectual property rights of companies interested in doing business with the military, and in particular of small companies that cannot depend either on their connections with the Pentagon or on an expectation of repeat business for protection. (This is particularly problematic given the stated interest of the Pentagon in pursuing non-traditional defense contractors for innovative technologies.)

     The Military and State Secrets Privilege has been receiving an enormous amount of attention lately, write Isaacs and Farley.  As the article also notes, just a few months ago Congress proposed legislation that is meant to rein in the Government’s use of the privilege, or at least encourage independent judicial consideration of the privilege’s application. But, the authors argue, particularly with regard to the use of intellectual property, this legislation still does not go far enough in ameliorating the negative effects described above.

 

  • Cite:  D. Isaacs and R. Farley, Privilege-Wise and Patent (and Trade Secret)-Foolish?: How the Courts’ Misapplication of the Military and State Secrets Privilege Violates the Constitution and Endangers National Security; 23 Berkeley Tech. L.J. __ (2009) (forthcoming).

Theft of Trade Secrets: Causes of Action in Maryland

     Earlier this week, several sources reported that the Justice Department had announced an indictment of two Silicon Valley engineers who allegedly tried to steal trade secrets for computer chip designs (the indictment also included counts of economic espionage) (see details at the Ethisphere blog or the National Security Crimes Blog by Douglas McNabb). The indictment underscores the need for companies to go beyond just calling something a trade secret: steps must be taken to implement a comprehensive program to identify and adequately protect a company's most sensitive data (90% of which is usually in an electronic form according to published literature). However, even with the best safeguards, employees may try to steal trade secrets for personal gain. Fortunately, those who take trade secrets will usually leave behind a trail that electronic forensic experts can find.

     In Maryland, trade secrets are covered under the Maryland Uniform Trade Secrets Act (MUTSA). For purposes of the MUTSA, a trade secret is something that derives independent economic value from not being generally known to, and not being readily ascertainable by proper means by, other persons who can obtain economic value from its disclosure or use. A company believing its trade secrets have been stolen by employees or other entities may seek relief in civil court by asserting one or more of the following causes of action in Maryland:

  • Misappropriation of trade secrets
  • Breach of contract (usually referring to a non-disclosure agreement or covenant not to compete that an employee signed)
  • Breach of fiduciary duty
  • Misappropriation of products
  • Intentional misrepresentation
  • Constructive fraud
  • Tortious interference with prospective advantage

     The Maryland State Bar Association (MSBA) Intellectual Property Section recently presented "Theft of Intellectual Property, Trade Secrets and Proprietary Information: Forensic Traces to Make Cases" by Jeff Gross (audio available here), which provides some useful information about tracking thieves' footsteps (you have to skip the long historical introduction to get to the good parts of the audio). Mr. Gross, who is with Computer Forensic Associates, Inc., comments that electronic assests are horrendously easy to steal, easy to transfer, and simple to hide. But with today's computer forensic tools, thieves can usually be identified from their actions involving use of computer systems.

Comments:

  • The Trade Secret Blog provides a good summary of the indictment of the two Silicon Valley engineers (which borrows heavily from the article Two NetLogics Employees Indicted For Economic Espionage)

  • Cite: Maryland Uniform Trade Secrets Act (MUTSA), Md. Code Ann., Com. Law §11-1201(e)

  • Just becasue something qualifies as a trade secret under MUTSA, it is not a protectable trade secret if its holder fails to take reasonable efforts to maintain its secrecy. Factors that Maryland courts have used to determine whether information is a trade secret include the extent to which the information is known outside of one’s business, the extent to which the information is known by employees and others involved in the business, the extent of measures taken by the owner of the secret to guard the secrecy of the information, the value of the information to the owner and to his or her competitors, the amount of effort or money expended in developing the information; and the ease or difficulty in which the information could properly be acquired or duplicated.

About

Brian Wm. Higgins, J.D., P.E.

Mr. Higgins is a partner and member of Blank Rome’s Intellectual Property Litigation practice group. He represents the interests of clients before federal district and appellate courts involving complex patent litigation matters, including matters involving pharmaceuticals, medical devices, software, telecommunications, and electronics. He provides strategic patent procurement, copyright, trademark, and trade secret counseling to clients in numerous industries, including the life sciences, financial, telecommunications, automotive, e-commerce, environmental protection, and consumer electronics industries, to name a few. Mr. Higgins also counsels clients in complex licensing arrangements with third parties, and represents clients in contract negotiations. Mr. Higgins has represented book authors, artists, songwriters, educators, engineers, surgeons, scientists, as well as small not-for-profit companies and multi-billion dollar international corporations. He is a registered patent attorney and a licensed Professional Engineer. Prior to entering private practice, Mr. Higgins worked as an engineer and consultant for the U.S. Army and two government contractors. 

 

Education

Mr. Higgins received his law degree (J.D.) from the University of Maryland School of Law, his Master of Science (M.S.) in Engineering from Johns Hopkins University, and his Bachelor of Science (B.S.) in Engineering from Arizona State University.

 

Admissions and Registrations

U.S. Court of Appeals for the Federal Circuit

U.S. District Court for the District of Maryland

U.S. Patent and Trademark Office

Maryland Court of Appeals

District of Columbia

Professional Engineer (P.E.)

 

Representative Matters


• Represented a patent owner before the U.S. Court of Appeals for the Federal Circuit in a patent lawsuit involving mobile data collection devices

• Assisted generic drug manufacturers obtain patents and defend against patent and trademark infringement allegations brought by competitors

• Defended three Taiwan mobile telecommunications carriers in a patent suit before the U.S. District Court for the District of Maryland

• Assisted a national weather content service provider develop an extensive patent portfolio in the mobile telecommunications location-based services (LBS) market

• Helped a book author identify and clear copyright obstacles involving publication of photos of famous individuals in author’s memoir

• Counseled Internet e-commerce and content/service providers, helped protect their on-line businesses with patents and other forms of intellectual property

• Provided strategic patent, copyright, licensing, and government contract advise to a major university technology office regarding university’s event detection system

• Prepared patent applications for inventions involving emergency information reporting over public-switched and wireless telephony networks

• Helped individual inventor build new business from ground up, including procuring patent protection for novel pacing system, incorporating business structure, negotiating employment agreement terms, and developing strategies for enforcing patent rights against competitors

 

Professional Career

Blank Rome, LLP: Partner

Science Applications International Corporation: Engineer

Woodward-Clyde Consultants: Engineer

U.S. Army Center for Health Promotion and Preventive Medicine (CHPPM); Captain/Engineer

 

Community Service

In addition to blogging for this web site, Mr. Higgins provides pro bono services to the Maryland Lawyers for the Arts, and volunteers as an ad hoc peer reviewer for the Journal of Environmental Health, a National Environmental Health Association (NEHA) publication.