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Trade Secrets Issues in Cloud Computing

In Uncategorized on October 14, 2010 at 5:05 pm
Diagram showing overview of cloud computing in...
Image via Wikipedia

Roy E. Hadley, Jr. and John L. Watkins have written a useful article on the legal issues relating to cloud computing.  As they state in the article, cloud computing refers to the practice of providing access to computer software through an Internet browser, with the software and data stored at a remote location at a “data center” or “server farm,” instead of on the computer’s hard drive or on a server located on the user’s premises.

The same protective measures that businesses apply to protecting trade secrets on local area networks (“LANs”) are likely to be useful in showing “reasonable” measures to a court.

Although it is difficult to predict how courts will react to trade secret claims based on information stored in cloud-based systems, a key factor will likely be the steps taken to maintain the secrecy of the information. Courts will likely inquire into whether the cloud provider has access to the data and whether it is bound to maintain the secrecy of such data. Other inquiries will focus on who from the client is permitted to have access to the information, password protection, and other security measures, much as in cases involving information stored on local networks. Read the rest of this entry »

Study Shows Courts Fail to Rely on Sister-State UTSA Law as Source of Case Law Precedent

In Uncategorized on October 8, 2010 at 10:11 am
Omar, mining town, West Virginia, 1935.
Image by New York Public Library via Flickr

The University of Pennsylvania Law Review’s PENNumbra published an essay by discussing whether, in the thirty years since the creation of the Uniform Trade Secrets Act (UTSA), courts actually look to sister states in interpreting the law. See Michael Risch, Essay, A Failure of Uniform Laws?, 159 U. PA. L. REV. PENNUMBRA 1(2010).   The author focuses on West Virginia as a test case because of the jurisdiction’s complete absence of state court trade secret case law, both before and after passage of the UTSA.

The author concludes that “the UTSA fails the test of uniformity because it is not being used as a source of case law precedent. Instead, older common law is being used.”  Even West Virginia federal courts have looked to outside precedent based on the Restatement (Second) of Torts, rather than the UTSA:

The West Virginia experience implies that the UTSA fails as a uniform source of precedent for sister states that adopt it. When faced with a lack of home-state-court guidance, West Virginia federal courts look to out-of-state precedent based on the Restatement (Second) of Torts, the primary source of trade secret common law. Indeed, when faced with collateral trade secret questions, such as litigation discovery protective orders, West Virginia’s own Supreme Court also looked to non-UTSA precedent.

By CHARLES JUNG

 

Benefits of Adding Claims Under the Computer Fraud & Abuse Act in Trade Secret Misappropriation Cases

In Uncategorized on October 7, 2010 at 9:03 am
online fraud
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David Smith has written a useful article discussing the Benefits of Trade Secret Misappropriation Claims Under the Computer Fraud & Abuse Act (“Benefits“), and comparing these claims to those under the Uniform Trade Secrets Act (“UTSA”).  The CFAA, 18 U.S.C. § 1030, is a federal statute outlawing “theft and destruction of data, hacking, use of viruses, theft of passwords and extortionate threats to damage computers.”  SeeBenefits at 1. The CFAA now allows a civil right of action.  See 18 U.S.C. § 1030(g).  The author points to the following three benefits of a CFAA cause of action in a trade secrets dispute:

  • Federal Question Jurisdiction: “The CFAA provides for federal question subject matter jurisdiction, which then allows a plaintiff to bring appropriate state law claims under the court’s supplemental jurisdiction.” Benefits at 1.  Smith points to the benefits of nationwide service of process in trade secrets disputes.  Id. He notes that this “benefit [nationwide service of process] cannot be downplayed because often in complex trade secret litigation the plaintiff resides in one state, the defendant resides in a different state, and both the evidence of trade secret theft and key witnesses are in different states around the country. Litigating this type of case in state court might require filing motions and proceedings in multiple jurisdictions throughout the country in order to depose key witnesses and obtain necessary evidence. Nationwide service of process avoids this entire situation and saves substantial amounts of time.” Id. (citing Liccardi, The Computer Fraud and Abuse Act: A Vehicle for Litigating Trade Secrets in Federal Court, 8 J. MARSHALL REV. INTELL. PROP. L. 155 (Fall 2008) at 13-14). Read the rest of this entry »