合理措施播客

The Role of Intellectual Property Best Practices and Legal Nuances

The conversation delves into the importance of establishing best practices for protecting trade secrets, such as clean desk policies and regular confidentiality training for employees. However, the podcast also touches on how trade secret definitions may need to evolve with the legal landscape. A key takeaway is that business trade secrets, such as valuation models and financial strategies, can be just as valuable—if not more so—than technical secrets. This shift in perspective underscores the complexity of legal cases where intangible business strategies may be at risk.
Additionally, the episode explores the critical role of emails in trade secret litigation. Poorly worded or careless email communications can serve as pivotal evidence in legal cases, often determining the outcome of a trade secret lawsuit. As more companies navigate the complexities of protecting their trade secrets, the evolving international dimensions of these cases become increasingly relevant. The case between Prysmian and Sterlite demonstrates how global companies now need to consider U.S. legal protections for trade secrets, even when the companies themselves are based overseas.
Ultimately, Chris and Tim highlight how the rising financial stakes and growing legal sophistication surrounding trade secret protection are reshaping the corporate landscape.

收获：

• The importance of tracking trade secrets is paramount.
• Trade secret cases are becoming more common and significant.
• Misappropriation can involve thousands of documents and sensitive information.
• Legal urgency is often critical in trade secret litigation.
• Business trade secrets can be as valuable as technical ones.
• Definitions of trade secrets may need to evolve with legal standards.
• Best practices like clean desk policies are essential for protection.
• Emails can serve as critical evidence in legal cases.
• The financial stakes in trade secret cases are rising.
• International implications of trade secret laws are increasingly relevant.

Transcript:

Chris Buntel (00:02.115):
Hey, Tim, welcome to number nine.

Tim (00:02.556):
Chris, we’re number nine. Here we go. Amen.

Chris Buntel (00:06.69):
We’re almost in double digits.

Tim (00:09.298):
Hey man, hey, maybe before we get started, let’s talk a little bit about this conference you just came from and the conference you’re going to. We just presented at their—by “we,” I mean you—just presented at the Kisaco trade secret event in Boston. How’d that go?

Chris Buntel (00:31.809):
It went great. It was a really good time. I did both a pre-event workshop, kind of like stretching before you get into the real game, as well as being on a panel dealing with the question of, “Do you track or not track trade secrets?” Which, of course, the answer is you track. But yeah, it was a great event. There were over a hundred people, very well-produced, and just a really good time.

Tim (00:43.655):
Heh.

Tim (01:00.944):
Yeah, and it’s amazing. There’s within two weeks, two trade secret events. This was unheard of a few years ago, right? So next week…

Chris Buntel (01:10.882):
Yeah, it’s like two in seven days for me. So I’ll be out in San Francisco next week at the IAM trade secret conference. Within seven days, to have two major events is unheard of before, but that just shows how important it is.

Tim (01:28.164):
Awesome. So this case we’re going to cover today, Prysmian versus Sterlite. So this is a decision that came down just a couple of weeks ago, and this is a follow-up to our conversation, our previous pod, where we talked about Italy. And so I guess all roads lead to Italy at the moment. And so we’ll talk about this case.

Which, again, is still a big number. It’s just shy of a hundred million, but super interesting set of facts here. So just a quick little setup: Prysmian is a company that’s been around for a long time. It’s Pirelli’s old fiber and cable business.

And so it got spun up into this Prysmian in sort of maybe 2010 timeframe or thereabouts. It’s acquired a bunch of companies and is now the big player in the market—30,000 employees, $20 billion market cap, serious player. The defendant in this case is Sterlite Technologies, a much smaller player—$60 million in revenue, market cap of a billion and change, part of a much bigger conglomerate in India.

And so what’s kind of interesting here, just to start, is you’ve got two companies who are headquartered outside of the US. And this is a case that was brought in South Carolina, as well as a DTSA claim, I believe. It’s kind of the age-old example of a senior exec leaves and takes a lot of stuff, right? And so maybe you want to take us through a little bit of the background of what happened here?

Chris Buntel (03:22.614):
That’s right.

Chris Buntel (03:43.99):
Yeah, and this case for me was interesting because my opinion of it kept going back and forth. At first, I thought, “Wow, this is really a good read,” and then for a little while, I thought, “It’s kind of like normal slash boring.” Then I kind of went back to, “This is actually kind of interesting for a couple of reasons.” So it’s funny that the deeper you get, your opinion keeps flip-flopping. But yeah, fundamentally, it is…

The usual pattern of a senior executive taking hundreds or thousands of documents with them, you know, breaking all of their contracts for confidentiality, non-compete, non-solicit, and then joining a competitor. So that all was fairly normal. I thought it was interesting that not only were the documents brought to the U.S. entity—so, you know, this guy basically left one U.S. entity and then joined the U.S. entity of the Indian company—but then all those documents ended up back in India.

So as part of the discovery process and the litigation, it turns out he didn’t only carry the documents down the street or into the next job, but they actually ended up back in the multinational HQ in India, which is pretty bad. That’s a pretty big thing to happen.

Tim (05:13.234):
So we got, just reading from the original 2021 complaint, business plans, projects, estimates, costing data, customer lists, technology, technical data. It’s kind of like everything, right? And what was it? The 10,000 files or something like that? Was…

Chris Buntel (05:28.199):
Everything, yeah.

Chris Buntel (05:35.655):
Yeah, yeah, I was… I think it was 10,000 pages. You know, let’s say 1,000 files at 10 pages each. I mean, that’s a lot of stuff covering all aspects of the business. So it’s not like he brought, you know, one product or one prototype. It was pretty much the entire business that was packaged and carried across the street.

Tim (05:39.281):
Pages.

Tim (05:57.938):
Yeah, it’s amazing. It’s such a much smaller company too. You know, looking at this $96 million bucks, you know, for a company that’s doing, you know, I don’t know, just call it a hundred and change in revenue. Yeah. This, this seems like it could be catastrophic.

Chris Buntel (06:00.316):
Mm-hmm. Yeah.

Chris Buntel (06:16.665):
It could be. And they’ve said they will appeal already. Basically, right? You know, days later, they said, “We’re going to appeal.” Because you’re right, it’s like an entire year’s worth of revenue. It’s massive. The other funny thing was in most trade secret lawsuits, there’s a real urgency because you want to prevent dissemination of your trade secrets or you want to control the damage as quickly as possible.

Oftentimes, you really scramble to get your complaint ready, to get all the facts lined up, to do whatever forensics you need to do, but it’s very much a rush to the courthouse. Here, that didn’t happen. They actually waited, it was like 10 months or so, just shy of a year to file the complaint, which I have to wonder, did they not figure it out, or were they just super relaxed about it? But that… Again, it’s very much an unusual timeframe. And that’s one of the things that swung me back to thinking that this was an interesting case after all.

Tim (07:24.114):
Well, and yeah, this idea that you’ve got a company headquartered in Milan, you’ve got a company headquartered in Pune, India, and now we’re gonna file the case in the U.S. under federal law, under state law, I think also just really highlights the power of trade secrets, right? Presumably, the misappropriation took place on U.S. soil, and so it makes plenty of sense. We don’t see too many cases. I’m sure there’s plenty. Certainly, we haven’t looked at too many where you see that fact pattern, right? Two international companies coming to the U.S.

So, I mean, ITC, we’ve talked about that. This is certainly a different kind of complexion than some of those ITC cases.

Chris Buntel (08:25.465):
Yeah. And here it was, it was the U.S. entity or U.S. subsidiary that were fighting it out. So, you know, one had, was a Delaware-incorporated entity, but based in Kentucky, the other one was South Carolina-based in South Carolina. So it wasn’t like, you know, the Indian multinational versus the Italian, like some of the headlines say, but still everything fed up back to…

You know, Pune in the case of where those thousands of documents went. So it is really a more interesting case than you think originally. But, but I was going to say, even the news media kind of got it wrong. Like some of the headlines are a little bit off. And then a couple of the websites even misspelled Sterlite to be the Sterilite, which is the plastic storage bins.

Tim (09:03.264):
And one of the things… Go ahead.

Tim (09:21.756):
Yeah, yeah, yeah.

Chris Buntel (09:22.96):
That you use to store your clothes at home. And just to be honest, the first time I looked at this, I thought, “This has to do with plastic storage.” I didn’t realize it was optical data cables, like undersea cables. It was pretty funny.

Tim (09:25.852):
You…

Tim (09:32.572):
How interesting.

Tim (09:39.358):
Totally. So yeah, I mean, from the original complaint, there’s one of the bits really focused in on valuation models and apparently some communication where the defendant, the executive in this case, referred to those valuation models.

And these are valuation models relating to a plant as “absolutely confidential.” Right? So it sounded like a nice smoking gun there. But I think it also, for me, it just really reinforces this idea that, wow, like maybe one of the most important pieces of data here is actually not technical at all. Right? It’s just the economics of how this plant is going to be built and make money.

Chris Buntel (10:18.06):
Yeah, definitely.

Tim (10:37.296):
Right.

Chris Buntel (10:38.933):
Yeah, and we have tangibly always talked about how there are technical trade secrets that a lot of IP lawyers kind of understand and think about. But then the soft trade secrets or the business trade secrets are often as valuable or even more so. And this is a great example of that.

Tim (10:58.012):
So one of the things in the complaint was almost the recitals, right? It’s like, here’s kind of what happened and here’s what’s in the contract. And so it defines, and I’m reading from the complaint, it defines proprietary information/trade secrets as “all information, whether or not in writing, memorized or verbally communicated of a private secret confidential nature concerning the company’s business or financial affairs.”

And so, you know, look, this is gonna get appealed, right? And very much like this Boeing decision, which we have to do the follow-up on still, by the way. But the Boeing decision, the $72 million decision, which we talked about a few weeks ago, got thrown out.

Chris Buntel (11:40.864):
Yep, absolutely.

Tim (11:54.564):
And so as I look at this definition of proprietary information and trade secrets, in some ways, it doesn’t really sort of jive with how the courts are behaving. Meaning that it’s not just all information, whether or not it’s in writing. And so I almost feel like these definitions, and it’s probably in everybody’s NDA, by the way. I don’t have ours memorized.

But it’s like this idea that whether in writing or not, you know, it’s like, just feel like maybe that’s a term that’s going to need to start to morph, you know, because it in and of itself is probably defining things wrong, isn’t it?

Chris Buntel (12:40.445):
Well, you can have a lot of great trade secrets that are not in writing, like they haven’t been written down. Like you might have a technician who manages the equipment and he or she knows exactly which setting all those dials need to be turned to, to get an optimized product. There’s no one document saying, “Know, dial number one is set at seven and dial number two is set at 13.” But still, like if that person dropped dead or left the company, you’d have a huge problem because that was super valuable proprietary information that wasn’t written down anywhere.

So it’s kind of tricky. I mean, it’s nice when it’s written down, but sometimes it doesn’t have to be.

Tim (13:25.07):
But isn’t the nature of the Boeing case, and we can look at a few of the other sort of big headline cases this past couple of years, but… So I understand what you’re saying. I don’t disagree with the idea that there are bits of information that are critical path to the business. They meet all of the hurdles of a trade secret. But if you’re gonna go try to litigate what’s in that operator’s head, you’re gonna lose, right?

Chris Buntel (14:00.251):
Well, the trend is to greater specificity. So if you just say the settings on the machine, that’s probably not going to fly because it’s too vague and doesn’t really particularly identify what the trade secret is. And all these litigations are saying, you have to be more and more specific and you can’t hand-wave like you used to. So I think we’re going to see a trend towards tightening up what people actually believe is their trade secret.

Tim (14:29.33):
Yeah, so I guess that’s why I’m kind of reacting to the definitions that are in everybody’s NDAs, right? As being like, and so look, maybe, and I’m just sort of thinking this through as we’re talking here, but like maybe as a, you know, 50,000-foot cover, right? Like you want to say, “Hey, you know, Chris, even if it’s not written down, it still could be a trade secret,” right?

Chris Buntel (14:30.648):
That’s probably a good thing.

Tim (14:56.402):
But if I go down to 30,000 or 20,000 feet, I may say, yeah, but if I really want to litigate this trade secret or really, really protect this trade secret, I better write it down, right?

Chris Buntel (15:06.765):
Yeah. And this actually came up in Boston at the conference of, you know, whether NDAs are really that useful or not, because they’re usually written very broadly, you know, “Evaluate business relationship between company one and company two,” which doesn’t say anything. So we were even talking about the idea of having multiple NDAs, like as the conversations get more specific, or as you need to discuss trade secrets with more detail, you do.

Tim (15:33.926):
Yeah. Yeah.

Chris Buntel (15:36.556):
You know, NDA sub one or sub two or sub three, and you might end up with multiple. Psychologically, people think, “We’ve got an NDA, you know, open the gates. It’s all good.” And it’s really not.

Tim (15:51.634):
Yeah, I, you know, if, and again, this is something for tangibly to figure out in software, but if you make that process easy, right, to execute maybe more stringent NDAs as, you know, as a relationship develops, I think it’s, you know, I think it would be well-received.

The other thing, and I had this same feeling once we got into this. I was like, just another boring $100 million case of some executive stealing stuff. But I’ve come to enjoy reading these cases. And some fun stuff kind of drops out here. And so when they were discussing sort of the loss of business, and so Prysmian was basically saying, “Hey, somebody stole something, we lost a bunch of business.” And then basically two witnesses from Prysmian basically said, “They’re producing its fiber optic cable at full capacity and cannot meet its customer demand.”

So it’s like, I guess that argument doesn’t hold so much. Anyway, it’s funny reading that kind of stuff in here.

Chris Buntel (17:13.953):
And we were joking at the conference that the “E” in email doesn’t mean “electronic mail,” it actually means “evidence mail.” Yeah, it was kind of a half-joke, half-serious comment. So many cases turn on emails. It’s not so much how people behaved, but if you have a poorly worded email or an email that you tried to be funny or joke and didn’t quite…

Tim (17:21.942):
That’s awesome. I’ve never heard that before.

Tim (17:28.348):
That’s funny.

Tim (17:41.19):
Yeah. Yeah. Yep.

Chris Buntel (17:43.898):
Reach that point, they can be super damaging. So you have to be careful with your “evidence mail.”

Tim (17:51.058):
Yeah, 100%. I think, yeah.

Chris Buntel (17:53.993):
Yeah. Well, the other comment you said, this is another boring hundred million dollar trade secret case. That’s actually an amazing thing to say because not too long ago, the only way you could get to a hundred million dollar case is through patent infringement. And, you know, the fact that you and I are now being bored by a paltry hundred million in trade secret in a way is fantastic. Saying, you know, we’re playing in the same…

Tim (18:16.028):
Yeah.

Chris Buntel (18:22.674):
Sandbox as patent infringement and trade secrets are equally financially important. So it’s funny that we’re both kind of bored by a hundred million dollars.

Tim (18:32.562):
But when you get into the details of that case, it’s no longer boring. But point taken. One of the things we should do, let’s add to our docket to do a kind of a win-loss comparison and a damages comparison. That would be fun to kind of dig through. We’ve got a lot of that data and we’ve been going back and forth on that recently. And I think if we put the PTAB data in there as well,

Chris Buntel (18:37.49):
Exactly.

Chris Buntel (18:52.103):
You…

Tim (19:00.846):
Not just jury trial, patent infringement, things that make it to trial, I should say. That would be really interesting to look at all that data. One more thing that’s in here that I thought was worth mentioning is Prysmian, this is from the complaint, has a clean desk policy to protect its information and does training to remind employees about the importance of confidentiality.

So again, those are those types of best practices that come in really, really handy in a case like this. But I gotta say, I’m excited to see what falls out of the appeal here because it certainly, it very much could start to mirror that Boeing-Gunam decision. So let’s see, cause I think…

Chris Buntel (19:53.638):
Yeah, the Boeing. Yeah.

Tim (19:57.746):
What we’re seeing in these appeals is like we’re getting into the weeds, right? Let’s see exactly the gory details of the trade secret. So anyway, be interesting to see what happens. All right, I think we’re at time, Chris. Let’s call it number nine. Great stuff. Number 10 is coming and what are we gonna talk about next?

Chris Buntel (20:18.062):
Also, I’m voting for the Motorola High-Terra case, which is fascinating because a lot of it happened internationally. So it’s really extending trade secret protection beyond the U.S. to cover international activities. So that’s my vote.

Tim (20:32.816):
All right, let’s do it. Let’s call it a day. Good seeing you.

Chris Buntel (20:34.926):

Awesome. Thanks, Tim. Catch you later. Bye.