by Unknown
Intelligence, Surveillance, and Misappropriation Law
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Using the theory of inevitable disclosure, the plaintiff may prove trade secret misappropriation by showing that the defendant’s new employment will
inevitably lead him to rely on the plaintiff’s trade secrets.
The trial court found no fair question on inevitable disclosure based on
the defendant’s testimony that he had destroyed his copies of the plaintiff’s price books and he, therefore, could not disclose the plaintiff’s pricing structure. The reviewing court examined the expert’s testimony, which stated that it was likely that the defendant had successfully created a CD with the price books and noted that the only evidence to refute this was the defendant’s questionable testimony. The court found it even more suspicious that evidence that would definitively show whether the defendant had successfully burned a CD was not available because the defendant had purged the application log on his hard drive a day after attempting to burn the CD.
The court said that since the defendant had erased the crucial piece of
evidence, the court presumed that the application log would have shown that the defendant had successfully created the CD in question. Based on this, the court rejected the trial court’s finding on inevitable use.
The court affirmed the trial court’s finding that Zonatherm’s customer list was not a trade secret. Although the trial court abused its discretion in failing to consider the bids and sales quotation records, the court found that the plaintiff failed to make a fair showing that the information was a trade secret. The court also found that the trial court abused its discretion when it found that the plaintiffs did not show a likelihood of success on their trade secret misappropriation claim against Mazur or irreparable harm concerning the price books.
The court remanded the case and directed the trial court to grant the
plaintiffs a preliminary injunction against the defendant Mazur, reasonable in scope and duration, to prevent any actual or threatened misappropriation of the price books.
SKF USA, Inc., v. Bjerkness, 2010 U.S. Dist. LEXIS 80776 (N.D. Ill. August 9, 2010); plaintiff award for the misappropriation of trade secrets .
The Northern District of Illinois ordered compensatory and exemplary
damage awards totaling more than $80,000 for the misappropriation of trade secrets contained within the thousands of computer files the defendants stole from their former employer.
Defendant Dale Bjerkness left his employment at plaintiff SKF USA, Inc.,
in 2008 to start a competing company, Equipment Reliability Services, Inc.
(ERSI). Three additional SKF employees followed Bjerkness to ERSI in the
subsequent 2 months.
Before leaving SKF, each of the four copied thousands of computer files
from SKF computers onto external hard drives, flash drives, and CDs. These files contained important SKF data, including price quotes, customer databases, reports, and training materials.
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Counsel for SKF notified the defendants of its belief that the defendants were in violation of secrecy agreements they had signed as employees at SKF, which prohibited use or disclosure of SKF trade secrets and confidential
business information. When SKF’s counsel requested that the devices used to copy SKF files be returned, the defendants turned over several such devices to their lawyer. Forensic analysis showed, however, that two devices that had been connected to both SKF and ERSI computers had not been produced.
SKF filed suit, arguing unfair competition, breach of secrecy agreements, and a violation of the Illinois Trade Secrets Act. The Northern District of Illinois issued a preliminary injunction requiring the defendants to destroy all information obtained from SKF, fearing that the defendants still had
trade secret information in their possession. The court ordered a third-party computer expert to inspect ERSI computers to confirm compliance with the
injunction.
On the trade secret claim, the court held that the information taken from SKF was confidential information that provided SKF a competitive advantage. The information was protected by reasonable measures to maintain
confidentiality, including password protection and the secrecy agreements the defendants had signed.
In determining damages, the court reasoned that the “Defendants’ theft
of thousands of computer files is circumstantial evidence that they intended to use SKF’s trade secrets” to divert SKF customers to their new business at ERSI. However, the court found that SKF failed to prove causality because the defendants had not specifically informed their customers that they were using SKF trade secrets in their new business. Instead, the court found that the defendants were liable for unjust enrichment under the Illinois Trade Secrets Act. The court ordered damages equal to the profits the defendants had earned using SKF trade secrets. It also issued an exemplary damage
award of $40,000 for willful and malicious misappropriation of trade secrets, reasoning that the defendants had admitted to taking confidential information without authorization and had been less than forthcoming in returning that data when requested.
Computer Forensics
Searches, Evidence,
14
and Notice
Both Carl Sagan and Stephen Hawking, two of the most brilliant men of our time, longed to understand the universe and what is in it. Stephen Hawking said, “Intelligence is the ability to adapt to change.” He also said, “I think computer viruses should count as life. I think it says something about human nature that the only form of life we have created so far is purely destructive.
We’ve created life in our own image” (http:/ www.brainyquote.com/quotes/
authors/s/stephen_hawking.html, retrieved June 5, 2013).
Searching Computers
United States v. Arnold, 523F.3d941 (9th Cir. 2008); reasonable suspicion not required for searching laptops or other digital devices at the borders.
In this case, the U.S. Court of Appeals for the Ninth Circuit held that the Fourth Amendment to the U.S. Constitution does not require government
agents to have reasonable suspicion before searching laptops or other digital devices at the border, including international airports.
Ranta v. Ranta, 2004 WL 504588 (Conn. Super. 2004); party ordered to stop using laptop and turn it over to the court.
In a divorce proceeding, the judge ordered the plaintiff “to stop using,
accessing, turning on, powering, copying, deleting, removing or uninstal ing any programs, files and or folders, or booting up her laptop computer.” The court order required the plaintiff to turn in her laptop to the court clerk’s office and to produce all floppy disks, CDs, and other similar storage devices. The cost of hir-ing a computer forensics expert would be split equal y between the parties, and the forensics expert would be required to sign a confidentiality agreement. If the parties could not agree on a computer forensics expert, the court would make the selection from a list comprised of two recommendations by each party. The defendant was also ordered to purchase a replacement laptop for the plaintiff.
In re: Search of 3817 W. West End, 321 F. Supp. 2d 953 (N.D. Ill. 2004); court orders government to submit search protocol prior to examining
seized computer.
This case involved the seizure of a computer and electronic storage media.
The government sought relief from the court’s order, which instructed the 235
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government to submit a search protocol before it forensically examined the seized items. The original order outlined the search protocol to ensure that irrelevant or privileged data were not examined. The government objected to the court’s order, arguing that courts could not regulate the manner in which a computer was searched once probable ca
use was established. The government compared the search of a computer hard drive to the search of a file cabinet concerning papers and urged that just as the court could not regulate the manner in which a file cabinet was searched, it could not regulate the search of computer files.
The court found the government’s argument unpersuasive and distin-
guished between the analogies based on the existence of tools allowing the search of computer information to be more targeted than a search of hard
copy documents. The court held that these tools afforded the government
the ability to limit its search by date range, key words, specific files, and specific software programs. Thus, the court held the search protocol was necessary in order to meet the particularity requirement of a constitutional search warrant.
ADHI Parasakthi Charitable v. Township of W. Pikeland, 2009 WL
1047894 (E.D. Pa. 2010); plaintiff ordered by court to allow forensic investigative analysis of computers.
The plaintiff sought a variance from the town zoning board’s zoning
regulations in order to build a religious temple on a parcel of land within the township. In an appeal from the defendant’s decision, the district court ordered the plaintiff to allow the defendant’s computer expert to inspect the plaintiff’s computers for responsive e-mails not produced in the first round of discovery.
During discovery, the defendant made several interrogatories and docu-
ment requests that it felt would demonstrate that the plaintiff had insufficiently answered. After the court ordered the plaintiff’s compliance with the discovery requests, the plaintiff produced 2600 pages of responsive documents.
This production, however, contained only three e-mails.
Believing there must be more e-mails related to the planned development,
the defendant again sought a court order to enforce the document requests.
The plaintiff argued that if any additional responsive e-mails had existed, they had since been deleted in the ordinary course of business and could not be produced. The defendant responded that mere deletion does not mean
the e-mails were lost forever. Some e-mails, the defendant argued, could be recovered by a forensic collection.
Agreeing with the defendant, the court ordered the plaintiff to allow
the defendant’s computer expert to forensically examine its computer sys-
tems for any responsive documents. The court reasoned that the plaintiff
Computer Forensics: Searches, Evidence, and Notice
237
had not argued the e-mails never existed and that the defendant was enti-
tled to fully discover any relevant information that may still exist on the computers.
Supreme Court Established Search Protocol
During the discovery phase of a martial dispute, the New York Supreme
Court established guidelines for a search protocol to assist the forensic examination of the defendant-husband’s work computer.
Plaintiff-wife Sarah Schreiber moved for an order compelling the pro-
duction of her husband’s office computer, claiming that it contained valuable information about his income and financial assets not previously disclosed to her. The defendant responded that he had fully disclosed his financial matters and that a forensic examination of his work computer would be a groundless fishing expedition.
After noting that parties in a marital dispute are entitled to full dis-
closure of financial assets, the supreme court of New York expressed
concern that unfettered access to the defendant’s computer could reveal
privileged and irrelevant documents. The court denied the plaintiff’s
motion to compel production of the computer, reasoning that she was not
entitled to unrestricted access. The court emphasized that the plaintiff
would be permitted to renew her motion if she provided a search protocol
that would adequately protect the defendant’s privileged and confidential information.
The court then indicated several areas that a search protocol must
adder: (1) A discovery referee must be appointed to supervise discovery,
(2) a forensic computer expert must be hired and he or she must sign a
confidentiality agreement governing nondisclosure of the contents of the
computer hard drive, and (3) the computer expert should (a) examine a
mirror image of the computer hard drive, (b) look for evidence of wiping
utilities that could be used to delete files, and (c) recover all files and frag-ments available on the drive.
The plaintiff must then establish a set of keywords and a relevant time
period for which to search. The plaintiff should narrowly tailor the keywords and time period to the immediate discovery needs. The computer expert
would search the recovered files, exporting the relevant documents to CD
or DVD for delivery to the defendant’s counsel, who would examine the files for privilege.
Finally, the defendant’s counsel was instructed to deliver nonprivileged
documents, as well as a privilege log, to the plaintiff’s counsel within 20 days.
Costs of the forensic analysis would be borne by the plaintiff, and the cloned
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hard drive would be returned to and destroyed by the defendant’s counsel at the termination of the litigation.
The court stressed that the discovery should be limited to produce only relevant documents and to protect any privilege.
Super Film of Am., Inc., v. UCB Films, Inc. , 219 F.R.D. 649 (D. Kan. 2004); party cannot shift electronic discovery obligations unless an undue burden exists.
In an action for breach of contract, the defendant filed a motion to
compel the plaintiff to produce electronic versions of documents including e-mails, databases, and spreadsheets. In its response to the motion to compel, the plaintiff stated that it attempted to provide electronic copies of the documents requested within its knowledge or expertise. The plaintiff argued that it did not have the expertise to recover any further electronic documents and the court’s order requiring such production would be unduly burdensome. As an alternative to a court order compelling production, the plaintiff proposed to make its computers available to the defendant’s technicians to inspect and make copies of any responsive electronic files or documents.
The court held that the plaintiff’s contention that it did not have the
expertise to retrieve such electronic data to be inadequate. The court said that it “cannot relieve a party of its discovery obligations based simply on that party’s unsupported assertion that such obligations are unduly burdensome.
The party opposing electronic discovery on the grounds of undue burden
must provide sufficient detail and explanation about the nature of the burden in terms of time, money and procedure which would be required to produce
the requested documents.” The court agreed with the defendant that al owing the plaintiff to satisfy its electronic discovery obligations by simply turning over its two computers to the defendant for inspection would unfairly shift the burden and expense of discovery.
YCA, LLC v. Berry, 2004 WL 1093385 (N.D. Ill. 2004); inconsistent testimony justifies delayed disclosure of computer forensic expert.
In a case involving an al eged breach of a restrictive covenant, the defendant moved to strike the testimony of a computer expert who recovered
deleted documents from the defendant’s computer. The defendant argued
that allowing the expert’s testimony would be unfairly prejudicial because the plaintiff failed to disclose the computer expert by the required discovery deadline. The plaintiff asserted the delay was justified as it was a result of the defendant’s own deposition testimony.
During a deposition, the defendant s
tated that an e-mail exchange regard-
ing documents at issue took place on outside e-mail accounts (Yahoo and
AOL), making a search of his computer unnecessary. However, in a subse-
quent affidavit, the defendant acknowledged creating a document that theoret-ical y could exist on his computer and not just on his outside e-mail accounts.
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239
The court found the inconsistent testimonies of the defendant were a
sufficient excuse for the delay. In doing so, the court stated that if the defendant “wanting to avoid ‘unfair surprise’ concerning his legal strategy, perhaps he should have followed the spirit of the discovery rules and informed
[defendant] that [plaintiff’s] computer might contain relevant documents.”
The defendant’s motion was denied and the computer expert’s testimony and the recovered documents were admitted.
Zakre v. Norddeutsche Landesbank, 2004 WL 764895 (S.D. N.Y. 2004); index of documents on a CD-ROM is not required when contents of the
disk are searchable.
The defendant provided the plaintiff with two CD-ROM disks and the
plaintiff filed a motion to compel further discovery. The defendant had
already reviewed the disks to ensure that none of the defendant’s privileged information was on the disks. But the defendant did not review the disks to identify the files that were responsive to the plaintiff’s request.
The court held that as long as the disks were searchable, the defendant
did not have to provide the plaintiff with an index of the documents or have to search the disks themselves for files that were responsive to the plaintiff’s requests. The defendant did not have to provide further discovery with
respect to the CD-ROM disks that it had already turned over to the plaintiff.
Capricorn Power Co. v. Siemens Westinghouse Power Corp. , 220 F.R.D 429
(W.D.Pa. 2004); preservation order denied without proof of destruction or degradation of evidence.
