Circuit Split on Data Breach Litigation

On March 25th, 2019, the Supreme Court denied review of a case involving individuals whose personal information held in a database was breached by hackers. Specifically, the issue was whether the parties requesting review had Article III “standing” to sue due to the database breach.

Standing is the authority of a court to hear a case. For the court to exercise such authority, the court will only hear cases based on events that cause actual injuries or create real threats of imminent harm to individuals who brought the case. The D.C. Circuit Court in its ruling of June 21st, 2019 deepened the split among contradicting circuit rulings. The D.C. Circuit Court ruled the petitioning party had standing to bring the case due to the breach of 21.5 million social security numbers, birth dates, and residency details of former, current, and prospective employees. The court held that, the plaintiff’s fear of facing a substantial risk of future identity theft met the burden to establish standing.

While the Sixth, Seventh, and Ninth circuits have similarly concluded that a heightened risk of identity theft is sufficient for individuals to possess standing to sue; the Second, Third, Fourth, and Eighth Circuits have ruled in the opposite direction. Distinct facts from this  latest data breach case include the nature of the defendant being a federal government agency and the alleged identity of the hacker being a foreign government entity where the breach was executed for purposes other than identity theft. Nonetheless, the D.C. Circuit Court found the federal government agency liable as well as Office of Personnel Management’s (OPMs) third-party vendor, despite the contract between the two parties. The Supreme Court may need to review and rule on this crucial issue in the near future given the current split of authority.

© 2019 Vandenack Weaver LLC

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The Defend Trade Secrets Act

Last summer, Congress enacted the Defend Trade Secrets Act (“DTSA”), which created a federal civil cause of action for misappropriation of trade secrets. Recently, various courts have started to interpret the DTSA, and determined that it does not preempt existing state law, but gives trade secret owners the option to enforce their claims and receive more consistent outcomes than they would in state court. Prior to the DTSA’s enactment, manufacturers and sellers had to bring trade secret misappropriation claims in state court, unless the parties could establish diversity jurisdiction or an independent federal cause of action.  Because state interpretations of the Uniform Trade Secrets Act vary in every state, consistent relief was not always possible.  For example, the definition of “trade secret” and the types of remedies differ across states. However, the DTSA applies nationwide and provides a uniform statute for trade secret owners to rely on in federal court.

The DTSA has important features that will impact trade secret owners.  Notably, it defines “misappropriation” and “trade secret”, which aids in consistent enforcement across state lines.  Additionally, it creates a civil seizure mechanism, which allows courts to order the seizure of property to prevent the propagation or dissemination of the trade secret, even before a formal finding of misappropriation is established and without notice to the alleged wrongdoer.  Last, a whistleblower provision provides immunity to employees from criminal or civil liability under federal or state laws for disclosing a trade secret to an attorney or government official for purposes of reporting or investigating a suspected violation of the law or filing a lawsuit made under seal.

Most controversial is the civil seizure provision, and courts are reluctant to permit seizures unless the plaintiff establishes necessity. Also controversial, federal courts are turning to state courts for guidance in interpreting the DTSA, thus, defeating its underlying purpose of providing uniformity. However, these issues are likely to be resolved over time. Since its enactment, it is estimated that less than seventy cases have been brought under the DTSA, but the law provides an important option for those pursuing trade secret claims.

© 2017 Vandenack Weaver LLC
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Federal Civil Remedy for Misappropriation of Trade Secrets Now Available

by M. Tom Langan, II

President Obama recently signed into law legislation that creates a federal civil remedy for the misappropriation of trade secrets. Trade secrets are a form of intellectual property that consist of a business’s methods, designs, formulas, and other confidential or proprietary information that helps a business obtain economic advantages over its competitors. While there were federal remedies for misappropriation of other forms of intellectual property (i.e. trademarks, patents, copyrights etc.), trade secrets were not protected at the federal level until now. The Defend Trade Secrets Act of 2015 offers a variety of remedies, from monetary penalties to injunctive relief to even seizure orders – all designed to stop the unlawful dissemination of trade secrets. There is a 3 year statute of limitations to bring a claim based off when the misappropriation is discovered or should have been discovered based off a reasonable investigation.

© 2016 Vandenack Williams LLC
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Understanding and Preventing Unintentional Copyright Infringement on Websites

Federal copyright law protects a copyright owner from a wide range of intentional and unintentional infringement. For example, an entity that runs a blog or a website could be liable for copyright infringement if a third party posts copyrighted material onto the webpage. In fact, the federal copyright law is broad and states: “[a]nyone who violates any of the exclusive rights of the copyright owner . . .  is an infringer of the copyright or right of the author, as the case may be.” 17 U.S.C. § 501. In conjunction with the strict liability standard used in copyright infringement cases, violating federal copyright law becomes frequent and difficult to prevent in the digital age.

In light of modern technology, new copyright challenges have emerged, such as one found in Perfect 10, Inc. v. Amazon.com, Inc., 508 F.3d 1146 (9th Cir. 2007), which involved two large technology companies, Google and Amazon. The issue, in essence, was Google and Amazon infringing upon copyrighted photographs because Google’s automated website indexing propagated the photographs in image searches, and subsequently on Amazon for other related services. Although this complex litigation involved a multitude of factors within copyright law, the issue in the case highlights the propensity for unintended copyright infringement with technology.

Fortunately, Congress recognized this issue in 1998 and passed the Digital Millennium Copyright Act, creating safe harbors for unintentional copyright infringement in specific situations. Although the safe harbors are somewhat limited, the law is intended to “balance the interests of copyright owners and online service providers by promoting cooperation, minimizing copyright infringement, and providing a higher degree of certainty to service providers on the question of copyright infringement.” Capitol Records, Inc. v. MP3tunes, LLC, 821 F.Supp.2d 627 (S.D.N.Y. 2011). Ultimately, this means every entity that has a website, blog, or online community of some sort, should take measures to ensure that their online presence fits within a safe harbor or does not violate copyright law.

© 2015 Houghton Vandenack Williams
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Domain Blocks Now Available for “.sucks” Domain Extensions

By Tom Langan. Earlier this year, over 550 new domain name extensions were created.  Examples include .basketball, .college, .miami, and .fishing.  Among the more controversial additions is “.sucks” which allows nearly anyone to obtain the domain www.[InsertYourName].sucks.  A “domain block” feature is now available that would allow individuals and/or business owners to reserve .sucks domain extensions and prevent others from using it. A domain block costs $199 and is valid for one (1) year.

© 2015 Houghton Vandenack Williams
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What Law Governs Contracts With Foreign Entities?

A Business FAQ with Mark A. Williams.

The law that governs every contract is usually the law that the contract says. In  most agreements, there will be a provision in it that says if we get into a dispute, here is the law that is going to apply. If the contract does not say that, then there is a little bit of a problem. Every state has some laws and there are federal treaties with other countries, and those laws and treaties are supposed to work out whether it is the law of your state or whether it is the law of the foreign jurisdiction that is going to apply.

The important thing to think about is if you are going to do business with a company in another country, you really need to  make sure that in your contract, you specify what law is going to apply and what jurisdiction lawsuits are going to happen in so that if there is a dispute, you know how it can get resolved.

© 2014 Parsonage Vandenack Williams LLC

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Can My Competitors Use My Business Name in Their Keyword Advertising?

An Intellectual Property FAQ with Mark A. Williams.

I would like to tell you that the answer to this question is no, they can never use your name but that is just not the truth. Some of the questions here come down to what have you done to protect your name? If you have obtained a federal trademark in your name, it makes it a lot easier for you to stop other people from using it. Where do you use your name? If you have a federal trademark, the law says you are using it in all 50 states. If you don’t have a federal trademark and you are only doing business in one state, you might have a competitor in an adjoining state that could legally use your name in their advertising.

It is really important to make sure that you have the right legal protections for your business name and all of your intellectual property when running your business.

© 2014 Parsonage Vandenack Williams LLC

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