Trade Secrets | Trade Secret & Unfair Competition Reporter

Category Archives: Trade Secrets

NORTH CAROLINA COURT REFUSES TO EXTEND NON-COMPETE TO NON-SIGNATORY, PUTATIVE OWNER OF BUSINESS

Posted by Eric Welsh on January 31, 2012 – 11:42 am

Filed under NC Court of Appeals, North Carolina law, Trade Secrets, Unfair Competition

Rejecting a novel attempt to extend the reach of a non-compete agreement to the putative owner of a business who had not personally signed that non-compete, the North Carolina Court of Appeals in Phelps Staffing v. S.C. Phelps, Inc., last month upheld the decision of the trial court which declined to find liability against the putative owner.

The Phelps case involved the not so uncommon fact pattern of a sale of a business with the owner (or in this case, putative owner) forming a new company to compete in the same space as the old company after the close of the transaction, with the parties left to argue about whether the conduct violated any sale agreement. In the Phelps case, S.C. Phelps (SCP) was sold through an asset purchase agreement to plaintiff Phelps Staffing, LLC. As part of the transaction, the sole shareholder of SCP, Ms. Sheila Phelps, agreed to sign on her behalf and on behalf of SCP, a non-compete agreement. Ms. Phelps’ husband, Charles Phelps, who was not an owner of SCP but was instrumental in acquiring new customers, refused to sign a non-compete agreement. Ms. Phelps was allegedly disassociating herself from the business, so the non-compete was not an issue. Mr. Phelps, on the other hand, had allegedly started his own company C.T. Phelps, Inc. (CTP), and evidently was keeping the option open of competing in the future. Mr. Phelps received half of the proceeds from the sale, but did not personally sign the asset sale agreement.

According to the opinion, following the sale of the business, Mr. Phelps informed his wife that he intended to reenter the contract labor staffing business and would do so through his new company, CTP. Mr. Phelps contacted former customers of SCP and solicited them to do business with his new company. Mr. Phelps also allegedly “flipped” some of the contract workers to his new company from SCP. Ms. Phelps provided some marginal assistance to her husband in acquiring and installing accounting software on new computers. Several months later, plaintiff Phelps Staffing, LLC filed suit against Mr. and Mrs. Phelps, SCP and CTP for breach of the non-compete and confidentiality provisions, trade secret misappropriation and unfair competition, among other claims. Following summary judgment and later a bench trial, the trial court found in favor of Mr. and Mrs. Phelps on the non-compete claims. The plaintiff appealed the decision.

On appeal, plaintiff argued that Mr. Phelps, although not a signatory to the non-compete agreement, was nonetheless subject to it as he was the “true owner” of SCP. In support of this argument, the plaintiff apparently did not cite to and rely upon North Carolina authority. Instead, plaintiff relied on a Montana case, Bolz v. Myers, 651 P.2d 606 (Mont. 1982).

In Bolz, the plaintiff there, Dale Bolz, purchased a hearing aid center, which was negotiated between Bolz and defendant Mason Myers. Myers wife and son executed the purchase agreement, while Mason Myers did not. The purchase agreement contained a non-compete agreement and in that case, the Montana Supreme Court found it binding on Mason Myers based in large part on the fact that Mason Myers was asked by Bolz and gave oral assurance to him that he had no intention of competing against Bolz after the sale. In Phelps, the plaintiff argued that Bolz was factually on point. The North Carolina Court of Appeals disagreed, finding the absence of any such oral assurance by Charles Phelps to be dispositive of the issue.

While there are several interesting aspects to this case — not the least of which is the fact that somehow all of “financial and accounting data sets” of the prior business (SCP) were somehow installed on the new computer at CTP yet no liability was found against defendants for unfair competition – perhaps the most interesting is the question of whether the Court of Appeals would have accepted and applied Bolz had the facts been slightly different. The Court of Appeals did not just reject the proposition out of hand. The Court of Appeals, while noting the opinion was not controlling, agreed with the plaintiff that there were factual similarities between Bolz and the present case, but then found the lack of oral assurance to be a key fact that distinguished the present case from Bolz.

Perhaps the door has been left open just a bit for such an application in the future. But if such an argument were to be considered, it would face great hurdles. First, the facts would likely have to approach some manifest injustice to the plaintiff, arising almost to fraudulent conduct in deceiving the plaintiff to proceed with a sale of the business without obtaining a non-compete from one of the key persons at the seller. Second, the plaintiff would have to overcome the fact that non-competes are disfavored in the law of this State. Finally, the plaintiff would have to overcome N.C. Gen. Stat. 75-4, requiring non-competes be in writing, signed by the party to be bound, for it to be legally enforceable. For some reason, the Court of Appeals did not discuss this provision. Whether a Bolz type case could find a foothold here in North Carolina would seem to be a long shot but time will tell.

FOURTH CIRCUIT REVIVES TRADE SECRET CLAIM BASED ON SOFTWARE COMPILATION

Posted by Eric Welsh on March 28, 2011 – 12:42 pm

Filed under NC Business Court, NC Court of Appeals, North Carolina law, Trade Secrets

In an unpublished opinion from earlier this month, the Fourth Circuit Court of Appeals found sufficient evidence presented at the trial court level to support the plaintiff’s claim that its software was a compilation of information protected under Virginia’s Trade Secret Misappropriations Act. Decision Insights, Inc. v. Sentia Group, Inc., No. 09-2300 (4th Cir. March 15, 2011).
In Decision Insights, the court was presented with the question of whether Decision Insights had presented sufficient evidence at the trial court level to support its claim that its software was a trade secret under Virginia law for the case to go to a jury. In that case, Decision Insights alleged that it had developed a software called “Dynamic Expected Utility Model” (”EU Model”), which was an analytical tool used to prepare negotiating strategies. The software allegedly applied concepts from a number of disciplines, including mathematics, economics and political science, to predict the outcomes of political or business situations. Decision Insights alleged that three of the individual defendants, who had been previously affiliated with Decision Insights, created a competing company and in the process developed software “almost identical” to Decision Insights’ EU Model. Decision Insights alleged that the Defendants’ software “could not achieve results equal to [Decision Insights'] software unless all the parameters, variables, and sequencing associated with the programs are equal.” Decision Insights alleged that the three individual defendants breached their non-disclosure agreements with Decision Insights and that all of the defendants misappropriated Decision Insights’ trade secrets under Virginia law.

At the trial court level, the defendants challenged the plaintiffs’ trade secret assertions. The lower court, in ruling on a motion for summary judgment filed by the defendants, found that while the Plaintiff had shown the EU Model was unique, it had “failed to distinguish which aspects of its software, as a compilation, are publicly available or readily ascertainable and which are not.” The district court granted the defendants’ motion and entered judgment in their favor.

On appeal, the Fourth Circuit reviewed district court’s decision as to the trade secret claim. The Fourth Circuit first noted that the Virginia statute recognizes “compilation of information” as being a trade secret, if not generally known or readily ascertainable by proper means, and specifically, that “computer source code as a compilation can qualify as a trade secret.” The Fourth Circuit then reviewed the evidence presented and concluded that the Plaintiff had presented sufficient evidence to establish the trade secret status of the “software compilation” for a jury to consider. As observed by the Court: “Although the EU Model uses certain mathematical formulas that are in the public domain, [Decision Insights] asserted that the combination and implementation of these formulas in [Decision Insights'] source code for the software constitutes a trade secret.” The Fourth Circuit found sufficient evidence to support this trade secret claim and remanded the case to the District Court for further consideration of other issues, including whether the Plaintiff had met its burden to show that it had taken reasonable measures to protect the alleged trade secret, another element of a trade secret claim.

While interesting in a number of respects, the Fourth Circuit’s opinion reaffirms that “compilations of information,” even when some of that information may be in the public domain, can be a trade secret. The North Carolina Court of Appeals has similarly found under the North Carolina Trade Secrets Protection Act that a compilation of business information can be a trade secret and protectable. See Sunbelt Rentals, Inc. v. Head & Engquist Equipment LLC, 174 N.C. App. 49, 620 S.E.2d 222 (N.C. App. 2005). In that case, Sunbelt alleged that the Defendants, through an orchestrated raid of its business, created a competing company by misappropriating Sunbelt’s trade secrets consisting of a “compilation of business information.” Following a bench trial, the North Carolina Business Court entered judgment in Sunbelt’s favor on the trade secret claim, among others, which was affirmed on appeal: “Defendants argue plaintiff’s ‘compilation of broad generalized categories of ever-changing business information’ does not qualify as a trade secret. We disagree.” Id.

These cases are instructive. Trade secrets are not always the Coca Cola formula. Trade secrets can include customer lists, pricing data and even compilations of valuable business information, which may be in the public domain in part, but taken as a whole, have value and are unique. As demonstrated by the Sunbelt and Decision Insights opinions, it is the totality of the information that merits protection under the trade secrets statutes and each case must be evaluated on their facts to see if the elements of the trade secret claim are met.

DOJ DISCONNECTS “DO NOT CALL LIST” AS ANTITRUST VIOLATIONS

Posted by Eric Welsh on November 1, 2010 – 6:26 am

Filed under Antitrust Developments, DOJ, Trade Secrets

Recently, the Department of Justice announced that it filed a lawsuit against Adobe Systems, Inc., Apple Inc., Google Inc., Intel Corporation, Intuit, Inc. and Pixar (the “Do Not Call Defendants”), alleging violations of Section 1 of the Sherman Act, 15 U.S.C. 1 related to their allegedly entering into agreements not to cold call each other’s employees. U.S. v. Adobe Systems, Inc., et al., Case No. 1:10-cv-01629 (Sept. 24, 2010) [complaint]. The DOJ alleged that these “Do Not Call Lists,” constituted naked restraints under Section 1 and per se illegal. The DOJ, that same day, disclosed that it had entered into a proposed settlement with these defendants, which remains pending for public comment. The Defendants have denied liability.

While the fact that the conduct alleged — entering into a flat out prohibition against calling another competitor’s employees to hire them — gave rise to concern at the DOJ may not be terribly newsworthy, the DOJ’s analysis of the situation in its Competitive Impact Statement (attached) is.

First, some background is necessary. The DOJ contended that the defendants, at various times starting in 2005, agreed not to call each other’s employees for employment. With the exception of Intel, each of the Do Not Call Defendants was alleged to have created internal “do not call lists” related to the competitor’s employees. These alleged agreements precluded the cold calling of the competitor’s employees, regardless of geographic location or position. The DOJ, looking at precedent in its complaint in U.S. v. Ass’n of Family Practice Residency Doctors, No. 96-575 CV-W-2, Complaint at 6 (challenging guidelines used for residency programs for senior medical students) and the illegal agreement found U.S. v. Cooperative Theaters of Ohio, Inc., 845 F.2d 1367 (6th Cir. 1988) (finding agreement not to solicit another’s customers a per se violation of Section 1), found support for its claims brought against the “Do Not Call” Defendants. The DOJ viewed there to be no difference in treatment under Section 1 between customer restraints and employment restraints, or output or input markets:

“Antitrust analysis of downstream, customer-related restraints is equally applicable to upstream monopoly restraints on employment opportunities.”

For the DOJ, the restraints placed on the employees of the Do Not Call Defendants was great. Even though these alleged agreements did not prohibit hiring of the other’s employees, the agreements interfered with the employee’s movement to another company and the pricing for those services. Competition for hiring employees in the computer industry was impacted. As the DOJ stated in its impact statement:

“Defendants’ concerted behavior both reduced their ability to compete for employees and disrupted the normal price-setting mechanisms that apply in the labor setting. These no cold call agreements . . . are facially anticompetitive because they eliminated a significant form of competition to attract high tech employees, and, overall, substantially diminished competition to the detriment of the affected employees who were likely deprived of competitively important information and access to better job opportunities.”

Perhaps the most interesting part of the DOJ’s action here is its analysis of what conduct is not prohibited as a per se violation when restricting employment opportunities. The DOJ stated that certain limited exceptions exist to a per se analysis if the challenged agreement is “ancillary to a legitimate procompetitive collaboration“. What is considered “ancillary” is a very short list:

“To be considered “ancillary” under established antitrust law, however, the restraint must be a necessary or intrinsic part of the procompetitive collaboration. Restraints that are broader than reasonably necessary to achieve the efficiencies from a business collaboration are not ancillary and are properly treated as per se unlawful.”

In other words, agreements not to hire that are narrowly drawn to protect the interests of a legitimate joint venture are not per se unlawful but would be reviewed under a rule of reason approach. This is the only exception noted by the DOJ to its per se treatment.

In this “No Call List” matter, the DOJ contended that the agreement was not tied to a specific collaboration and was overbroad, applying to all geographies, job functions, product groups and time periods. The DOJ concluded that these agreements were not “ancillary” to any collaboration, even though there was some indication that there were some joint venture collaborations between the parties. Simply put, the DOJ sees the situation as black and white: if it is not “ancillary to a legitimate collaborative effort” — i.e. a joint venture — it is a per se violation of Section 1.

The implications of this DOJ action remain unclear. Would DOJ’s analysis have differed if the defendants had entered into this type of agreement to protect their trade secret information? Would DOJ view agreements between competitors, that are part of settlement agreements but restrain the hiring of competitor’s employees to protect those secrets, as per se violations or subject to a rule of reason analysis. Precedent would suggest that such agreements should be subject to a rule of reason analysis, Weisfied v. Sun Chemical Corp., 210 F.R.D. 136 (D. N.J. 2002), but the DOJ’s analysis is categorical and does not lend itself, at least on the face of it, to that interpretation.

For now, we will just have to put this discussion “on hold.”

WHETHER TALKING ABOUT A GOOD MUFFIN OR OBTAINING AN INJUNCTION: IT’S ALL ABOUT THE INGREDIENTS

Posted by Eric Welsh on August 18, 2010 – 8:02 am

Filed under Trade Secrets

Finding a sufficient likelihood, but not inevitability, of disclosure of a former employer’s trade secrets, the Third Circuit Court of Appeals last month affirmed the district court’s grant of an injunction in Bimbo Bakeries USA, Inc. v. Botticella, No. 101510 (July 27, 2010). See Actions Speak Louder Than Words: Bad Faith Conduct Supports Finding of “Inevitable Disclosure” of Trade Secret.

In that case, Bimbo Bakeries USA, Inc. obtained an injunction against Chris Botticella, Bimbo’s former Vice President of Operations in California, to prevent him from working with Bimbo’s competitor, Interstates Brand Corporation (now Hostess Brands Inc.). Bimbo contended that Botticella had downloaded confidential, trade secret information of Bimbo prior to his departure, which he continued to receive as an employee of Bimbo after he had received his offer from Hostess. Bimbo also argued that an injunction was warranted given the sufficient likelihood that Botticella would disclose Bimbo’s trade secrets in his new position. The district court agreed with Bimbo and granted the injunction. On appeal, the Third Circuit affirmed.

The Third Circuit opinion raises several interesting points. First, in affirming the district court’s injunction, the Third Circuit made it clear that it was not basing its decision on the theory of “inevitable disclosure.” Rather, the Third Circuit based its decision on the Pennsylvania trade secret statute’s proscription of threatened misappropriation.

Second, the Third Circuit clarified that the standard for showing such threatened misappropriation. Rejecting the argument that a showing was required of ”virtual impossibility” of avoiding disclosure of the trade secrets, the Third Circuit concluded that a lesser standard, of showing a sufficient likelihood of disclosure, is all that is required.

In clarifying the standard for proving threatened misappropriation (and in the process distinguishing prior contrary language of the Third Circuit in Victaulic Co. v.Tieman, 499 F.3d 227, 234 (3d Cir. 2007) as dicta), the Third Circuit found more than enough evidence in the record, to support Bimbo’s likelihood of success on the merits, including evidence of Botticella’s continued receipt of Bimbo confidential information after he had received his Hostess offer, his “copying Bimbo’s trade secret information from his work laptop onto external storage devices” and the substantial similarity of his positions at Hostess and Bimbo. Interestingly, the Third Circuit also found that the district court was entitled to make an adverse inference against Botticella for failing to testify at the preliminary injunction hearing.

As any good chef knows, a great dish is made up of not one but many great ingredients. For the district court, and the Third Circuit, Bimbo introduced many pieces of probative evidence that made a compelling case that absent an injunction, Botticella was likely to misappropriate Bimbo’s trade secrets. Bimbo’s case was not reliant only on claims of “inevitable disclosure.”

TRADE SECRET THEFT CLAIM DOES NOT REQUIRE DIRECT PROOF OF ACTUAL MISAPPROPRIATION

Posted by Eric Welsh on August 3, 2010 – 11:59 am

Filed under NC Business Court, NC Court of Appeals, North Carolina law, Trade Secrets

A recent decision by the North Carolina Court of Appeals (Armacell LLC v. Jeffrey Bostic, et al., No. COA09-1160 (July 20, 2010)) reminds us that under the North Carolina Trade Secrets Protection Act, N.C. Gen. Stat. § 66-152, direct evidence of misappropriation is neither required nor necessary to establish a claim for misappropriation.

Armacell LLC manufactured foam insulation products and employed Jeffrey Bostic in its Research and Development Group as a Senior Research Scientist. Armacell had developed and marketed a foam insulation that was based on ethylene propylene diene methylene (EPDM), which was superior to other pipe insulation in terms of its fire test ratings. Armacell competed with K-Flex, which did not have an EPDM product prior to this dispute.

In its complaint, Armacell alleged, among other things, that Bostic and K-Flex had misappropriated Armacell’s trade secrets for the EPDM insulation product. Armacell alleged that Bostic resigned from Armacell to accept a position as a chemist at K-Flex and in the process, undertook ”a surreptitious campaign of disloyal actions,” copying onto external hard drives thousands of competitively sensitive and confidential information of Armacell. Armacell asserted that K-Flex, which did not have an EPDM product, had been struggling to compete with Armacell in the sale of two inch thick pipe insulation. After Bostic was hired, however, K-Flex quickly had ready for testing a one-inch thick EPDM product, a product for which K-Flex had no commercial need but which could be reproduced to develop a two-inch EPDM sample. Armacell alleged that this evidence was strong circumstantial evidence of misappropriation.

The North Carolina Business Court agreed with Armacell and issued a preliminary injunction against Bostic, K-Flex and its affiliated company. On appeal, the Defendants challenged the injunction order, asserting that the Business Court erred in finding that Armacell had proven a likelihood of success on the merits of its trade secrets claim. The Defendants contended that Armacell brought only “speculative claims” and “while the evidence demonstrated that Bostic took a significant amount of data from [Plaintiff's] computer system, [Plaintiff] did not show that [Defendants] had a specific opportunity to acquire [Armacell's EPDM formulation].” The Defendants argued that the evidence was simply not sufficient.

The Court of Appeals rejected the Defendants’ argument. In affirming the granting of the injunction, the Court correctly observed that North Carolina’s Trade Secrets Protection Act only requires that the plaintiff make out a prima facie showing of misappropriation and the burden then shifts to the defendant to show that it obtained the subject information lawfully.

Under the Act, a prima facie case is established by “the introduction of substantial evidence that the person against whom relief is sought both:

(1) Knows or should have known of the trade secret; and

(2) Has had a specific opportunity to acquire it for disclosure or use or ahs acquired, disclosed, or used it without the express or implied consent or authority of the owner.” N.C. Gen. Stat. § 66-155.

Once the prima facie showing is made, it is up to the defendant to rebut that evidence through the introduction of “substantial evidence that the person against whom relief is sought acquired the information comprising the trade secret by independent development, reverse engineering, or it was obtained from another person with a right to disclose the trade secret.” Id.

Although the defendants challenged the very nature of the burden shifting in the statute, the Court, consistent with precedent, reiterated the view that the statute in fact contemplates a shifting of the burden of proof. Combs & Associates, Inc. v. Kennedy, 147 N.C. App. 362, 369, 555 S.E.2d 634, 639 (2001); Byrd’s Lawn & Landscaping v. Smith, 142 NC. App at 376, 542 S.E.2d at 693. The reason for the burden shifting is simple: the North Carolina statute reflects the practical reality that “[f]ew defendants leave the proverbial ’smoking gun’” when misappropriating a trade secret. Lawsuits Between Business Competitors: Chapter 75-1.1 and Beyond, Eric D. Welsh, Mecklenburg County Bar Association Business Litigation Forum, February 17, 2006, p. 7. Moreover, due to the frequent absence of direct evidence, a claim for misappropriation will often depend upon circumstantial evidence. Medical Staffing Network, Inc. v. Ridgway, 194 N.C. App. 649, 658, 670 S.E.2d 321, 329 (2009); Byrd’s, 142 N.C.App. at 377, 542 S.E.2d at 693; Static Control Components, Inc. v. Darkprint Imaging, Inc., 200 F. Supp. 2d 541, 545 (M.D.N.C. 2002).

In reviewing the record before it, the Court of Appeals found ample circumstantial evidence to support Armacell’s prima facie case of trade secret misappropriation. The evidence showed that Bostic, as a Senior Research Scientist, had knowledge of Armacell’s EPDM technology and K-Flex, which had not developed an EPDM product prior to Bostic being hired by it, had, within a year after hiring Bostic, produced an EPDM sample. Relying on Sunbelt Rentals, Inc. v. Head & Engquist Equip., L.L.C., 174 N.C.App. 49, 620 S.E.2d 222 (2005), the Court of Appeals found that this “before and after” evidence was ”sufficient circumstantial evidence to show Defendants’ opportunity to acquire the trade secrets as well as Defendants’ subsequent use thereof.”

In Sunbelt, a case involving the theft of trade secrets and unfair competition resulting from a corporate raid, the North Carolina Business Court found as persuasive evidence of misappropriation the fact that the Defendants were able to quickly compete against Sunbelt even though they had not invested time to develop independently the requisite resources to do so. As the Business Court stated:

In this instance it may be more important to look at what was not done and the business results. There is no evidence of a unified pricing structure for Hi-Lift. Many salespeople testified that they did not have prices when they began calling on customers. There were no restrictions placed on the sales people concerning use of BPS information. The sales people began calling on the same customers within days of leaving BPS and in some cases went after business that was based on special pricing arrangements. Credit decisions had to be based upon knowledge obtained at BPS, as there is no evidence of the independent development of credit information for the customers called upon at the outset. Indeed, there is little evidence of the independent development of information by Hi-Lift that one would expect in a normal greenfield operation. As previously noted, there was an advantage to Hi-Lift to get the new Hi-Lift branches open in the BPS markets before Sunbelt could close its transaction. The rapidity with which the old BPS customers were identified, called upon and converted to Hi-Lift, despite the lack of business information and guidance from Hi-Lift management, provides strong circumstantial evidence that at least some of BPS confidential information was used to solicit customers. Sunbelt Rentals, Inc. v. Head & Engquist Equip., LLC, 2003 NCBC 4, 2003 WL 21017456 (N.C. Super. May 2, 2003).

As in Sunbelt, the Defendants in Armacell obtained a head start advantage as a result of Bostic’s alleged misappropriation and that advantage, from the Court’s perspective, was sufficient proof of misappropriation.

The Defendants in Armacell attempted to rebut this prima facie showing, arguing that Armacell’s proof showed only that Bostic stole some of Armacell’s information but not the information related to the EPDM product. Defendants’ curious argument, however, failed because they were unable to come forward with ample evidence to explain how it was that they had developed the EPDM product so quickly if not through Bostic’s efforts. Here, it would appear that Armacell caught Bostic with his hand in the “trade secret cookie jar” — perhaps 7000 times — which was more than enough for the Court to conclude, at this stage, that Bostic not only had access to the information but, in light of the absence of a product before and then sudden introduction of a product after his hiring, had misappropriated that information.

__________

* Parker Poe represented Sunbelt Rentals, Inc. in the Head & Engquist Equipment litigation and Eric Welsh was a member of the trial team.

NEW STATISTICAL ANALYSIS SHOWS TRADE SECRET CLAIMS ON THE RISE

Posted by Eric Welsh on April 26, 2010 – 12:58 pm

Filed under Federal Court, Trade Secrets

A statistical analysis of trade secret cases filed in federal court was recently published in the Gonzaga Law Review. A copy of the analysis is available here.*

This article, titled “A Statistical Analysis of Trade Secret Litigation in Federal Courts,” is noted by the authors as being the first such statistical analysis conducted of trade secret cases in federal court. Several of the authors’ conclusions are of interest here.

First, the number of trade secret claims doubled from 1988 to 1995 and then doubled again from 1995 to 2004. The authors believe that trade secret cases in federal court will double again by 2017.

Second, trade secret theft cost companies as much as 300 billion dollars per year.

Third, in more than 85% of the cases, the trade secrets were misappropriated by employees or business partners, not third party computer hackers.

This article tends to highlight several facts known by attorneys who practice in this area: trade secret misappropriation can have a large financial impact on a company and to reduce the risk of misappropriation, attention should be paid closer to home. It is the employee that leaves his employment with files on a USB device or the business partner that was entrusted with confidential, proprietary information that then uses the information for its own financial gain that poses the most immediate risk. These frequent scenarios have been noted previously in this blog. See Nucor v. Bell, 2:06-cv-02972-DCN (D.S.C. 2008) (Post February 19, 2010)** and Raytheon Corp. v. Indigo Systems Corp., No. 4:07 cv-109 (E.D. Tx 2009) (Post March 17, 2010). While we periodically see the stunning event where someone from abroad has successfully hacked into a computer and wreaked havoc (see “Cyberattack on Google Said to Hit Password System,” John Markoff, New York Times, March 20, 2010), the risk faced daily by companies is for more pedestrian but certainly no less impactful to their business.

_____
* Published with permission of the authors.

** Parker Poe represented Nucor in this lawsuit.