Issues

Contributed Article Trade Secret Enforcement and Compliance By David Chun and Patrick Sinclair (Ropes & Gray LLP)

he importance of understand and address developments provide some intellectual (“IP”) related risks and rewards. The context for this trend: Trights is well known today. same can also generally be said IP rights are an essential element of , trade mark and for maintaining control over a even protections. Intellectual new product or invention, and Where the waters are often may even be used to protect a muddied, however, is in the Property Task Force corporate image. These realm of trade secrets. This is In 2010, the U.S. Department of protections not only foster because the laws that define Justice established a Task Force additional invention, they can what a trade secret is and how it on to also be used to ward off may be protected varies from address the increased threat to competitors and imitators. country to country, from state to American due to Today, particularly for those state (in the U.S.), and in the intellectual property crimes. companies that operate across particular facts and The Attorney General international borders, the circumstances. A case involving emphasized that threats from management of IP rights is a former R&D employee who foreign entities was a primary already an integral part of moves to a competitor company concern. Simply put, the everyday . Taking is very different from a case initiative by the Department of as an example, in recent involving a corporate data Justice resulted in enhanced years companies have filed breach by a malicious third party focus and greater allocation of hundreds of thousands of patent hacker. The complexity for trade manpower and other resources application in the United States secret issues is compounded by to prosecute IP related crimes - Patent and Office. the fact that trade secret more agents, more prosecutors These patents then become the violations or economic and more funding. subject matter of the thousands cases can even result of patent litigations that are filed in criminal investigations and each year in United States penalties. Expansive Reach Federal District Courts and in the Further, in recent years there The United States can International Trade Commission have been an increasing number investigate crimes based on (“ITC”). In large part due to the of trade secret actions involving foreign activities, so long as sheer volume of patent activity activities that span across both there is a sufficient nexus to the over many years, the process for Korea and the United States. United States. As can be seen in obtaining and enforcing patent Indeed, some of these have been the news regarding the recently rights are today reasonably well high profile and involved very announced investigation into established. As a result, large awards or fines. the activities of Fédération companies can reasonably A few recent trends and Internationale de Football

42 Journal 2015 Association (FIFA), prosecutors n light of the recent trend in requirements for the receipt, can exercise broad jurisdiction trade secret enforcement storage, access and even where individuals and Iactions, companies are dissemination of third party corporate entities are outside of increasingly turning to IP confidential information. the U.S. Indeed, the level of compliance guidelines. While Guidelines should also include cooperation between many companies already have diligence requirements for the international law enforcement general ethical or corporate hiring or retention of new authorities in these contexts conduct related compliance employees or agents (e.g., continues to increase over time. guidelines, or guidelines relating consultants, regional sales We can also see broad to the handling of the agents) and for dealings with companies’ own information, a suppliers, distributors or vendors. jurisdiction in other contexts, robust policy relating to the including in the ITC where trade treatment of third party secret actions 3. Model provisions confidential information is not can be brought in some Companies should include prevalent. circumstances even where the model contractual provisions for State of the art IP compliance misappropriation took place employees that apply to specific guidelines generally include situations. Examples include outside of the United States. three main components: model non-disclosure provisions, contractual language 1. IP Concepts for use with consultants, or a Cooperation with Guidelines should explain basic due diligence checklist for use prosecutors concepts relating to patents, when researching a potential , and new hire. Private parties often cooperate trade secrets. Through with authorities in education of basic concepts, investigations. In the context of individuals will be able to better trade secrets, an aggrieved party spot potential issues and avoid ecause a company might (who likely is a competitor) wrong-doing. be on the hook for the might even bring evidence of the activities of its agents, IP trade secret to a federal B 2. Interactions with compliance guidelines should prosecutor to help initiate the also apply to the company’s Third Parties investigation and to prove that a agents in addition to the The greatest risk to companies theft had occurred. company’s own employees. stems from interactions with And, as with all compliance third parties who might have programs, regular training, confidential information. monitoring and auditing will Guidelines should include help the program be successful.

David Chun, US Lawyer & Foreign Legal Consultant, is one of the founding partners of Ropes & Gray LLP’s Seoul office. He focuses his practice on litigating , trade secret misappropriation and copyright infringement matters in U.S. courts and in connection with government enforcement actions. David is consistently recognized as a leading attorney in U.S. patent litigation by publications including Chambers. He is an adjunct professor at Georgetown University Law Center and also a director of the Korean Intellectual Property Lawyers Association (KIPLA).

Patrick Sinclair is a partner of Ropes & Gray LLP and a Registered Foreign Lawyer in the office. Patrick was a federal prosecutor in the U.S. Attorney's office for the Eastern District of (2007-2014) and was appointed as Deputy Chief of General Crimes. His practice is focused on white collar criminal defense, internal investigations, and risk assessment in the anti- corruption and sanctions spaces.

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