2022 review: Biggest trade secret cases
The cost of trade secrets theft has reached $1.7 trillion annually and this risk is expected to escalate in the coming years, according to a 2021 report published by The Economist Intelligence Unit.
Below, we set out four of the most notable trade secret cases of 2022.
Corporate spies and landmark verdicts
Earlier this year, a Virginia court delivered a record $2 billion jury verdict in a case involving corporate espionage and trade secret misappropriation.
Two years ago, tech company Appian accused software firm Pegasystems and an individual of conspiring to access its trade secrets over an eight-year period, dating from 2012.
During the trial, Appian presented evidence that Pegasystems had hired an employee of a government contractor, Zou, to provide the company with access to Appian’s trade secrets.
To find out more about the dispute and whether it could herald a seachange in trade secrets litigation, click here.
At the time, Pegasystems confirmed it planned to appeal against the verdict. But in September, the Virginia court entered a final judgment ordering Pegasystems to pay Appian the $2 billion dollars in damages for the misappropriation of trade secrets, along with $23m in attorney fees.
A secret formula
Earlier this year, a former Coca-Cola chemical engineer was sentenced to 14 years in prison after being convicted of stealing trade secrets worth $120 million to benefit a China-based company.
Xiaorong You, aka Shannon You, was ordered to serve three years of supervised release and pay a $200,000 fine, after a jury found that You had conspired to commit trade secret theft and economic espionage, stole trade secrets, and carried out wire fraud.
According to court documents and evidence, the trade secrets related to formulations for bisphenol-A-free (BPA-free) coatings for the inside of beverage cans.
Between December 2012 and August 2017, You was employed as principal engineer for global research at Coca-Cola. She stole the trade secrets to set up a new BPA-free coating company in China and, with her Chinese corporate partner, received millions of dollars in Chinese government grants to support the new company.
Protecting critical infrastructure
A worker at Canadian government-owned electricity company Hydro-Québec was charged with allegedly obtaining trade secrets to benefit China in November.
The accused served as a researcher at Hydro-Québec’s Center of Excellence in Transportation Electrification and Energy Storage—which is dedicated to research and development in the field of battery materials—and allegedly stole the trade secrets to benefit China.
The Royal Canadian Mounted Police (RCMP) began an investigation in August after receiving a complaint from Hydro-Québec's corporate security branch, which had terminated the employee’s access as soon as suspicions arose.
“Foreign actor interference is a priority for many law enforcement and intelligence agencies around the world,” said the police.
“Hydro-Québec is considered a critical infrastructure and a strategic interest to be protected. The RCMP and its partners are working together with at-risk sectors to improve Canada's response and resiliency to this threat.”
A supercomputer called ‘Dojo’
In August this year, WIPR reported that a former Tesla engineer had lost his bid to keep a dispute with his former employer in court.
Alexander Yatskov was hired in January 2022 as a thermal engineer to work on Dojo, Tesla’s advanced supercomputer for artificial intelligence (AI). However, by early May, Tesla had sued Yatskov over the “illicit retention of trade secrets” and “refusing” to return confidential information belonging to the firm.
US District Judge James Donato ordered that the case should go to arbitration after Tesla had claimed that Yatskov was bound by a clause from his employment agreement. Yatskov had requested that the case remain in court so he could publicly defend “public and humiliating claims that irreparably damaged” his reputation.
This isn’t Tesla’s first fight over trade secrets: back in July 2020, Tesla accused rival Rivian Automotive of stealing next-generation battery technology.
Tesla escalated the suit in October last year, claiming that little had changed since the suit was filed, accusing Rivian of continuing to poach its staff and IP.
WIPR to unveil ranking of top trade secrets firms
These developments in trade secrets cases come as WIPR Insights will soon publish an industry-first ranking of top trade secrets firms.
Commenting on the launch, Baron Armah-Kwantreng, rankings editor, said: “Global brands and their IP practitioners are increasingly aware of the risks posed by their most valuable know-how, or 'secret sauce', exiting the building on a data stick with former employees.
“The WIPR Insights Global Trade Secrets rankings supplement will spotlight the global firms who can help clients navigate these risks.”
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