Tag: data security breach

Trade Secret Misappropriation: When An Insider Takes Your Trade Secrets With Them

Raymond Law Group LLC‘s Stephen G. Troiano recently had an article, Trade Secret Misappropriation: When An Insider Takes Your Trade Secrets With Them, featured in The National Law Review:

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While companies are often focused on outsider risks such as breach of their systems through a stolen laptop or hacking, often the biggest risk is from insiders themselves. Such problems of access management with existing employees, independent contractors and other persons are as much a threat to proprietary information as threats from outside sources.

In any industry dominated by two main players there will be intense competition for an advantage. Advanced Micro Devices and Nvida dominate the graphics card market. They put out competing models of graphics cards at similar price points. When played by the rules, such competition is beneficial for both the industry and consumers.

AMD has sued four former employees for allegedly taking “sensitive” documents when they left to work for Nvidia. In its complaint, filed in the 1st Circuit District Court of Massachusetts, AMD claims this is “an extraordinary case of trade secret transfer/misappropriation and strategic employee solicitation.” Allegedly, forensically recovered data show that when the AMD employees left in July of 2012 they transferred thousands of files to external hard drives that they then took with them. Advanced Micro Devices, Inc. v. Feldstein et al, No. 4:2013cv40007 (1st Cir. 2013).

On January 14, 2013 the District Court of Massachusetts granted AMD’s ex-parte temporary restraining order finding AMD would suffer immediate and irreparable injury if the Court did not issue the TRO. The TRO required the AMD employees to immediately provide their computers and storage devices for forensic evaluation and to refrain from using or disclosing any AMD confidential information.

The employees did not have a non-compete contract. Instead the complaint is centered on an allegation of misappropriation of trade secrets. While both AMD and Nvidia are extremely competitive in the consumer discrete gpu market involving PC gaming enthusiasts, there are rumors that AMD managed to secure their hardware to be placed in both forthcoming next-generation consoles, Sony PlayStation 4 and Microsoft Xbox 720. AMD’s TRO and ultimate goal of the suit may therefore be to preclude any of their proprietary technology from being used by its former employees to assist Nvidia in the future.

The law does protect companies and individuals such as AMD from having their trade secrets misappropriated. The AMD case has only recently been filed and therefore it is unclear what the response from the employees will be. What is clear is how fast AMD was able to move to deal with such a potential insider threat. Companies need to be aware of who has access to what data and for how long. Therefore, in the event of a breach, whether internal or external, companies can move quickly to isolate and identify the breach and take steps such as litigation to ensure their proprietary information is protected.

© 2013 by Raymond Law Group LLC

Data Security Breach Alert: 1.5 Million Credit Card Customers Affected

The National Law Review recently published an article regarding A Recent Security Breach written by Adam M. Veness of Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C.:

Global Payments, Inc. (NYSE: GPN) (“Global”) has reported a significant data security breach for approximately 1.5 million credit card customers.  According to astatement that Global released on Sunday, their investigation has revealed that “Track 2 card data may have been stolen, but that cardholders’ names, addresses and social security numbers were not obtained by criminals.”  Using Track 2 data, a hacker can transfer a credit card’s account number and expiration date to a fraudulent card, and then use the fraudulent card for purchases.

As a result of the breach, Visa has removed Global from its list of companies that it considers to be “compliant services providers.”  In an effort to calm consumers, Global issued a press release today assuring that “[b]ased on the forensic analysis to date, network monitoring and additional security measures, the company believes that this incident is contained.”

The incident reinforces the importance of maintaining adequate data security.  Companies must take ample precautions to secure their customers’ data, and if they fail to do so, they may be vulnerable to a serious security breach that could adversely affect their bottom line.  As of the time of this post, Global’s stock price has fallen approximately 12% since the data breach news was announced.  Even when following best practices in data security, companies still may face data security breaches.  Despite these inevitable risks, companies should do everything reasonably required to protect against data breaches.  If a company can show that it has taken the proper precautions, then this may mitigate or reduce potential liability in the event of a breach.  After a breach, companies should ensure that they follow all of the strict legal requirements for notifying customers of the breach and remedying the effects of the breach.  Doing so may greatly reduce a company’s exposure to customer lawsuits and government action against the company.

©1994-2012 Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C.