Trade secret expert James Pooley believes the leak could represent a “major crisis” for the social media platform and suggests that the drastic loss of staff could be a factor.
“For a software-based company like Twitter, publication of any significant part of its source code represents a major crisis,” he tells WIPR.
“That said, it’s difficult to discern the impact when we don’t yet know what portions of the code were posted, what significance they have to the functioning or security of the platform, and how long they were available on GitHub.”
He adds: “We don’t know who might have grabbed a copy of the code during the months that it was there. In any event, the theft implies some level of failure of the company’s information security programme.
“How was it that someone was able to get access to exfiltrate the information? Why was it not discovered sooner? A reasonable assumption is that the rapid contraction in Twitter’s workforce, with so many experienced people being made redundant or resigning, caused the company’s security controls to degrade.
“One can only hope that, in addition to its effort to find the culprit, Twitter also focuses on assessing the cause of this breach and shoring up its procedures and oversight.”
There may be broader implications, too, according to Pooley.
“Although a partial or temporary disclosure of confidential information will not necessarily destroy its status as a trade secret, an extreme breakdown like this could support an argument that Twitter has lost trade secret protection for some or all of its source code because it has failed to engage in ‘reasonable steps’ to protect it, as required under TRIPS Article 39 and related national laws.”
The proposed ban would upend companies’ approach to protecting their proprietary information, several IP and trade secrets attorneys said. Businesses across the economy would be forced to lean on other mechanisms, such as expensive, time-consuming, and harder-to-prove trade secrets litigation instead, they said.
“This is an absolute disaster when it comes to intellectual property protection,” trade secrets attorney James Pooley said. “And it’s absolutely contrary to the stated objective of this administration of robust trade secrets rights.”
Requiring companies to provide recruits a pre-hire notice of a noncompete agreement—as some states require—is also broadly considered a fair practice, he said.
California has already demonstrated that eliminating noncompetes entirely leads to more trade secrets litigation, Pooley said.
Jim Pooley was recently interviewed as a guest on the Understanding IP Matters podcast about how companies are increasingly using trade secrets as the basis for competitive advantage. Jim spoke about the value of trade secrets, how they differ from patents, and what companies should do to protect their trade secrets.
You can listen to the full podcast episode below:
Trade secrets are defined as “information” not generally known that an entity makes “reasonable efforts” to keep secret. The owner also must derive economic value from that secrecy. The secrets are misappropriated if they’re acquired by someone else through improper means.
Precedent applying those principles to living things remains slim, but life-based secrecy is growing.
“We’re adapting to the fact that there’s a lot of business activity now around lifeforms,” trade secrets attorney James Pooley said.
Pooley said much of the shrimp case’s reasoning stems from Pioneer Hi-Bred’s dicta and its subsequent “mischaracterization” as a holding.
He predicted “it will take some time” before an appeals court tackles the question head on, but he called the reasoning in cases involving organisms-as-information “sort of sloppy” because they equate intangible information with tangible objects; a computer chip isn’t a trade secret, the information on it is, he said. He doesn’t think the cases are necessarily reaching the wrong results, just relying on faulty logic.
“It can matter in the law because there are certain things the law can do with tangibles that it can’t do with intangibles,” such as have them seized or destroyed, Pooley said. “If you’re trying to control the genetic information in your hybrid seed corn, you have to control the corn itself” so that the information doesn’t become accessible.
Surprisingly, 50.5% of companies that performed or funded R&D found utility patents “not at all valuable.” Some observers believe that if businesses are not filling patents, they are not disclosing inventions, which is harmful to innovation.
“This may be a result of a perception that the value of U.S. utility patents has diminished in recent years to due to erosion of patentability standards, coupled with increased cost and risk of enforcement,” James Pooley told IP CloseUp. Pooley is a trade secret expert and former Deputy Director General of WIPO and advisory board member of the Center for Intellectual Property Understanding.
The World Trade Organization last week approved a deal to loosen intellectual property protections that many policy professionals say will shatter investment and innovation incentives for drugmakers to meet the needs of major health crises. The deal was a blow to vaccine makers such as Pfizer Inc. and Moderna Inc., which fought to keep the current framework that enabled them to produce life-saving vaccines in record time.
“Anyone with a stake in preventing or responding to future crises should be concerned about the negative effect of this agreement,” said James Pooley, a former deputy director general at the United Nation’s World Intellectual Property Organization.
The IP waiver comes after nearly two years of debate and at a time when initial catalysts for a plan to spur vaccine access and production capabilities have largely been addressed—leaving many in the IP and drug spaces skeptical of the goals of the agreement beyond political gain.
“It delivers the worst possible result: coming at a time when there is an oversupply of vaccines, it is irrelevant to the current crisis; and by reducing the reliability and predictability of patent protection it makes it much harder to secure private investment in the research required to deal with the next global health crisis,” Pooley said.
The waiver indicates that patent rights include ingredients and processes necessary for the manufacture of the vaccine. Were that interpreted to include trade secrets, it could scare off investment capital, Pooley said.
“It signals that the United States is willing to play footsie with India and South Africa on this essential sort of lie, that pulling back on patent protections globally will somehow solve more problems than it creates, and that’s a delusion. And we’re buying into it,” said James Pooley, a former deputy director general at the World Intellectual Property Organization. “That itself will have a dampening effect on the willingness of companies to invest in technologies.”
According to the tentative plan, WTO members will decide whether to extend the waiver to “cover the production and distribution of COVID-19 diagnostics and therapeutics” within six months of an agreement.
McDole, however, noted that “like the vaccine manufacturers, Gilead and other therapeutic manufacturers are continuously entering into voluntary licenses to increase production and access” for Covid treatments.
The waiver, particularly from the U.S. point of view, is “the worst of both worlds,” Pooley said.
“It doesn’t solve the actual problems of vaccine availability,” and “it reinforces the idea that whenever we have some sort of global issue, let’s look at ways in which the IP system can be seen as a barrier,” he said.
DTAS (Defend Trade Secrets Act) claims now constitute almost three-quarters of those filed in suits. The DTSA, signed into law on May 11, 2016, provides litigants a private right of action in federal court for trade secret misappropriation claims.
“It’s no surprise that many plaintiffs favor the federal option, with nationwide service of process and harmonized rules,” says James Pooley, a leading trademark attorney, author and ex-Deputy Director General of WIPO. “Many still choose state court for essentially local cases, where it is generally easier to get your case to trial.
“As for the high percentage of judgments resulting in injunctions, that statistic should be understood in context of how few cases actually get to a judgment after trial. Those that do would naturally tend to present strong facts that justify injunctive relief.”
Five years after legislation significantly improved trade secret protection in the US, Jim Pooley
tells IAM in an interview, more policymakers on Capitol Hill are advocating tough policing of
potential IP theft by Chinese entities - for good and not so good reasons
The current US Congress is still in its early days but if the first few months are anything to go by we can expect plenty of discussion and proposed legislation on the subject of IP theft and specifically on protecting their trade secrets.
Last week, Senators Grassley and Whitehouse issued the Stop Theft of Intellectual Property Act 2021. If enacted, this would see foreign nationals who engage in IP theft facing potential deportation from the US.
Another proposed bill comes from Senator Graham. He put out a news release last month about his introduction of “The Combating Chinese Purloining (CCP) of Trade Secrets Act”. Among other things, the bill would include “prohibition on applications for patent protections by US Patent and Trademark office” for foreign persons who misappropriate a trade secret.
“My legislation is designed to deter behavior, much of it from China, that results in the loss of trade secrets, intellectual property, and sensitive government research,” Graham announced.
Senators Van Hollen and Sasse have also had their say with their “Protecting American Intellectual Property Act”, which passed the Senate late last year and, last month, was reintroduced in the new Congress. That proposes levying economic penalties on companies or individuals who have been found to have engaged in the theft of US IP.
Whether any of these bills actually become law remains to be seen. It has only been five years since the Defend Trade Secrets Act (DTSA) was passed, handing rights owners a powerful new route to bring cases under federal law. There hasn’t been an indication yet that
this legislation hasn’t given US authorities enough powers to tackle the problem of IP theft - a message that trade secrets expert Jim Pooley reiterated in a recent interview with IAM.
“These [bills] were not generated from a sense of concern that trade secrets in general are not being sufficiently supported or that the DTSA is not working or that prosecutions under the Economic Espionage Act are somehow not hitting the mark,” Pooley remarked.
Perhaps not surprisingly, Pooley stressed that what had changed the dynamic are the geopolitical tensions between the US and the world’s most populous country. “China was a concern five years ago, now it’s an almost rabid concern on the part of a number of politicians for good reasons and not so good, in my view,” Pooley said.
“I think the elevated concern over China is largely justified but that part is more performative - that you want to be seen to be tough on China - and this is what has me worried because of the unintended consequences,” Pooley commented.
The danger, should some of the proposed legislations’ more radical ideas become law, is that it will prompt a tit-for-tat response.
“Whenever you take measures that are designed to punish and discourage behavior by a foreign country or coming from a foreign country, what you risk is that that country or other countries will enact similar legislation of their own,” Pooley stressed.
In recent years legislators on Capitol Hill have been making ever more radical suggestions around how the US could use the IP system to get tough on China’s leading tech players. In 2019 Senator Rubio even floated the idea of preventing Huawei from seeking damages in patent litigation after it emerged that the Chinese tech giant had asked Verizon to pay $1 billion in licensing royalties.
Graham’s proposal that transgressors should be prohibited from filing for US patents might raise alarm about a similarly harsh response affecting the legions of US companies that have significantly increased their Chinese patent portfolios in recent years. That may not be an appealing prospect for a business like Qualcomm which makes a huge chunk of its revenue from device makers in China.
The risk, Pooley underlined, is that ideas around a balanced playing field and rights owners being given due process in overseas courts, which have traditionally underpinned US policy, might be undermined if the US pursues lopsided measures.
“We want our companies that are engaged in litigation in China to be treated appropriately but what we’re risking here is that by putting up these kinds of barriers without due process we’re basically sending a contrary message,” he stated.
Pooley, who was a key voice in the passage of the DTSA, underlined that the legislation was working largely as was hoped when it was enacted in 2016. He pointed to the large number of trade secrets cases now being filed in federal courts and to developments in the case law such as the decision in Motorola v Hytera, which found that the DTSA could apply to IP theft outside of the US.
“At the moment we don’t need to fix the existing tool in some way to make it more effective,” Pooley insisted. “What I do think we need to do is, a little more broadly speaking around intellectual property, come up with a national strategy for innovation that will increase our competitiveness in a way that hoping additional blocking or punishment mechanisms might not.”
Pooley stressed that he is happy to see a focus on strengthening IP rights, particularly in trade secrets, but added that: “At the same time I worry that the long-term effects of these kinds of proposals may not be what we really want.”
Patents themselves are publicly accessible, noted James Pooley, intellectual property attorney and former deputy director general of the United Nations' World Intellectual Property Organization. But trade secrets developed by Pfizer/BioNTech, Moderna and others, "cook books" of manufacturing processes such as temperature and growing conditions, have not been made public. That may ultimately be a dual problem for negotiators. Before they protect the knowledge, U.S. officials would have to ensure access to it.
Those companies would need to be persuaded to come to the bargaining table to give up such trade secrets.
“What happens when it turns out that the U.S. can’t actually deliver the information that is critically important to implementing the inventions?” Pooley asked. “This will be seen as another failure by the U.S. and other rich countries to keep their promises.”