EXHIBIT A
[CONFIDENTIALLODGED UNDER SEAL]
EXHIBIT A
EXHIBIT B
1-9 Trade Secret Law and Corporate Strategy § 9.05
Trade Secret Law and Corporate Strategy > PART III Trade Secrets in Practice > CHAPTER 9 Trade
Secret Litigation: What to Expect When You’re Litigating
§ 9.05 Important Trade Secret Litigation Lessons If You Are the Accused
[1]
Don’t Make the Situation Worse
A process server just handed your receptionist a packet of very formal-looking papers. Flipping
through them, you discern that a competitor has sued your company for trade secret misappropriation.
Most people immediately realize that they have to act quickly. Some people, however, believe that
acting quickly means they should destroy any evidence that might be used to incriminate them. This
is not the right answer. It will only make the situation worse. This advice is so important, it bears
repeating: Don’t destroy evidence.
Even if someone succeeds in destroying evidence, it will be obvious that data has been deleted or
destroyed, and courts will assume that the deleted information would have confirmed the alleged
misdeeds. You have already seen examples of this. In chapter 2, you learned about Muhammad
Munawar Ali, who ran software programs called CleanUp! and Erasure on his laptop after his former
insurance brokerage employer accused him of stealing customer information. He claimed that his
computer had caught a virus while he was “visiting some ‘adult’ websites.” The court didn’t believe
him, found that he had tried to hide his work for a competitor, and referred the case to law enforcement
authorities to investigate Ali’s potential perjury. You may also remember Hawaiian Airlines’ failed
merger discussions with Mesa described in chapter 6. Mesa’s CFO denied having Hawaiian’s
confidential information on his company computer. He later tried to explain having used a file deletion
program by claiming that he wanted to erase “adult content” on the computer and the company’s
network. The court did not believe the excuse and awarded $80 million to Hawaiian, which eventually
received $52 million from Mesa as part of a settlement.
In these two cases, the plaintiffs relied on sophisticated computer forensics to prove that evidence had
been destroyed. But sometimes the evidence of destruction requires far less sophisticated methods to
collect, even if the consequences are just as devastating for the defense, as shown in the following case.
ROBOTS THAT DISARM BOMBS, EVIDENCE DESTRUCTION, AND DUMPSTER DIVING
Jameel Ahed joined iRobot immediately after graduating from the University of Illinois
with a biomedical engineering degree. Ahed helped develop the PackBot, a tactical robot
that disarms explosives on the battlefield. When Massachusetts-headquartered iRobot tested
its PackBots near the Pakistani border, the “battle bots” were so wildly popular with the
troops that they wouldn’t let iRobot take the PackBots home with them. But not everyone
was as enthralled with iRobot. When iRobot denied him a raise, Ahed left iRobot to make
his own tactical robot—the Negotiator—at his newly formed company, Robotic FX. Ahed
was so eager to start his own company that he already had five employees working on the
Negotiator, using PackBot schematics, before he left iRobot. When iRobot discovered
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Ahed’s Negotiator, which eventually beat out the PackBot for a $285 million military
contract, it used a third party to buy a prototype. iRobot’s experts disassembled the
Negotiator and discovered that Ahed’s new robot was based on stolen PackBot designs. Its
suspicions confirmed, iRobot sued Ahed for trade secret theft. The day iRobot filed its
complaint, Ahed gathered the specialized welding equipment used to make the Negotiator,
100 CDs containing the Negotiator’s schematics, and three external hard drives. He drove
to an office supply store to purchase a heavy-duty shredder, and on the way home, he
dropped a portion of the evidence in a trash bin. When he returned home, Ahed began
shredding the CDs, but the shredder jammed. He dumped the broken shredder in a different
trash bin and drove back to the office supply store to buy another shredder. Using the new
shredder, he finished his work and trashed the CDs. Unfortunately for Ahed, iRobot hired
private detectives to keep an eye on him. After a day spent dumpster diving, iRobot’s
investigators had all the evidence the company needed to get a preliminary injunction. The
court said Ahed’s conduct profoundly undermined his credibility, which was devastating to
his case since he served as Robotic FX’s principal witness. The case settled soon after on
ruinous terms for Ahed and Robotic FX: iRobot now owns Robotic FX, and Ahed was
prohibited from participating in competitive robotics for five years.
[2]
It Will Not Go Away Because You Ignore It
The next important lesson for anyone accused of trade secret misappropriation is a close cousin to the
first. Just as destroyed evidence will not help you appear innocent, the accusations will not go away
because you ignore them.
Defending against the accusations will be inconvenient. But it is worth the effort to prove your
innocence or to minimize the effects of any lapses in judgment.
HACKER SKIPS ARRAIGNMENT TO PLAY MODERN WARFARE
2
While attending the Penny Arcade Expo East gaming conference (PAX) in Boston,
20-year-old gamer Justin May decided that he was not going to wait for the official release
of the hotly anticipated video game “Breach.” Instead, May used his laptop to hack into the
Xbox 360 Test Kit demonstrating the game and began downloading the code. PAX staff
questioned May, who fled the scene, but conference security quickly caught up to him.
Boston prosecutors charged May with receiving stolen trade secrets in the form of the
source code for a game worth more than $6 million. May failed to show up for his court
hearing, and the gaming website joystiq.com reported that May, or someone using his Xbox
gamertag, was playing Modern Warfare 2 while he was supposed to be in court. Ultimately,
May was convicted of trade secret theft and required to forfeit his computer and stay off
Xbox Live.
[3] Don’t Allow the Plaintiff to Rely on Vague Descriptions of Its Trade Secrets
As part of your defense in the litigation, you should force your accuser to specifically identify all
allegedly misappropriated trade secrets. Depending on the jurisdiction in which you bring suit, courts
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will usually support these efforts. Especially in technology-rich regions where trade secret cases are
common, courts recognize that allegations of trade secret theft are not always borne out. Judges
acknowledge that trade secret cases can be unfairly brought to stifle an unwanted competitor. And more
than one plaintiff has overstated its case amid the whirl of emotions evoked by a formerly loyal
employee’s departure.
THE SECRET ART OF STACKING APPLES
Anthony Settipani spent 25 years stocking produce and corralling carts in the fruitmarket
industry. When his employer, Randazzo Fresh Market, turned down his application for a
supervisory position, Settipani left to work at Vince & Joe’s Gourmet Market, one of
Randazzo’s Eastern Michigan competitors. Although Vince & Joe’s offered Settipani the
same pay—$9 an hour—they were willing to provide him with health insurance, vacation
benefits, and a chance for advancement. Randazzo did not take this defection lightly. The
company sued Settipani, arguing that he could reveal Randazzo’s trade secrets to Vince &
Joe’s. Randazzo’s owner, Sonny Randazzo, acknowledged that his confidential practices
“are not nuclear secrets,” but he argued that his 40 years of experience have helped him
develop “the Randazzo way,” an invaluable asset to his business. Settipani’s attorney,
handling the case on a pro bono basis, challenged Randazzo to identify the specific trade
secrets Settipani might reveal. According to Settipani’s attorney, “[T]here’s no trade secrets
on how to stack apples.” Soon after Randazzo filed suit, the parties settled the dispute.
Although neither would reveal the terms of the settlement, both sides said the resolution
was “amicable.”
Forcing the plaintiff to identify all allegedly misappropriated trade secrets helps prevent the plaintiff
from relying on trumped-up or imagined accusations. It can also help minimize the burden imposed
by the litigation. The enormous surge in electronically stored information has greatly inflated the cost
of all litigation, including trade secret litigation. Plaintiffs who believe they have suffered trade secret
misappropriation predictably want to look at everything a defendant possesses. Most courts, however,
will not allow this. Courts are increasingly sensitive to the cost and burden of litigation and will limit
the plaintiff to investigating only those areas reasonably related to the allegedly misappropriated trade
secrets.
Similarly, by putting the onus on the plaintiff to identify all supposedly misappropriated trade secrets,
a defendant can better thwart contrived allegations of trade secret theft. More than one plaintiff has
reviewed a defendant’s internal documents only to claim information in those documents as the
plaintiff’s trade secret. With the defendant’s use confirmed, the plaintiff need only prove that the
information originated with the plaintiff. This “proof” might come in the form of testimony from an
employee who is highly motivated to convince the court that the defendant misappropriated the
plaintiff’s trade secrets. Courts are appropriately wary of this tactic, and forcing a plaintiff to identify
its trade secrets before the plaintiff starts reviewing a defendant’s materials can help minimize the
potential abuse.
Faced with a demand for a list of the allegedly misappropriated trade secrets, plaintiffs predictably
respond that the defendant “knows what it stole.” Your lawyer can work with you to make sure the
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plaintiff does not get away with such misdirection. The plaintiff must have a good-faith basis for
bringing its lawsuit, and you are entitled to know what the plaintiff believes was taken. With that
information, you can better focus your investigation and plan your defense.
[4]
Conduct Your Own Investigation
In chapter 7, we described the investigation you should conduct if you believe you are the victim of
trade secret misappropriation. If you have been accused of trade secret misappropriation, you should
conduct an investigation that mirrors the victim’s. That investigation will have three basic parts: (1)
data preservation, (2) data review, and (3) interviews.
Data preservation is a corollary to the imperative not to destroy evidence. Court rules require that you
preserve evidence reasonably related to the subject matter of the litigation. And failing to preserve the
evidence, as we have already seen, can become a substitute for proof of misappropriation. Evidence
preservation means more than not using a shredder or electronic file deletion programs. Evidence
preservation in this context means suspending automatic file deletion programs, such as those routinely
used for e-mail. It also means creating forensically sound copies of storage locations (on computers,
mobile storage devices, and networks) where information relevant to the investigation is likely to be
found.
Data review means conducting the same type of forensic investigation that the plaintiff or law
enforcement will undertake of your data. Electronic information leaves a trail, and plaintiffs or law
enforcement will use that trail to full advantage.
HARD KNOCKS AND HARD CIDER IN THE GREEN MOUNTAIN STATE
Since the time of the colonists, Vermonters have been perfecting their home-brewed hard
apple cider recipes. In 1991, Joseph Cerniglia, the owner of a small winery, decided to
produce hard apple cider on a large scale. His business, Woodchuck Hard Cider, became
wildly successful and was the first hard cider in the country to sell more than a million
cases. To oversee Woodchuck’s expanding distribution network, the company hired Lenny
Ciolek, a 25-year beverage industry veteran, to manage its national accounts. Unbeknown to
his new employer, Ciolek was planning to launch his own hard cider brand. Shortly after
arriving at Woodchuck, Ciolek began communicating with Garrett Mayer of Mayer
Brothers—the East Coast’s largest apple juice distributer. The two exchanged e-mails about
the name and logo for the new venture, with Mayer emphasizing that “we need to add the
exact nutrition facts and ingredients from the [W]oodchuck label.” Before leaving
Woodchuck, Ciolek posted on his Facebook page that the cans for his new cider were
already in production. Woodchuck became suspicious when Ciolek left and immediately
launched his own cider brand, prompting his former employer to conduct a forensic
examination of his computer. Along with the e-mails to Mayer, they discovered that Ciolek
downloaded confidential pricing information onto his personal USB drive while still at the
company. Woodchuck sued Ciolek, alleging violations of the Vermont Trade Secrets Act.
The two parties eventually settled. The settlement included a permanent injunction
precluding Ciolek from using any of Woodchuck’s trade secrets.
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With subjects ranging from apple cider to high-tech robots, you have seen numerous examples of
plaintiffs proving misappropriation with incriminating electronic data obtained from the defendant. As
a defendant, you want to know what that information shows before the plaintiff does. You also want
to know what that information does not show. A well-conducted forensic investigation that reveals no
evidence of misconduct can be powerful evidence that the plaintiff’s allegations are false.
Interviews conducted by your attorneys should also form an essential part of your investigation. The
plaintiff’s complaint likely identifies the person (or people) it accuses of having taken the alleged trade
secrets without authorization, and that is a good place to start asking questions. Chapter 7 offers
guidelines for conducting interviews, and those should be followed here as well to better ensure you
get useful and truthful information.
Understanding the plaintiff’s allegations is an obvious goal of interviewing witnesses. But interviews
can also reveal essential information for other defenses. The interviews thus need not be limited to
company employees. By talking to knowledgeable people, you may discover that the claimed trade
secret is well known, was obtained from another source, or was authorized to be used. You might
likewise discover that the plaintiff’s security measures are inadequate. And you might discover that the
plaintiff is simply mistaken about the alleged trade secret being used at your company. All of these
defenses require evidence to support them. And the plaintiff is not going to volunteer that evidence.
You need to identify leads as soon as possible, and the more information your investigation uncovers,
the more informed your defense will be.
[5]
Don’t Wait to Take Appropriate Action—Be Proactive
Although the techniques for handling the investigation are similar whether you are the plaintiff or the
defendant, what you do with the results of the investigation varies tremendously. As a victim of trade
secret misappropriation, you become a plaintiff in a lawsuit seeking the court’s help in preventing
further misappropriation and seeking damages.
As a defendant, if your investigation uncovers likely misappropriation, you must determine what
additional steps are necessary to minimize the consequences. Those steps can include modifying
personnel policies to better incorporate the best practices described in this book. They can also include
changing physical and electronic security systems to prevent trade secrets from being improperly
introduced into the company. They can include taking actions against involved personnel, up to and
including termination. And they can include changing company products or programs to cease use of
alleged trade secrets.
Taking these steps as a defendant serves to help protect the company in a variety of ways. When taken
in the face of existing litigation, they are essential to demonstrate that the company did not participate
in or encourage any misappropriation. They send critical messages to the court handling your trade
secret case, to your employees, and to others that you do not tolerate unethical behavior. Prompt and
decisive action against individuals who misappropriated trade secrets or violated the company’s
information-handling policies can be especially difficult, but it is important to prevent their misconduct
from tainting the company.
Victrex’s response to learning that one of its employees was accused of trade secret theft provides an
instructive example. In chapter 8, you read how Gary Min stole tens of thousands of documents from
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DuPont before he left to work for Victrex. After he started at Victrex, he loaded 180 DuPont
documents, some containing their trade secrets, onto his Victrex laptop. Min was eventually convicted
of trade secret misappropriation and sentenced to 18 months in jail. Victrex was not punished because
it took prompt, decisive action. When Victrex learned of DuPont’s allegations, Victrex confiscated
Min’s laptop and turned it over to the FBI. Victrex also suspended Min. This cooperation likely
prevented the FBI from suspecting that Victrex encouraged, or even knew about, Min’s theft.
Victrex’s investigation apparently revealed that it had not used information from DuPont’s trade secret
documents. Not all investigations end this way. You may learn that a rogue employee has copied
another company’s information onto your network and shared it with other employees. You may learn
that the information is now being used in the company’s materials or in certain of its products. These
are challenging situations, but they are not unusual or impossible.
You should immediately work with your attorney to rid the company of the tainted information. This
may mean making archive copies of files and deleting the active versions employees can access. It may
mean redesigning materials or products to avoid any use of another’s trade secrets. It some cases, this
redesign requires implementation of a clean-room process to ensure that the redesigned materials or
products are not tainted by previous, inappropriate exposure to trade secrets. These clean rooms do not
involve workers wearing sterile “moon suits.” They are “clean” because the employees and the work
environment are free from contamination created by unauthorized information, including another’s
trade secrets. Organizing and running them properly require an expensive and cumbersome
combination of legal and technical oversight. But once implemented, clean rooms can allow a
company to continue offering its goods and services regardless of the outcome of trade secret litigation.
Many defendants react to these suggestions by worrying that they will be viewed as admissions of
guilt. Administered properly, however, they can be strong evidence of innocence, as they were for
Victrex. They can also serve as the foundation for a prompt end to the litigation. Many settlements
result from a defendant expressing willingness to undertake remedial measures. Such settlements have
something to offer the plaintiff and the defendant. The plaintiff achieves a resolution that may include
elements a court would be unlikely to order, and the defendant ends the litigation on terms that will
allow it to continue as a viable business.
Some remedial actions are admittedly easier than others. Modernizing your physical and electronic
security and adopting personnel and technology policies that reflect best practices are steps you would
likely take anyway. Disciplining personnel and cooperating with law enforcement are much harder
decisions. Deciding to redesign materials or products, especially in a clean room, potentially has even
greater consequences for the company.
The importance of these decisions reinforces the need to retain experienced counsel to identify your
options and the consequences of pursuing each one. While some of these actions can be difficult, not
acting can be even more devastating. Being found guilty of trade secret misappropriation can
permanently change the way a company is viewed by shareholders, suppliers, customers, and others.
It could result in court orders prohibiting you from shipping your most important products. Making
these decisions as soon as possible is the best way to be in the best possible position to succeed in the
future, no matter what may have happened in the past.
Trade Secret Law and Corporate Strategy
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Copyright 2014, Matthew Bender & Company, Inc., a member of the LexisNexis Group.
EXHIBIT C
EXHIBIT D
Michael Filardo
MTS Somewhere Over the Startup Rainbow
Experience
Member Technical Staff at a well funded stealth startup
January 2015 - Present (7 months)
"I am putting myself to the fullest possible use, which is all I think that any conscious entity can ever hope to
do." -HAL 9000
Chip Lead / Principal ASIC Design Engineer at Broadcom
April 2011 - January 2015 (3 years 10 months)
Chip Lead, Senior Design Engineer for 10G/40G/100G ethernet switch chips.
Senior ASIC Design Engineer at NVIDIA
2005 - 2011 (6 years)
GPU rtl design
Senior Design Engineer at Centillium Communications
2003 - 2005 (2 years)
EPON networking chips
Senior Design Engineer at Morphics
2001 - 2003 (2 years)
Senior Design Engineer at HAL Computer Systems
1993 - 2001 (8 years)
Math Teacher at Peace Corps
November 1990 - December 1992 (2 years 2 months)
Senior Design Engineer at Siemens
1986 - 1989 (3 years)
Skills & Expertise
SoC
VLSI
RTL design
Verilog
ASIC
Static Timing Analysis
Page1
Bring-up
Functional Verification
RTL Design
Timing Closure
Debugging
Embedded Systems
Semiconductors
EDA
Integrated Circuit Design
IC
Education
UCLA
Bachelor of Science (B.S.), Electrical and Electronics Engineering, 1978 - 1983
Page2
Michael Filardo
MTS Somewhere Over the Startup Rainbow
Contact Michael on LinkedIn
Page3
EXHIBIT E
Avinash Mani
Senior Director, IC Design Engineering at Broadcom
Experience
Director, IC Design Engineering at Broadcom
June 2006 - Present (9 years 1 month)
Manage teams of 50+ engineers engaged in various aspects of ASIC Development of L2/L3 Switch Routing
chips, EPON chips, Security chips. Functions within the team include functional verification, emulation,
FPGA prototyping, silicon validation, micro-architecture and design specification review, etc...
Senior Director, IC Design Engineering at Broadcom
June 2006 - Present (9 years 1 month)
Sr Manager, IC Design Engineering at Broadcom
September 2010 - February 2012 (1 year 6 months)
Manager, IC Design Engineering at Broadcom
March 2008 - September 2010 (2 years 7 months)
Principal Engineer, IC Design at Broadcom
June 2006 - March 2008 (1 year 10 months)
Director Of Corporate Applications at Axiom Design Automation
March 2005 - July 2006 (1 year 5 months)
Verification Solution Architect at Synopsys
September 2002 - March 2005 (2 years 7 months)
Sr. Hardware Engineer at Riverstone Networks
June 2000 - September 2002 (2 years 4 months)
Skills & Expertise
SystemVerilog
Team Building
Functional Verification
Management
C++
Perl
TCL
Verilog
Traffic Management
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Networking
Software Development
C#
Unix Shell Scripting
VHDL
Microarchitecture
Hardware
Debugging
ASIC
Education
University of Southern California
Master of Science (M.S.), Electrical and Electronics Engineering, 1996 - 1998
Indian Institute of Technology, Bombay
BTech, 1992 - 1996
Page2
Avinash Mani
Senior Director, IC Design Engineering at Broadcom
Contact Avinash on LinkedIn
Page3
EXHIBIT F
Bruce Kwan
Technical Director, Distinguished Engineer at Broadcom
Summary
Have worked at several networking systems and semiconductor companies in the area of broadband
communications.
Specialties
System architecture, switch fabric and traffic management architecture, performance analysis and modeling,
discrete event simulation.
Experience
Technical Director, Distinguished Engineer at Broadcom Corporation
March 2013 - Present (2 years 5 months)
Development of Ethernet switching ASICs.
Associate Technical Director at Broadcom
2011 - 2013 (2 years)
Senior Staff Scientist/Principal Scientist/Engineering Manager at Broadcom
2004 - 2011 (7 years)
Member Technical Staff at ZettaCom Inc.
February 2002 - December 2003 (1 year 11 months)
Development of high performance switch fabric and traffic management products.
1 recommendation available upon request
Systems Architect at Bravara Corporation
2000 - 2001 (1 year)
1 recommendation available upon request
Senior Member of the Technical Staff at Jet Propulsion Laboratory
1997 - 2000 (3 years)
Skills & Expertise
System Architecture
Discrete Event Simulation
Architecture
Electrical Engineering
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Technical Leadership
System Design
Ethernet
Semiconductors
ASIC
Systems Engineering
Simulations
Education
University of California, Los Angeles
MS/PhD, Electrical Engineering, 1990 - 1997
University of California, Berkeley
BS, EECS, 1986 - 1990
Page2
Bruce Kwan
Technical Director, Distinguished Engineer at Broadcom
2 people have recommended Bruce
""
— Paul L., VP Strategic Marketing, ZettaCom, worked with Bruce at ZettaCom Inc.
""
— Gene O., Communications Architect, Bravara, worked directly with Bruce at Bravara Corporation
Contact Bruce on LinkedIn
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