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Why Legal Experts Are Up In Arms Over a Trade-Secrets Bill Microsoft Loves (cio.com)

itwbennett writes: At a Senate Judiciary Committee hearing on Wednesday, lawmakers heard arguments over the Defend Trade Secrets Act of 2015. The proposed legislation would allow companies to pursue trade-secrets cases in federal court much as they can copyright or patent cases, thereby freeing them from the state-level constraints of today's laws. It also allows for so-called ex parte seizure, enabling a company that thinks a secret has been stolen to ask the government to seize a suspected thief's property without notice, to prevent misuse of that secret. It's the ex parte seizure provision, as well as the bill's potential to increase the duration and cost of trade-secrets litigation, that prompted more than 40 law professors to write a joint letter expressing their concern. Companies have long protected algorithms such as consumer credit-scoring mechanisms under trade-secret law, intellectual property expert and Hamline University professor Sharon Sandeen said in an interview after the hearing. If passed, the new bill could give them new powers to conceal those algorithms, she said. Voicing the opposing view, lawyers from Corning and DuPont cited the increasingly digital and global nature of trade-secrets theft, a sentiment that was echoed in a blog post by Jule Sigall, Microsoft's assistant general counsel of IP policy and strategy.

48 comments

  1. Microsoft... by Anonymous Coward · · Score: 2, Informative

    ... the root of all evil.

    1. Re: Microsoft... by Anonymous Coward · · Score: 0

      Why is microsoft singled out in this headline?

    2. Re:Microsoft... by Anonymous Coward · · Score: 0

      Bill Microsoft? I thought he was called Bill Gates...

    3. Re:Microsoft... by thoughtlover · · Score: 1

      Wha? With that, you have to add AT&T, Comcast, Apple, Sony, Google, Samsung, Oracle, et al. to the list... I see no reason why you have a 2, Informative. All the major tech companies lobby congress for business practices that favor their position in the marketplace.

      --
      No sig for you! Come back one year!
  2. Alternate Headlines by VorpalRodent · · Score: 5, Funny

    The Secret Provisions that Microsoft Lawyers Don't Want You To Know
    Take a Look at These Seven Trade Secrets Microsoft is Hiding From You
    These Legal Experts Will Restore Your Faith in Humanity
    Microsoft Angers Legal Experts With This One Weird Trick

    --
    Take it to the limit, everybody to the limit, come on, everybody fhqwhgads.
    1. Re:Alternate Headlines by Anonymous Coward · · Score: 0

      The Secret Provisions that Microsoft Lawyers Don't Want You To Know Take a Look at These Seven Trade Secrets Microsoft is Hiding From You These Legal Experts Will Restore Your Faith in Humanity Microsoft Angers Legal Experts With This One Weird Trick

      Alternate headline: "Lawyers want per-state complexity in, and opportunities for, litigation to continue and we are up in arms over Microsoft and others wanting federal level rules on this"

    2. Re:Alternate Headlines by Anonymous Coward · · Score: 0

      The Secret Provisions that Microsoft Lawyers Don't Want You To Know Take a Look at These Seven Trade Secrets Microsoft is Hiding From You These Legal Experts Will Restore Your Faith in Humanity Microsoft Angers Legal Experts With This One Weird Trick

      Alternate headline: "Lawyers want per-state complexity in, and opportunities for, litigation to continue and we are up in arms over Microsoft and others wanting federal level rules on this"

      It is amazing what you can get Slashdotters to blindly support if you put Microsoft on the other side of the issue.

    3. Re:Alternate Headlines by queazocotal · · Score: 4, Insightful

      If this was all that was - it's not.
      Ex parte seizure is really problematic, for reasons outlined in the responses in the original article.

      In short.
      Microsoft says, without complete proof that an ex employee took sourcecode to your company, and now on the word of microsoft alone, without any rights to debate this - all they have to do is to convince a non-technical judge - they can basically shut down your entire company for a period.
      There is - in principle - a defence if they do this maliciously, but that's going to be _extraordinarily_ hard to prove absent someone actually committing to paper 'let's fake a complaint and screw this guy'.
      The process takes around a week.
      In any realistic scenario, this 'express' process is uselessly faster than a month one for other legal action, simply as by that time the code has already been moved.

    4. Re:Alternate Headlines by Anonymous Coward · · Score: 0

      Microsoft Angers Legal Experts, Hires one ex-expert instead

      Her name is Julia, as in Louis-Dreyfuss. She can play that role really really well. Same hilarious results.

      The un-funny part is that TFA has an "About the author" link. Click on it, and you get nothing but the same article. MS must think nothing of her expertise, if she can be as forgetful of MS' past to be serious about this whole shenanigan. If I were MS I would put something nice about her e.g. she came up with the verbage for the EULA, that is universally clicked on without ever being read and absolves MS of anything and everything.

  3. M$ new business model... by Anonymous Coward · · Score: 2, Insightful

    ...sounds to me like Microsoft is setting themselves up to become patent trolls to keep them afloat when their cash cows (Windows and Office) dry up.

  4. State Courts by Etherwalk · · Score: 3, Interesting

    As a general rule, nobody wants to be in state courts if they can help it. There are exceptions, and there are some good state courts, but you still would almost always rather be in federal court. If they could figure out a way to put all trade secrets cases in the commercial division in New York, for a counterexample of a good state court system, they might do it. But depending on the patchwork of inconsistent quality and law in state courts, if you're a big company in particular you'd rather just deal with federal courts.

    1. Re:State Courts by Anonymous Coward · · Score: 2, Insightful

      Federal court has zero ethics (yes, I've sat through cases). Not to mention that "ex parte seizure" is inevitably and severely abused.

    2. Re:State Courts by kwiecmmm · · Score: 1

      As a general rule, nobody wants to be in state courts if they can help it. There are exceptions, and there are some good state courts, but you still would almost always rather be in federal court. If they could figure out a way to put all trade secrets cases in the commercial division in New York, for a counterexample of a good state court system, they might do it. But depending on the patchwork of inconsistent quality and law in state courts, if you're a big company in particular you'd rather just deal with federal courts.

      That is the cost of those companies rooting themselves in those states.

    3. Re:State Courts by Anonymous Coward · · Score: 0

      Of course it will inevitably be abused, just like the standard search and seizure clauses of a warrant. The only difference is that this provides a codified set of standards about how to issue search and seizure warrants in cases of suspected improper possession of proprietary data.

    4. Re:State Courts by gtall · · Score: 4, Insightful

      Well, that...but it is also a nice tidy way to effectively patent the unpatentable. This is an end run around the notion that mathematics is not patentable. Nope, now it's a "trade secret"...cue the angelic choir of thousands of lawyers giving thanks.

  5. Sorry, no mod points right now... by tlambert · · Score: 1

    Sorry, no mod points right now... but this one is freaking brilliant!

    Microsoft Angers Legal Experts With This One Weird Trick

  6. Nothing to fear, ANONYMOUS is here! by Anonymous Coward · · Score: 0

    They will save the day! Expose their "secrets" so we all can laugh!

  7. Trade secrets by Anonymous Coward · · Score: 2, Insightful

    Still not getting why the government needs to intervene in the protection of trade secrets. That's why patents exist.

    1. Re:Trade secrets by alva_edison · · Score: 4, Insightful

      Exactly. We made a decision early on that keeping secrets was bad for broad innovation, so we came up with patents. You get protection, but no more secret. If you want to keep your secret, you give up on extra protection. So a leaked secret shouldn't have extra protection.
      As much as the patent system sucks, it still gets a public record of inventions that we might not otherwise be able to recreate.

      --
      He effected a bored affect.
    2. Re:Trade secrets by Anonymous Coward · · Score: 1

      except typically a trade secret can be so ambiguous/retarded/general that even patent office won't touch. but a good way to cull competition.

    3. Re:Trade secrets by Fire_Wraith · · Score: 2

      Depends how someone got them. If you manage to clean-room reverse engineer the formula for Coca-cola, then you're legally in the clear (at least as it currently stands). If however you steal that formula, then it's understandable that perhaps different rules should apply.

      The tricky thing, from what it sounds like to me at a glance, is the ex parte bit, as the law professors cite above. To use the Coca-cola example, the question becomes what redress does Pepsi have if Coca-cola accuses them of stealing the formula and asks the government to seize all Pepsi shipments (or vice versa).

      My guess is that this is likely aimed mostly at China, though I have to wonder if Microsoft doesn't have certain competitors in mind.

    4. Re:Trade secrets by rtb61 · · Score: 4, Interesting

      How ever the sound limit on prosecution from breaching trade secrets is the actual theft and only the theft, beyond that nothing. You had a secret, it was exposed tough luck, you should have patented it and if it wasn't patentable then you have nothing. The problem is they simply can not claim it is impossible to come up with the same solution. It looks very much like M$ is shifting to a litigation and marketing engine and it wants to claim as criminal exposure of it's massive invasion of privacy Windows anal probe 10 as an infringement of it's trade secrets. How far it will go to steal your information and you intellectual property and how it will do it, apparently will become defined as a trade secret and any exposure of it a criminal offence. You can wrap all sorts of stuff around trade secrets eg a list of customers is a trade secret.

      --
      Chaos - everything, everywhere, everywhen
    5. Re:Trade secrets by Anonymous Coward · · Score: 0

      You had a secret, it was exposed tough luck, you should have patented it and if it wasn't patentable then you have nothing.

      Exactly! And there's another problem - All "Trade Secrets" can be duplicated.
      We all know how ridiculous software patents are, being either (a) a small improvement over something already existing or (b) obvious.
      If your trade secret is that your mathematician figured out how to divide by zero, then mine probably can too.

    6. Re:Trade secrets by Anonymous Coward · · Score: 0

      The Coca-Cola example is silly because a recipe cannot be copyrighted, patented or legally protected in any way, shape or form.

  8. GPL Compliance by GrEp · · Score: 1

    Wouldn't this help enforce GPL compliance?

    --

    bash-2.04$
    bash-2.04$yes "Don't you hate dialup connections?"| write USERNAME
    1. Re:GPL Compliance by Anonymous Coward · · Score: 1

      No, GPL compliance depends on copyright.

      Trade *secrets* are 100% incompatible with the definition of "open source".

    2. Re:GPL Compliance by mikael · · Score: 2

      A trade secret is a way of using software or hardware in a way that is extremely profitable to the original developer by helping to reduce costs or increasing profits.

      It might be a new way of ranking search engine results using natural language processing. Maybe it's a way of improving yields in silicon chip manufacturing, or improving performance in a graphics algorithm, or performing stock trade predictions. Some companies have resorted to encoding these algorithms in custom ASIC's so that there is no way for a third party to reverse engineer the software. Others wrap these algorithms around a secure server where the customer sends their data in and gets the results out.

      But Microsoft aren't happy with that. If they just "suspect" that someone might be using their trade secrets, they want the right to seize all the computer hardware and search it for violations.

      --
      Vintage computer adverts: http://www.vintageadbrowser.com/computers-and-software-ads
    3. Re:GPL Compliance by Pseudonym · · Score: 1

      ...unless the trade secret is data, of course.

      --
      sub f{($f)=@_;print"$f(q{$f});";}f(q{sub f{($f)=@_;print"$f(q{$f});";}f});
  9. To clarify... by Fire_Wraith · · Score: 4, Insightful

    Trade secrets are a little different than patents or copyrights. A trade secret is something like the full list of KFC's original 11 herbs and spices, or the formula for transparent aluminum. To give an example of the difference between patents, copyright, and trade secrets, etc, let's consider Coca-cola:

    The Coca-cola name and logo are trademarks.
    If Coca-cola were to come up with a new method of putting carbonation in soft drinks, they might file a patent for that process.
    If Coca-cola came up with song as an advertising jingle, they would own the copyright to that song.
    And the (secret) formula for Coca-cola is a trade secret.

    1. Re:To clarify... by Fire_Wraith · · Score: 1

      Note, of course, that none of that means the concept can't or won't be abused - just to try and clarify some of the general differences in the concept. (Also, Not a Lawyer, etc.)

  10. Re:Microsoft...FTFY by zlives · · Score: 2

    "... the administrator of all evil."

  11. Copyright law gone even more wrong by kheldan · · Score: 3, Interesting

    That's what this would be: Microsoft and companies like them being able to almost literally black-bag people, take everything they own, and leave them with no legal recourse and no rights, just on their say-so that their alleged trade secrets have been 'stolen'. Sure, no potential for massive abuse here, no sir-eee.

    --
    Are YOU using the TOOL, or is the TOOL using YOU? Think about it!
    1. Re:Copyright law gone even more wrong by AHuxley · · Score: 2

      Yes after doing anything near the brands products or services your profession, university degree/s, skill sets ie a persons livelihood is at risk of been legally
      confiscated by a private company on a whim. A secret denunciation with the full force of gov backing.
      The only protection is never to work on a product, project related to a company that will go after its workers or contractors in such a direct way.
      What next? A special short list of cleared lawyers who can read the hidden charges in a special closed room and cannot mention any facts in open court?
      Could a lawyers even talk in open about the case?
      A chilling non compete clause for a persons profession for ever and any legal team they hire to try and get their profession back?

      --
      Domestic spying is now "Benign Information Gathering"
  12. Sounds like an end-run around patents by smellsofbikes · · Score: 4, Insightful

    Patents are so inconvenient: limited lifetime, you have to publish how you're doing what you're doing. Much easier to just turn trade secrets into secret, infinite-life patents, now with government protection and a nice threat for any small companies that dare to try to compete with you.

    --
    Nostalgia's not what it used to be.
    1. Re:Sounds like an end-run around patents by Anonymous Coward · · Score: 0

      Sergey Aleynikov.

      prime example.

  13. Double edged sword by Anonymous Coward · · Score: 0

    This COULD be a double edged sword.

    Every tech person can form an LLC and self-incorporate.

    They seize my laptop under trade secrets?
    No problem. They do whatever and give it back.
    I believe that they have retained copies of some of MY company data that was on that laptop, and is trade secret... Under the same law, seize their entire network until they can PROVE that they don't have any copies.

    I mean, it IS fair. I am a very small company, and their court order seized MY company's entire network (the one laptop), so I should be able to seize theirs as well.

  14. We already have a long hisory protecting ideas by blindseer · · Score: 2

    Long, long ago, in a land far, far away there were people that were very protective of their ideas. They'd go to great lengths to keep these ideas to themselves. Skilled workers were very protective of the processes they used to create their products. I recall reading of factories where the workers would never leave. They'd have effectively a castle built to house the workers and equipment. Food and raw material would enter and finished product would leave. As technology improved and society developed the concept of intellectual property was eventually born. In this way the people with the knowledge and skills would no longer have to be locked up to protect industrial processes.

    This idea of intellectual property didn't end the practice of trade secrets but did provide an option to people that thought intellectual property laws were a better option than building a castle and trying to convince skilled craftsmen to lock themselves inside of it. The trade off was that the ideas that would otherwise be held a secret would be exposed to the government. The government would then give a time limited protection to the use of that idea so that the creator, and society, may profit from the idea. Any violations of this protection was therefore enforced by the government.

    The problem with government enforced trade secrets is that the government does not know what they are protecting before there is a claim of a violation. The government would essentially have to rely on the claimant that the idea was actually their own to begin with. The accused would likewise have to show that they came up with the same idea independently, lawfully acquired the idea, or some other defense that would prevent prosecution.

    In law and in theory the accused is innocent until proven guilty but in practice that does not always hold true.

    I see so many ways that this could be abused. Unfortunately I cannot get the article to load, perhaps it's been slashdotted, so I don't know if the article spells out all the ways this law can be abused. We already have a very long history of legal protections of intellectual property, I see no need to change it now. If someone wishes to keep something a trade secret then they need to make sure no one else finds out through existing legal means. If someone wants legal protections of their intellectual property then they need to share that with a government body first, before it is revealed to anyone else, so that there is no question on who came up with the idea first. Without this prior revelation then there is always a reasonable doubt on who owns the property.

    This bill should not become law, of only because any claim against it would be nearly impossible to prove in a court. As someone that has developed intellectual property for a living I believe I have a pretty strong understanding of how intellectual property laws benefit us all. I also understand the need to simply keep things to yourself if you want to keep something secret. For example, if I kept a crypto key (or a house key) in a obscure location then I can't be expected to have the government punish someone because they happened upon where I kept it. If that key enables someone to snoop around my electronic files (or my refrigerator) then there are laws against that. I can expect the government to protect my property to the extent that I made an effort to secure it, but if I don't secure my stuff then why should I expect the government to do that for me?

    --
    I am armed because I am free. I am free because I am armed.
  15. Historically by Anonymous Coward · · Score: 0

    Historically the way to protect trade secrets was to look after your staff through providing excellent employment packages and instil in them a pride in the company they worked for.

    One more blow for workers rights.

  16. Sieze property? by superdave80 · · Score: 1

    ...to seize a suspected thief's property without notice, to prevent misuse of that secret.

    Um, if it is a secret idea/algorithm/recipe/etc.... what good would it do to seize physical property? Are they going to grab every computer/laptop/thumbdrive/DVD/Backup drive/smartphone that belongs to a company in the hopes that they will get all copies of the stolen secret? Am I missing something here?

    1. Re:Sieze property? by Anonymous Coward · · Score: 0

      It's anti-competitive, which is good for big business, bad for small business. Software algorithms can be written in so many different ways to get the same result, so what they're looking to do is make it even more difficult for people to create the same end result of something by doing it a different way. They just want to see how. The problem with this approach is that it's seizing someone's property based on one's fear of being beaten by the competition.

      Sadly, there are people who do this to big business, too. Websites that just seem to spring up overnight that try to copy the likes of Facebook. Linux forks all over the GD place. And Windows/Mac clones.

      Another part of this is the extension, and that's exhaustive to businesses who have to protect their IP. It gets costly, having to register trademarks, prove that you're still using it. Also, don't forget, most of the news you hear is sensational B.S. to scare people from being competitive. Hundreds of millions of dollars of fines is just a scare tactic and a sales pitch in a lawsuit; it's hardly ever awarded at full asking price to prosecution.

      Most new business owners will be quick to get a lawyer, and they should; one that knows the B.S. flung by other lawyers. I'd find an older, experienced lawyer, if I was running a business. They've been around the block a few times, and know that there are IN FACT laws that exist already, and have been for 100+ years, that overrule a lot of B.S.

      (I know many people like to jump the gun and think, "OMG! NEW LAWS TO RUIN US ALL" Don't. There are laws that have been baked in, with precedence, that will just sweep crap like this under the rug for avg. Joe just lookin' to run a small business.)

  17. Very Bad by ewhac · · Score: 3, Insightful
    Who remembers the DeCSS DVD kerfuffle?

    Briefly, a kid in Norway named Jon Johansen, along with other programmers in Germany, reverse-engineered the Xing DVD player, and published DeCSS, an independent implementation of the Contents Scrambling System (CSS) that was used on DVDs to deter unsanctioned copying, allowing Linux users for the first time to view DVDs on their computers. Subsequent research among crypto experts yielded more general solutions, and now CSS is effectively a no-op.

    The DVD Copy Control Association -- DVD-CCA, the organization that licenses the creation of Hollywood-sanctioned DVD players -- tried to sue DeCSS out of existence in a California court. Their primary argument? That CSS was a trade secret that Johansen had improperly obtained and disclosed.

    What was "improper" about it? His reverse-engineering violated the (*snicker*) "license agreement" attached to the Xing player.

    Further, the DVD-CCA (incorrectly) argued, everyone who came in contact with DeCSS "knew or should have known" that CSS was a trade secret, and not to traffic in it, and asked the judge to put a restraining order on the Internet to prevent further distribution. (DVD-CCA also tried to argue that reverse-engineering is never proper or appropriate.)

    Although the DVD-CCA's case was never resolved, CSS today is effectively useless as a copy protection mechanism, and DeCSS or its functional equivalent is widely available.

    This legislation from Microsoft would appear to be an attempt to defend against such activity, and prevent people from ever inspecting or exercising control over their computers again.

    Trade secrets are a weird edge case in intellectual property. They are not explicitly called out in the Constitution (as are copyrights and patents), but enjoy recognition in the courts. Unlike trademarks and patents, however, trade secrets do not need to be registered -- they exist solely by fiat (i.e. they exist because the company declares they exist). Trade secrets also do not have a formally defined "limited time" as Constitutionally required of copyrights and patents -- the inherent fragility of maintaining any kind of secret indirectly establishes the trade secret's limited lifetime.

    Microsoft's proposal would greatly extend the reach and lifetime of trade secrets beyond their traditional scope.

    1. Re:Very Bad by Anonymous Coward · · Score: 0

      Would the blog linked in TFA care to describe Julie's background, how long has she been at Microsoft, can she correctly describe Netscape, and how much computer software history does she know (might be layman's version, but how much is she aware of)

  18. You know... by Anonymous Coward · · Score: 0

    You know how three companies can keep a trade secret?

    If two of them are bankrupt by the third.

  19. Thanks for the click bait title Slashdot by Anonymous Coward · · Score: 0

    Seriously, this makes me sad. I loved slashdot since I was a kid :(

  20. Microsoft empowered by Anonymous Coward · · Score: 0

    ... enabling a company that thinks a secret has been stolen ...

    Yes, I see where this is heading: No longer will Microsoft need to sign pesky contracts promising "sharing" intellectual property with a hard/middle ware vendor. Just accuse them of stealing Microsoft technology and get a good look at their secrets courtesy of the US government. The law needs to include 'Chinese wall' provisions to prevent this happening.

    ... the new bill could give them new powers to conceal those algorithms ...

    Why do I smell bullshit?

    ... digital and global nature of trade-secrets theft ...

    So the solution is stripping the accused of due process: It's the DMCA all-over again. The real question: What will stop Oracle/Microsoft/Apple/Google/FaceBook from attacking each other?

  21. Clickbait title? "a Trade-Secrets Bill Microsoft" by Barryke · · Score: 2

    This /. title looks like a bad clickbait.. straight from some free translation service.
    "Why Legal Experts Are Up In Arms Over a Trade-Secrets Bill Microsoft Loves "

    I'm not native english but "a trade-secrets" does not compile. Do they mean that Microsoft Loves "Trade-Secrets Bill" ?

    --
    Hivemind harvest in progress..
  22. Fuck you and your click bait headlines by heson · · Score: 1

    Slashdot needs better story moderation. By using click bait language you are poisoning my neural network to actually try to deciper the sentence rater than just ignore it as normal ads. Please do not do this.

  23. Pay your taxes before using our courts. by Anonymous Coward · · Score: 0

    Pay your taxes before using our courts.