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The court in Planner 5D v. Facebook, one of the first cases about trade secrets in artificial intelligence datasets, has granted the motion to dismiss on the copyright claims and denied the motion on the trade secret claims.

Trade secrets. The court held that the amended complaint sufficiently pleaded that the Planner 5D data files were trade secrets and that the defendants used improper means to acquire those trade secrets.

Defendants first argued that the Planner 5D files were not trade secrets. Princeton contended that Planner 5D designed its website to transmit object or scene data files to users’ browsers, where they were automatically stored in the browser’s cache, which enabled any user to access and reproduce those files. While the terms of use prohibited downloading material generally and prohibited using scraping tools, the terms of use expressly excluded “page caching” from the list of prohibited activities. Princeton relied on multiple exhibits and a declaration purportedly showing these technical details, but the court rejected much of that evidence because courts typically do not consider extrinsic evidence (e.g., exhibits not attached to the complaint) to resolve a motion to dismiss.
Continue Reading Planner 5D v. Facebook: Trade Secrets and Copyright Update

One of the ways trade secret disputes differ from other IP litigation is that in a trade secret dispute it is not always clear what the intellectual property actually is. Trade secrets aren’t disclosed to the patent office or registered like trademarks. Nor are they as clearly defined as copyrights. Thus, a threshold question in every trade secret case is what the trade secrets actually are. This creates a natural tension, as the very definition of a trade secret includes that it be kept secret. Nonetheless, litigation cannot proceed in the dark and there must be some disclosure at some time before a case can be meaningfully resolved. Courts vary widely in their approach to the what and the when of these disclosures. Some require detailed specificity before any discovery can occur, sometimes even at the pleading stage. Other courts are more lenient and will allow discovery to proceed without first requiring early and detailed disclosures.
Continue Reading Sedona Conference Lists Principles for Identification of Trade Secrets

Judge William Orrick of the Northern District of California held a hearing last week to address 12(b)(6) motions to dismiss by Facebook and Princeton University in UAB “Planner5D” v. Facebook, Inc., et al., Case No. 19-CV-03132 (N.D. Cal.). This appears to be one of the first trade secret misappropriation and copyright cases relating to artificial intelligence datasets.

Plaintiff Planner 5D has a website with a home design tool to allow customers to digitally design their own home, office, or landscape. As alleged by Planner 5D, the tool uses thousands of object and scene files as seed data sets to train machine learning algorithms. The complaint alleges that Princeton used software tools to obtain secret internet addresses where the object and scene files were hidden and then scraped the website to obtain the files, ultimately making the data available to Princeton researchers. Princeton then allegedly shared that data with Facebook. Planner 5D contends that, although the images themselves are viewable on the internet, the underlying datafiles and secret internet addresses that were scraped by Princeton, as well as the file locations, are trade secrets.
Continue Reading Planner 5D v. Facebook: Trade Secrets and Artificial Intelligence Hearing

A Texas appellate court recently affirmed the principle that state free speech rights don’t provide immunity for trade secret misappropriation. Collaborative Imaging v. Zotec Partners. Zotec Partners provides revenue cycle and practice management services to healthcare providers. Dhruva Chopra worked at Zotec as a client service manager. In 2018, Chopra resigned and began working with Texas Radiology Associates, LLP (which had been a Zotec client) on a competing business. Chopra allegedly had knowledge of Zotec trade secrets involving, among other things, Zotec’s technology platform and software, billing, clients, and business processes.
Continue Reading Trade Secrets Suit Doesn’t Infringe Free Speech

Computer forensic information often becomes an issue in trade secret cases, as computer artifacts or other electronic information (such as on external hard drives, cell phones, etc.) can sometimes prove or disprove whether a person accessed, used, transferred, or destroyed trade secret material. If the parties or the judge determines that the computer forensic information is relevant, the next key question is how much needs to be exchanged and what limitations will be in place. The producing party often will argue that computers include numerous irrelevant files and artifacts, privileged communications, and private information that should not be subject to discovery. One middle ground is to use a neutral examiner, in which the electronic data is never handed directly to the opposing party. Instead, a neutral computer expert will field requests and/or create reports of the pertinent data.
Continue Reading Chinese Self-Driving Car Company Must Make Its Source Code Available in Lawsuit Against Tesla but Only Through a Neutral Examiner

UAB dba Planner 5D sued Facebook and Princeton for copyright infringement and trade secret misappropriation under both the Defend Trade Secrets Act and California UTSA, based on use of an AI dataset. The plaintiff alleges that it owns a large dataset of three-dimensional objects and scenes. Princeton allegedly downloaded thousands of scenes by scraping the

In October 2018, a non-compete reform bill when into effect in Massachusetts (the Massachusetts Noncompetition Agreement Act (“MNCA”)). The MNCA is still being refined through the courts with only the second published decision regarding the MNCA being decided recently in NuVasive, Inc. v. Day, 1:19-cv-10800-DJC. The District Court there granted the employer a preliminary injunction,

The U.S. Supreme Court’s June 24 decision in Food Marketing Institute v. Argus Leader alters 40 years of Freedom of Information Act law governing the withholding of documents the government receives from outside sources (including businesses). Instead of showing that the company submitting the information must suffer “competitive harm” from its release, commercial information received

In March 2018, HouseCanary won a $706M trade secrets verdict against Title Source Inc., a Quicken loans affiliate.  After a seven-week jury trial, HouseCanary moved the court to seal fourteen trial exhibits because they purportedly revealed HouseCanary’s trade secrets, although the parties discussed and displayed these fourteen exhibits in open court at trial (they asked witnesses questions about the exhibits, displayed portions of the exhibits in the courtroom, and read portions of the exhibits to the jury). The trial court ultimately ruled to seal the exhibits.  Last week, the Fourth Court of Appeals in Texas ruled on appeal that the trial court erred by granting HouseCanary’s motion to seal the exhibits after trial, concluding that the Texas Uniform Trade Secrets Act does not require courts to set aside valid protective orders and that HouseCanary didn’t follow the proper procedure, laid out in Texas Rule of Civil Procedure 76a (and agreed to by the parties in their stipulated protective order), for sealing the documents.  
Continue Reading Title Source Inc. v. HouseCanary, Inc.