In the highly competitive brokerage industry, proprietary computer code must be closely guarded. Employees are increasingly walking out the door with it and starting their own firms.
Most recently, two New York men were charged with stealing source code from Flow Traders L.L.C., a high-frequency trading firm in Manhattan. They planned to use the information to establish a competing business, according to criminal complaints filed by the office of Manhattan District Attorney Cyrus Vance.
The court documents allege that former trader Jason Vuu sent trading strategies, valuation algorithms and proprietary code from his work email account to his personal email address. He subsequently shared the information with Simon Lu using file-hosting service Dropbox.
The latest charges follow the high-profile prosecution of Goldman Sachs Group Inc. programmer Sergey Aleynikov, who was also charged with misappropriating proprietary source code. As previously discussed on this Business Law Blog, federal charges were ultimately dismissed after the Second Circuit Court of Appeals ruled that downloading proprietary computer code does not constitute stealing under the National Stolen Property Act, which criminalizes the theft of trade secrets. The state charges are still pending trial.
While there are criminal and civil remedies available in the case of source code misappropriation, the best defense is a strong offense. Given how easily technology can be used to facilitate trade secret theft, New York and New Jersey businesses brokerage firms should have strong intellectual property policies and procedures in place. These include non-disclosure agreements, non-compete agreements, and security protocols.
If you have any questions about the current trade secret theft case or would like to discuss how to better protect your firm, please contact me, Jay Surgent, or the Scarinci Hollenbeck attorney with whom you work.
Rule 26 Expert Discovery: When an Expert Witness Uses AI, Is It Discoverable?
Case law following the 2010 amendments to Federal Rule of Civil Procedure 26 offers guidance on how courts are likely to address whether an expert witness’s AI records are subject to discovery. Key Takeaways Rule 26 Expert Discovery After the 2010 Amendments This article addresses the question courts and lawyers have faced in recent cases: […]
“Show how 3M is 0% at fault.” The absurd tale of how a 350-page ChatGPT history for 3M’s expert witness was produced during a deposition is more likely than you think. It’s an inevitable trend, and an unsettled question for federal courts as experts make generative AI part of their workflow. Key Takeaways Expert Witness […]
The Screenshot Problem: Why Nothing Is Really Private Anymore
Screenshots have changed the risks of electronic communications. The screenshot problem is that messages intended for one person or a small group can be copied, forwarded, preserved, and ultimately presented to opposing counsel, regulators, journalists, customers, or a jury. Businesses should recognize that a truly private digital conversation is increasingly unreliable and ensure their policies, […]
BESS Project Agreements: Allocating Risk Among Developers, EPC Contractors, and Equipment Suppliers
Developers, engineering, procurement, and construction (EPC) contractors, and equipment suppliers each play a critical role in completing a BESS project. However, when equipment costs rise, deliveries are delayed, or regulations change, determining who bears the financial consequences can become contentious. Well-drafted project agreements are essential to sound risk allocation. Key Takeaways This article is Part […]
IP Infringement: What Steps Can You Take If You're Affected?
IP infringement occurs when someone uses your intellectual property without your permission or beyond the scope of the permission you granted. Common examples of IP infringement include copying a product’s patented features or using a trademarked logo in a way that is likely to confuse consumers about the source or affiliation of goods or services. […]
Public Allegations, Unfinished Investigation: What New Jersey Businesses Should Do Next
When facing public allegations of wrongdoing, companies should not let the speed of the public conversation dictate the speed of an investigation. An investigation designed to confirm a preferred narrative rather than establish the facts can create serious problems later, particularly if litigation, regulatory scrutiny, or employment claims follow. Key Takeaways When public allegations surface […]
No Aspect of the advertisement has been approved by the Supreme Court.
Results may vary depending on your particular facts and legal
circumstances.
Sign up to get the latest from our attorneys!
Explore What Matters Most to You.
Consider subscribing to our Firm Insights mailing list by clicking the button below so you can keep up to date with the firm`s latest articles covering various legal topics.
Stay informed and inspired with the latest updates, insights, and events from Scarinci Hollenbeck. Our resource library provides valuable content across a range of categories to keep you connected and ahead of the curve.
Let`s get in touch!
Sign up to get the latest from the Scarinci Hollenbeck, LLC attorneys!
