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Recent Theft Shows Trade Secrets Highly Valuable

Daniel Mills, Trademark Attorney

Posted Wednesday, August 26, 2015 by Daniel Mills

Jing Zeng, a former manager at game maker Machine Zone, was arrested at San Francisco Airport on August 20. According to a report from the Wall Street Journal, Zeng, a director of global infrastructure, tried to use the information to negotiate a better severance package after he was told to leave the company.

Gameindustry.biz reports that Zeng is accused of stealing over 100 files on player behavior in Game of War. Game of War is an immensely popular online strategy game that features super model Kate Upton in a Super Bowl commercial and ad campaign. After allegedly giving conflicting accounts of how many copies existed and whether the copies were in the US or China, the company called the FBI and agents arrested him while trying to board a plane to China. Zeng now faces a maximum of 10 years in prison and a $250,000 fine.

This case is a great example and answer to the question: What are Trade Secrets? It’s easy to think of the formula for Classic Coke or the KFC recipe as trade secrets, but in today’s world and business environment, customer use data provides is just as important to a company as its secret formula. In fact, you can argue that for a game company, data on how customers interact with the game IS the secret formula. One of the primary elements of a trade secret is that it “derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by other persons who can obtain economic value from its disclosure or use”

Clearly this information has independent economic value. It had value to Mr. Zeng as he tried to get himself more money from Machine Zone, and the criminal complaint stated that the data could “provide valuable insight and a huge competitive advantage over other online game providers and competitors.”

The other primary element of a trade secret is that the information, “is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.” In this case, knowledge of Zeng’s downloading was discovered from log files maintained by the company’s tech department. It is reasonable to infer from this that Machine Zone monitors its network very carefully to detect just this type of activity. This is certainly reasonable for a company whose intellectual property is largely contained in digital form

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