TSI Symposium Explores Latest in Trade Secrets Law in the Age of Algorithmic Decision-Making

Trade secrets now play a central role in both the economy and public policy. Trade secret enforcement has grown to straddle the boundary between civil and criminal law, while algorithmic decision-making—often including secret proprietary code—is widely used in criminal prosecution and everyday government services. Distinguished scholars and practitioners gathered at the Law School in February to discuss these and other recent developments in trade secret law.

“2017 was a breakthrough year in trade secrets law,” said TSI Fellow Brian Kim ’18, one of the symposium’s organizers. “We saw the first jury verdict under the Defend Trade Secrets Act (DTSA). DTSA’s controversial ex parte seizure provision was used to broadly seize all electronic memory devices of two ex-employees at a company in Oklahoma. There were also many high-profile cases, such as Waymo v. Uber, over the alleged theft of trade secrets by a former Google engineer and the alleged use of those secrets by Uber. The suit grabbed the attention of the tech industry and took a dramatic turn into criminal investigation.”

The first panel, “New Developments in Trade Secret Enforcement,” was moderated by TSI Fellow Lauren Rayner Davis ’18 and included Victoria A. Cundiff, partner at Paul Hastings LLP; Alexander H. Southwell, partner at Gibson, Dunn & Crutcher LLP; and Ken Corsello, counsel at IBM. The group discussed how DTSA has affected the trade secrets landscape since it became effective in May 2016, and reviewed recent developments in the enforcement landscape.

“There are some interesting issues that haven’t yet been litigated—but I think we can predict they will be,” said Cundiff, pointing to a driverless car case in China that mirrors accusations made in Waymo v. Uber. “Under the DTSA, if an act of misappropriation took place inside the United States, trade secrets owners can sue here, so it will be interesting to see if non-U.S. plaintiffs start availing themselves of the new law.”

Cundiff also noted an increase in Racketeer Influenced and Corrupt Organizations Act cases, as DTSA now makes it possible to assert trade secret misappropriation as a predicate offense. She also said the infrequent use of the hotly-debated ex parte seizure provision, designed to prevent the dissemination of trade secrets, was a sign that “people are thinking long and hard and carefully—as they should—before seeking such relief.”

Southwell cited the increasing value of information as a driver behind the DTSA. “One of the significant issues here is the overarching importance of the digital economy,” he said. “The valuable assets of corporations in the United States and globally [are], increasingly, intellectual property—and how do you protect that intellectual property from espionage by competitors, countries, and disloyal employees...The DTSA reflects that these issues are paramount.”

The second panel, “Secrecy and Accountability in the Age of Algorithms,” was moderated by TSI Fellow Christopher Aranguren ’18 and included Rebecca Lipman, assistant corporation counsel at New York City Law Department; Andrew Selbst, postdoctoral scholar at the Data & Society Research Institute; and Hannah Bloch-Wehba, clinical lecturer in law, associate research scholar in law, and Stanton First Amendment Fellow, Information Society Project at Yale Law School.

The panelists discussed the dilemmas of trade secrecy and accountability in public services, given algorithmic decision-making is now widely used by governments. Recent cases and legislation in New York have grappled with the balance between transparency for the public and trade secrecy for the creators of these proprietary processes—addressing questions such as when the public should have access to the code that affects their lives and freedom.

“I don’t think there could be a more ‘bleeding edge’ topic. With each passing day, algorithms are controlling more and more of our lives—whether we know it or not,” said Aranguren. “It creates a whole new [type] of conflict, where on one hand there is a desire for transparency and accountability—people want to know how a decision that affects them has been reached. On the other hand…there are IP rights that we’ve always wanted to protect.”

“Algorithms are everywhere,” said Selbst, citing examples of their use in policing, social services, education, and national intelligence and security. “Almost any decision you can imagine, might be made by an algorithm. This raises many tough questions about transparency and accountability. [Machines] can detect patterns that go beyond what humans can intuit on their own, but…how do you know you are being treated fairly, in a non-discriminatory way? Can it be challenged? It becomes harder to regulate and square with our intuitions about due process.”

Lipman said there needs to be balance between sensitivity to the kinds of issues raised by Selbst and [New York City’s] pressing operational needs. Last year, the city passed a bill to tackle algorithmic discrimination—the first measure of its kind nationally. The algorithmic accountability bill, expected to be signed by Mayor Bill de Blasio, will establish a task force to study how city agencies use algorithms to make decisions that affect New Yorkers’ lives, and whether any of the systems are discriminatory. The task force’s report will also explore how to make the decision-making processes more transparent and understandable to the public.

“The city uses algorithms in a fairly comprehensive way, but it is spread out across agencies and it depends on the problem they are trying to solve,” said Lipman. “It’s problem specific, agency specific—and changing over time as the technology advances and as algorithmic transparency [gets] more attention.”

Under the leadership of Professor Christopher Beauchamp, an expert in the areas of intellectual property and legal history, the Trade Secrets Institute provides comprehensive, neutral reviews of key trade secret cases and legislative or regulatory initiatives throughout the United States. Through the work of its Fellows, TSI provides content via a unique website repository of supporting documents, briefs, motions, and timelines for current cases, as well as updates and original commentaries on pending legislation or regulatory initiatives concerning trade secrets. TSI was made possible by a generous grant from the Mai Foundation, and spearheaded by David Mitnick ’00, founder and president of DomainSkate, Adjunct Professor of Law Alexander Kaplan '00, partner at Proskauer Rose LLP, and the Honorable Claire Kelly ’93, Judge on the United States Court of International Trade and a member of the Board of Trustees.

Watch the symposium here.