Former Goldman Sachs Group Inc. computer programmer Sergey Aleynikov was found guilty of two counts of stealing the firm’s trade secrets by appropriating part of a high-frequency computer source code.
Aleynikov went on trial Nov. 29 in federal court in New York on charges of violating the Economic Espionage Act and the Interstate Transportation of Stolen Property Act. He faces as long as 10 years in prison on the espionage charge and five years for the interstate transportation charge.
U.S. District Court judge Denise Cote set sentencing of Aleynikov for March 18. He and his lawyer both declined comment. He will be under home confinement and electronic monitoring, Judge Cote ruled.
Aleynikov, who is a naturalized U.S. citizen, holds dual U.S.-Russian citizenship, his lawyer Kevin Marino said in court.
“I would like the parties to explain whether or not there are travel restrictions that can be enforced through a watch list,” Cote told prosecutors and Marino. “I would like the government to confirm for me by 5 o’clock today whether Mr. Aleynikov’s name can be added to watch lists so he can’t board a plane.”
Cote directed that Aleynikov limit his travel to the Southern and Eastern Districts of New York. Jurors left the courthouse after the verdict and all declined to comment.
Cote also ordered that Aleynikov surrender all travel documents and directed that three financially responsible people come back and sign his bond. He left court accompanied by family members and declined comment.
Assistant Manhattan U.S. Attorney Rebecca Rohr, in her closing statement on Dec. 9, told jurors that Aleynikov was a “thief.” On his last day of work at New York-based Goldman Sachs in June 2009, Aleynikov uploaded hundreds of thousands of lines of source code from the firm’s trading system, she said.
He circumvented Goldman Sachs’s security system, sent the code to an outside server in Germany, and later compressed and encrypted the code, Rohr said. Aleynikov took the code with him to a meeting with his new employers in Chicago in July 2009, she said.
After taking Goldman’s software, Aleynikov executed a program to cover his tracks, prosecutors said. If he thought the codes were open source and should be publicly available, “why did he then encrypt it?,” Rohr asked jurors. “So that no one, like him, could access the code,” she said.
While Aleynikov may have broken a confidentiality rule of Goldman Sachs, he didn’t commit a crime, said his attorney, Kevin Marino.
“He violated the policy, OK, but that’s not a crime,” Marino told jurors. “A crime is when you act to harm the victim and benefit yourself.”
Aleynikov had access to all of Goldman Sachs’s high- frequency trading software and could have easily taken a flash memory drive and copied the entire trading platform, yet he didn’t, Marino said. Aleynikov took open-source code he had written at Goldman Sachs and nothing that was proprietary, he said.
Marino called the government’s case “a silly prosecution” as he waved a notebook at prosecutors at the conclusion of his closing arguments.
Aleynikov, who started at Goldman Sachs in May 2007, left his $400,000-a-year job to work for Chicago-based Teza Technologies LLC, which promised him $1.2 million including salary, bonus and profit-sharing.
During the trial, prosecutors presented evidence that, on the night of June 4, 2009, before his last day at Goldman Sachs, Aleynikov transferred hundreds of thousands of lines of computer source code related to the firm’s high-frequency trading business. At about 5:20 p.m. the next day, Aleynikov sent parts of the trading code to a code-storage website in Europe that wasn’t blocked by the firm, witnesses said.
Marino, saying Goldman Sachs “wasn’t the New York Yankees of high-frequency trading,” told jurors that prosecutors exaggerated the value of the firm’s high-frequency trading platform.
“Sergey knew what Goldman Sachs owned and that lots of it was open source code,” Marino said.
“If it’s open source code, it’s not Goldman’s just because it happened at Goldman,” he said.
The case is U.S. v. Aleynikov, 1:10-cr-00096, U.S. District Court, Southern District of New York (Manhattan).
Gufic Wins Indian Trademark Challenge Filed by Estee Lauder
Gufic Biosciences Ltd., a Mumbai-based pharmaceutical and personal-hygiene products company, bested Estee Lauder’s Clinique unit in a trademark battle in India, the Business Standard reported.
In 2008 Estee Lauder had asked the Delhi High Court to bar Gifuc from selling its Skinclinique Stretch Nil, claiming it infringed the marks for its “Clinique” brand, according to the newspaper.
After several rulings by the Delhi High Court, India’s Supreme Court found that the Gufic product, which is used to treat stretch marks associated with pregnancy, was substantially different from the Estee Lauder product, according to the Standard.
The Gufic product has been sold since 1997 and there is “ a huge price difference between it and the Clinique products, the newspaper reported.
Rolex Sues Maker of Vans for Handicapped for Infringement
Rolex Group’s Rolex Watch USA unit sued a Minnesota company that customizes vans for wheelchair use for trademark infringement.
According to the complaint filed Dec. 2 in federal court in Minnesota, Associated Partnership Ltd. of Savage, Minnesota, is accused of infringing the marks. Associated does business as Rollx Vans and through its www.rollxvans.com website.
The Switzerland-based watch company claims the Rollx mark is a “confusingly similar, sound-alike mark” that is likely to bring to mind the Rolex mark, create consumer confusion and a false association between the Swiss company and the van company.
According to the Rollx website, the company has been in business for almost 40 years. The family-owned company converts new and used imported and domestic vans for wheelchair users, according to a video posted on Google Inc.’s YouTube video- sharing site.
Rolex claims the van company’s mark blurs the distinctiveness of the watch company’s trademarks. It objects to the van company’s attempts to register Rollx as a trademark, and claims it’s suffered “irreparable harm and damages” as a result of Rollx’s actions.
The watch company asked the court to bar the van company’s use of Rollx as a mark, and for awards of money damages, attorney fees and litigation costs.
Rollx didn’t respond immediately to an e-mailed request for comment.
Rolex is represented by Ruth Rivard and Kevin D. Conneely of Leonard, Street & Deinard of Minneapolis, and Brian W. Brokate, Beth M. Frenchman and Jeff Dupler of New York’s Gibney, Anthony & Flaherty LLP.
The case is Rolex Watch U.S.A. Inc. v. Associated Partnership Ltd.,0:10-cv-04787-ADM-JJK, U.S. District Court, District of Minnesota.
Shearson, Meister Brau, Handi-Wrap Marks Bought at Auction
In an auction organized by New York-based Racebook Capital Advisors LLC, some famous trademarks changed hands for prices from $2,000 to $4,500, Advertising Age reported.
Among the trademarks that changed hands in the Dec. 8 auction in Manhattan are Shearson, which went for $45,000; Meister Brau, for $32,500, and Handi-Wrap, for which a purchaser paid $30,000, according to Advertising Age.
John J. Cuticelli Jr., Racebook’s chief executive officer, told Advertising Age each trademark was sold free and clear and “all the buyers have to do is back it with a product.”
Some of the brands that found no takers were Kitten Soft, Kool Shake, Nudit, Hot Pants, Relaxacizor and Pharmhouse, Advertising Age reported.
Amarillo Told It Can’t Use ‘Gold Sox’ for Baseball Team Name
A plan to revive the Gold Sox name for an Amarillo, Texas- based minor league baseball team has run into opposition, the Amarillo Globe-News reported.
The Gold Sox name was registered as a trademark by a Marysville, California-based collegiate summer-league team that objected to its use by the Texas team, according to the newspaper.
The owners of the California team told the newspaper they’ve not interested in money, so won’t license the name to the Texas team.
UT Says Car Wash Structure Infringes School Tower Trademark
The operator of a car wash in Austin, Texas, has run afoul of the University of Texas, the Statesman newspaper reported.
The school objects to the structure atop the building that’s a copy of the University of Texas tower, according to the newspaper.
Craig Westemeier, the university’s assistant athletic director for trademark licensing told the newspaper the school is working with the carwash owner to make some design changes so the structure won’t look so much like the campus tower.
The owner of the car has said all his promotional literature contains the disclaimer that the business isn’t affiliated with the school, according to the Statesman.
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Phil Spector Sued for Royalties by Darlene Love, Ronettes
Pop singer Darlene Love and the vocal group the Ronettes have again sued producer Phil Spector, who’s in prison in California for murder, for unpaid royalties on songs recorded in the 1960s.
The plaintiffs, who include Spector’s former wife Ronnie Greenfield, charge that Spector has violated a 2009 court- ordered settlement agreement that required him to pay royalties twice a year, according to a complaint filed Dec. 9 in the Supreme Court of the State of New York.
“Defendants have generated millions of dollars through the sale of plaintiffs’ musical recordings, yet have paid only a fraction of royalties,” lawyers for the singers said in the complaint.
Spector is serving a 19-year sentence on a second-degree murder conviction in the California Substance Abuse Treatment Facility and State Prison in Corcoran, according to the complaint.
Love sang with the groups the Blossoms, the Crystals and Bob B. Soxx and the Blue Jeans. The Crystals’ hits included “Da Doo Ron Ron.”
Other plaintiffs include members of the Ronettes; the estate of Estelle Bennett, Ronnie’s sister; and their cousin Nedra Talley Ross.
The Ronettes signed with Spector’s Phillies Records, also a defendant, in 1963 and recorded hits including “Be My Baby.” The case is Darlene Love v. Phil Spector, 652227-2010, Supreme Court of the State of New York, County of New York. An earlier case was Ronnie Greenfield v. Phillies Records, 000763-1988, Supreme Court of the State of New York.
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Eastman Kodak Sues Shutterfly Over Photo Patents
Eastman Kodak Co. accused Shutterfly Inc., the Internet- based photo storage and printing company, of infringing five patents for image processing.
Kodak is seeking a jury trial and unspecified damages in the lawsuit, filed Dec. 10 in federal court in Wilmington, Delaware.
Shutterfly has misappropriated Kodak’s technology by “offering to sell image products” including prints and photo books “through its website, shutterfly.com,” lawyers for Rochester, New York-based Kodak contend in court papers.
Kodak, which was founded in 1880 and popularized film photography, is trying to make the transition to digital imaging in part by using its patents to combat competition -- including camera phones. It claims that Shutterfly infringed five patents, issued between 2000 and 2007.
Gretchen Sloan, a Shutterfly spokeswoman, didn’t immediately return phone and e-mail messages seeking comment on the lawsuit.
The case is Eastman Kodak v. Shutterfly, 10CV-1079, U.S. District Court, District of Delaware (Wilmington).
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