Digital Transformation Media Planning and Buying

Yahoo lawsuit alleges employee stole trade secrets upon receiving Trade Desk job offer

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By Kendra Clark | Senior Reporter

May 19, 2022 | 7 min read

A civil lawsuit alleges that a former Yahoo employee stole valuable intellectual property when he downloaded approximately 570,000 pages of proprietary source code, ad placement algorithms, internal strategy documents and more upon securing a job offer from The Trade Desk, a direct competitor of Yahoo’s advertising technology arm.

A civil suit indicates that Yahoo Ad Tech, together with Oath Holdings – a financial subsidiary of Yahoo Inc – are suing Qian Sang, who previously served as senior research scientist at the company, for $5m plus punitive damages. The suit was filed in a Fairfax, Virginia circuit court on April 29.

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Yahoo is suing a former employee for stealing about 570,000 pages of internal documents and intellectual property

Yahoo claims that Sang stole proprietary information about Yahoo AdLearn, the technological backbone of the organization’s demand-side platform (DSP) – a digital marketplace enabling real-time ad buying.

“In the minutes after receiving a job offer from a direct industry competitor, Sang downloaded on to personal devices more than 500,000 files including data consisting of source code, backend advertising architecture, algorithms that control ad placement and associated earnings tracking on the Yahoo Demand Side Platform ... and strategy behind Yahoo’s backend advertising technology,” allege the plaintiffs in the filing. “With Yahoo’s sophisticated trade secrets in hand, Sang then joined The Trade Desk, Inc ... a digital advertising platform and Yahoo competitor, as a staff data scientist.”

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AdLearn works by feeding real-time data inputs to machine learning (ML) algorithms, which process the information to intelligently place ads in real-time based on a customer’s pre-set factors. Yahoo claims that AdLearn stands out among competing technologies and is uniquely poised to deliver results for the advertisers that use it; the company asserts that “by constantly computing campaign-level bid adjustments,” the solution “maximizes a customer’s return on investment,” which in turn drives customer loyalty.

Per the filing, the technology was developed by Yahoo Ad Tech’s research and engineering employees. While the research team conducts data mining and develops the ML capabilities, the engineering team is principally tasked with developing the code to implement AdLearn’s algorithms.

At the time of his resignation in February, the suit says that Sang served as the most senior leader of one of four unique research teams responsible for developing elements of AdLearn. Specifically, he headed up the budget spend pacing control system – the system responsible for constantly adjusting bid pricing and frequency to meet a customer’s predefined parameters in the DSP. Yahoo alleges that, in his role, Sang “regularly” worked with colleagues on the engineering side, handling source code and determining how to implement it.

Sang, who holds a PhD in electrical and computer engineering from the University of Virginia, was employed with the company for nearly six years. Initially, he joined AOL in 2015 as a senior research scientist, just a month before AOL was acquired by Verizon Communications and subsequently renamed Oath Inc. Since then, through a number of mergers and acquisitions, Verizon Communications and Oath Inc have become Yahoo. Sang was officially employed by Oath Holding Companies from 2018 until his recent resignation.

In February, The Trade Desk, a leading advertising technology player currently valued at $24.7bn, officially extended an employment offer to Sang, which included a salary raise, six-figure cash signing bonus and close to $1m in stock units that would vest over time, per the suit. Yahoo claims that about 45 minutes after receiving the letter on February 11 – still four days before he would submit his resignation to Yahoo – Sang downloaded approximately 570,000 files from his company laptop to two personal external storage devices without authorization from his employer.

Sang allegedly had possession of the devices until Yahoo issued a cease-and-desist order a few weeks later, upon which he returned them to the company for forensic analysis. The analysis uncovered the trove of downloaded information, which included what the filing describes as “the substantial majority (if not exclusive content) of the source code reflecting the budget spend pacing control algorithms” as well as other AdLearn code and files entitled “bidding research,” which were scraped from Yahoo Github repositories. The company also alleges that Sang stole sensitive and confidential information including Yahoo’s competitive analysis of The Trade Desk as well as specific strategy plans.

“Sang’s misappropriation divested Yahoo of the exclusive dominion and control of its trade secrets,” the filing says. “The files Sang transferred constitute a serious misappropriation of intellectual property that would provide any DSP competitor with a competitive advantage in the online advertising space,” it goes on to say, suggesting that Yahoo believes Sang intended to divulge the company’s secrets to his new employer.

The suit explains that Yahoo’s forensic analysis also found that Sang communicated – though to whom it’s unclear – via WeChat as early as September 2020 about using a Western Digital cloud system for file back-up purposes. According to his LinkedIn profile, Sang worked for Western Digital, a San Jose, California-based hardware and software firm, before he was originally employed by AOL in 2018.

Yahoo has brought three separate charges against Sang: violation of the Virginia Uniform Trade Secrets Act; breach of his fiduciary duty; and conversion, or theft, of the company’s intellectual property.

Yahoo is being represented by McGuireWoods, a storied law firm that has represented parties ranging from Boeing – in the federal investigation surrounding issues related to its 737 MAX aircraft – to the parents of Otto Warmbier, the US college student who in 2017 died following his imprisonment in North Korea.

Yahoo and its representatives at McGuireWoods declined requests for comment. The Trade Desk and Sang have not responded to requests for comment.

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