Overview of Trade Secrets and Legal Framework in the United States
Understanding trade secrets, their definition, protection, and examples is crucial for businesses operating in the United States. This content provides insights into the laws, including the Uniform Trade Secrets Act and the Economic Espionage Act, governing trade secrets at both state and federal levels. It explains what constitutes a trade secret and the reasonable measures required to maintain secrecy. The discussion also touches on challenges related to customer lists and obscure information that can qualify as trade secrets.
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TRADE SECRET SEGMENT PROF. JANICKE 2018
SOURCES OF LAW 46 STATES HAVE: UNIFORM TRADE SECRETS ACT CIVIL ACTIONS TEXAS: 2013: adopted Uniform Trade Secrets Act Earlier: Caselaw Doctrines Based On 1st Rest. Of Torts (1939) ALSO HAS A CRIMINAL STATUTE TEX. PENAL CODE 32.05 2018 IP Survey Trade Secrets 2
FEDERAL LAW TOO: GOVERNMENT CIVIL ACTIONS AND CRIM. PROCEEDINGS ECONOMIC ESPIONAGE ACT (1997) PRIVATE CIVIL ACTIONS AVAILABLE UNDER PROTECT TRADE SECRETS ACT OF 2016 2018 IP Survey Trade Secrets 3
WHAT IS A TRADE SECRET (1) ANY COMPETITIVELY VALUABLE INFORMATION (2) THAT S NOT WIDELY KNOWN OR EASILY FOUND OUT (3) THAT THE POSSESSOR HAS TAKEN REASONABLE STEPS TO KEEP FROM DISCLOSURE 2018 IP Survey Trade Secrets 4
EXAMPLES MFG. METHODS MFG. MATERIALS BUSINESS PLANS PRODUCT DESIGN, BEFORE PUBLIC ACCESS 2018 IP Survey Trade Secrets 5
USE, OR EVEN PLANNED USE, IN POSSESSOR S BUSINESS IS NOT REQUIRED SECRECY OF INDIVIDUAL COMPONENTS OR PROCESS STEPS IS NOT REQUIRED 2018 IP Survey Trade Secrets 6
THE PROBLEM OF CUSTOMER LISTS HAS CAUSED A CASE LAW QUAGMIRE OFTEN ARE EASILY LEARNED BY RIGHTFUL MEANS; HENCE NOT A TRADE SECRET BUT: CAN BECOME A SECRET BY ADDING PURCHASE HISTORY, PLANS, CONTACTS, ETC. 2018 IP Survey Trade Secrets 7
HARD-TO-GET REQUIREMENT LOOSELY CONSTRUED TO HELP TRADE SECRET OWNER EXAMPLE: OBSCURE PUBLICATION OR UNKOWN SUPPLIER S NAME: OK FOR TRADE SECRET 2018 IP Survey Trade Secrets 8
REASONABLE-MEASURES-FOR- SECRECY REQUIREMENT TYPICAL: EMPLOYEE AGREEMENTS MARKING DOCUMENTS AND DRAWINGS CONFIDENTIAL CIRCULATING WRITTEN POLICY POSTING WRITTEN POLICY (cont d) 2018 IP Survey Trade Secrets 9
TYPICAL MEASURES (CONTD): LIMITING TYPES OF EMPLOYEES WHO HAVE ACCESS LIMITING ACCESS TO PROJECT MEMBERS USING EXIT INTERVIEWS 2018 IP Survey Trade Secrets 10
PROTECTIVE MEASURES CAN BE BY IMPLICATION RATHER THAN EXPRESS, BUT RISKY TO LITIGATE HOPING FOR A SYMPATHETIC JUDGE OR JURY 2018 IP Survey Trade Secrets 11
SECRETS GIVEN TO EMPLOYEE IF OWNED BY THE EMPLOYER, THESE REMAIN OWNED BY EMPLOYER, UNTIL PUBLISHED BY EMPLOYER 2018 IP Survey Trade Secrets 12
CASES LAMB-WESTON LEARNING CURVE 2018 IP Survey Trade Secrets 13
2018 IP Survey Trade Secrets 14
2018 IP Survey Trade Secrets 15
NEW SECRETS DEVELOPED ON-THE-JOB CONTRACT PROVISION , IF THERE IS ONE, WILL CONTROL OWNERSHIP IF NO CONTRACT PROVISION, RESULT GOES BY THE EQUITIES WILD CARD 2018 IP Survey Trade Secrets 16
GENERAL SKILLS OF A CALLING ARE ALWAYS OK FOR EMPLOYEE TO TAKE WITH HIM AND USE DEFINING THESE IS DIFFICULT 2018 IP Survey Trade Secrets 17
WHAT IS MISAPPROPRIATION USING UNDER WRONGFUL CONDITIONS: OBTAIN RIGHTFULLY, BUT USE IN BREACH OF AGREEMENT [MANY CASES] OBTAIN BY FRAUD OR INDUCING A BREACH OF CONFIDENCE [A FEW CASES] 2018 IP Survey Trade Secrets 18
THE KNOWLEDGE REQUIREMENT WHERE SECRET IS IMPARTED TO AN EMPLOYEE OR OTHER PERSON IN CONFIDENCE: MISAPPROPRIATION UNDER UTSA (INCLUDING TEXAS) REQUIRES RECIPIENT knew or had reason to know THE INFO WAS acquired under circumstances giving rise to a duty to maintain its secrecy or limit its use >>> 2018 IP Survey Trade Secrets 19
MOST DEFENDANTS SAY THEY DIDNT KNOW OF ANY DUTY BUT, HAD REASON TO KNOW IS GIVEN BROAD INTERPRETATION BY COURTS AND JURIES 2018 IP Survey Trade Secrets 20
WHAT IS NOT A MISAPPROPRIATION COPYING AN OPENLY AVAILABLE PRODUCT REVERSE ENGINEERING OF AN OPENLY AVAILABLE PRODUCT WHOLLY INDEPENDENT DESIGN ADOPTING THE DESIGN, AFTER DISCLOSURE UNDER CONTRACT OF NON- CONFIDENCE 2018 IP Survey Trade Secrets 21
NO OWNING INFO THE INFORMATION PER SE IS NOT PROTECTED ONLY THE IMPROPER OBTAINING OR IMPROPER USING IS BARRED A TORT 2018 IP Survey Trade Secrets 22
CASES MANGREN CROUCH 2018 IP Survey Trade Secrets 23
MOST CASES INVOLVE RIGHTFUL LEARNING, AND THEN MISAPPROPRIATING TYPICAL PATTERNS: EMPLOYEES LEARN, THEN JUMP JOINT VENTURE PARTNER LEARNS, THEN VENTURE TERMINATES POTENTIAL BUYER OF BUSINESS LEARNS, AND SALE FALLS THROUGH 2018 IP Survey Trade Secrets 24
TYPICAL PATTERNS (CONTD): HARDER TO DECIDE: SALES EXECUTIVE DRIVES THE DEVELOPMENT, THEN JUMPS HARDER TO DECIDE: VENDOR, AGENT, ADVISOR DEVELOPS THE SECRET THEN USES FOR OTHER CLIENTS 2018 IP Survey Trade Secrets 25
HARDEST CASES: FLY-OVERS ONE DECIDED CASE TRAILING SHOULD BE OK TRASH COLLECTING MAY BE OK ON THE TRADE SECRET FRONT; PERILOUS ON CRIMINAL FRONT; AND BAD PRESS 2018 IP Survey Trade Secrets 26
CASES CHICAGO LOCK SMITH v. DRAVO DUPONT v. CHRISTOPHER 2018 IP Survey Trade Secrets 27
REMEDIES INJUNCTION IS THE KEY REMEDY IF SECRET IS GONE BY THEN: PREVAILING U.S. VIEW (AND NEW TEXAS STATUTE VIEW): IF INFO HAS BEEN MADE PUBLIC BY OWNER, INJUNCTION SHOULD: BE LIMITED TO LEAD-TIME, NOT PERPETUAL TIME IT TOOK P IS A ROUGH RULE OF THUMB; SHOULD TAKE D AS LONG 2018 IP Survey Trade Secrets 28 28
WHERE SECRET HAS BECOME PUBLIC: EXAMPLE OF LEAD-TIME INJUNCTION: P SPENT 3 YEARS IN DEVELOPING THE INFO D NEEDED ONLY 1 YEAR, DUE TO MISAPPROP. D SHOULD BE ENJOINED FROM USE FOR 2 YEARS 2018 IP Survey Trade Secrets 29
NOTE: IF STOLEN SECRET IS STILL SECRET, INJUNCTION COULD BE PERPETUAL SO LONG AS PLAINTIFF MAINTAINS CONFIDENTIALITY 2018 IP Survey Trade Secrets 30
DAMAGES ARE AVAILABLE COMPENS. AND PUNITIVE [UTSA: UP TO TREBLING] CAN BE D s UNJUST ENRICHMENT PLUS P s LOSS OF BUSINESS CAN BE TREBLED IF WILLFUL OR MALICIOUS [TWICE THE ACTUAL DAMAGES, AS PUNITIVE COMPONENT] 2018 IP Survey Trade Secrets 31
TR. SEC. CASES OFTEN INVOLVE PRELIM. INJUNC. HEARING SELDOM GO TO TRIAL VERY HIGH SETTLEMENT RATE 2018 IP Survey Trade Secrets 32
INJUNCTION AGAINST WORKING FOR A PARTICULAR COMPETITOR CAN BE HANDLED PER NO-COMPETE CONTRACT IN MOST STATES, INCLUDING TEXAS TEX. BUS. & COMMERCE CODE 15.51 WHERE NO NO-COMPETE CONTRACT, THIS TYPE OF INJUNCTION IS COMMONLY SOUGHT TO PROTECT THE SECRET ARGUMENT: WORKING FOR THEM IN THIS MANNER WILL INHERENTLY DIVULGE COUNTER-ARGUMENT: NEED TO EARN A LIVING 2018 IP Survey Trade Secrets 33
COMMON JUDICIAL RELUCTANCE RE. NO-COMPETE INJUNCTION WHERE NO CONTRACT PROVISION JUDGES DO NOT WANT TO KILL JOBS JUDGES DO NOT WANT TO DEPRIVE FAMILIES OF LIVELIHOODS >>> 2018 IP Survey Trade Secrets 34
POSSIBLE SOLUTIONS: INJUNCTION REQUIRES KEEPING PERSON ON PAYROLL AND WORKING INJUNCTION REQUIRES PROVIDING MINIMUM CONSULTING FEES AND POSSIBLE WORK INJUNCTION LIMITED TO WORKING IN COMPETITOR DIVISION MOST LIKELY TO CAUSE BREACH 2018 IP Survey Trade Secrets 35
CASE WEED-EATER 2018 IP Survey Trade Secrets 36
SPECIAL PROBLEM: STATUTE OF LIMITATIONS ONE VIEW: MISAPPROPRIATION IS AN ONGOING TORT, NEW VIOLATION EVERY DAY HENCE, ONLY OLD MISUSES ARE CUT OFF; DAMAGES AND INJUNCTION ARE AVAILABLE FOR RECENT/FUTURE VIOLATIONS 2018 IP Survey Trade Secrets 37
SPECIAL PROBLEM: STATUTE OF LIMITATIONS ANOTHER VIEW: ORIGINAL MISAPPROPRIATION STARTS A SINGLE CLOCK; WHEN IT RUNS, ALL ACTION IS BARRED TEXAS SOLUTION: SINGLE WRONG, SINGLE RUNNING -- BUT FROM DISCOVERY DATE (KNEW OR SHOULD HAVE KNOWN) 2018 IP Survey Trade Secrets 38
CASE SCHALK 2018 IP Survey Trade Secrets 39
