20111ip survey – trade secrets trade secret segment prof. janicke 2011
TRANSCRIPT
2011 2IP Survey – Trade Secrets
SOURCES OF LAW
• 45 STATES: UNIFORM TRADE SECRETS ACT – CIVIL
• TEXAS: CASELAW DOCTRINES BASED ON 1st REST. OF TORTS (1939); ALSO CRIMINAL STATUTE TEX. PENAL CODE § 32.05
2011 3IP Survey – Trade Secrets
• FEDERAL:
– GOVERNMENT CIVIL ACTIONS AND CRIM. PROCEEDINGS – ECONOMIC ESPIONAGE ACT (1997)
– NO PRIVATE CIVIL ACTION
2011 4IP Survey – Trade Secrets
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
2011 6IP Survey – Trade Secrets
• USE, OR EVEN PLANNED USE, IN POSSESSOR’S BUSINESS IS NOT NEEDED
• SECRECY OF INDIVIDUAL COMPONENTS OR STEPS IS NOT NEEDED
2011 7IP Survey – Trade Secrets
THE PROBLEM OF CUSTOMER LISTS
• HAS CAUSED A CASE LAW QUAGMIRE
• OFTEN ARE EASILY LEARNED BY RIGHTFUL MEANS; HENCE NOT A “TRADE SECRET”
• CAN BECOME A SECRET BY ADDING PURCHASE HISTORY, PLANS, CONTACTS, ETC.
2011 8IP Survey – Trade Secrets
HARD-TO-GET REQUIREMENT
• LIBERALLY CONSTRUED TO HELP TRADE SECRET OWNER
• EXAMPLE: OBSCURE PUBLICATION OR SUPPLIER NAME
2011 9IP Survey – Trade Secrets
REASONABLE-MEASURES-FOR-SECRECY
REQUIREMENTTYPICAL:
• EMPLOYEE AGREEMENTS
• MARKING DOCUMENTS AND DRAWINGS “CONFIDENTIAL”
• CIRCULATING WRITTEN POLICY
• POSTING WRITTEN POLICY
2011 10IP Survey – Trade Secrets
TYPICAL MEASURES (CONT’D):
• LIMIT TYPES OF EMPLOYEES WHO HAVE ACCESS
• LIMIT ACCESS TO PROJECT MEMBERS
• EXIT INTERVIEWS
2011 11IP Survey – Trade Secrets
• PROTECTIVE MEASURES CAN BE BY IMPLICATION RATHER THAN EXPRESS, BUT RISKY TO LITIGATE
2011 12IP Survey – Trade Secrets
OWNERSHIP OF ON-THE-JOB DEVELOPMENTS
• CONTRACT PROVISION CONTROLS, IF THERE IS ONE
• IF THERE IS NO CONTRACT PROVISION, RESULT GOES BY THE EQUITIES
• GENERAL SKILLS OF A CALLING ARE ALWAYS OK FOR EMPLOYEE TO TAKE WITH HIM– DEFINING THESE IS DIFFICULT
2011 13IP Survey – Trade Secrets
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]
2011 14IP Survey – Trade Secrets
WHAT IS NOT
• 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
2011 15IP Survey – Trade Secrets
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
2011 16IP Survey – Trade Secrets
TYPICAL PATTERNS (CONT’D):
• HARDER TO DECIDE: EXECUTIVE DRIVES THE DEVELOPMENT, THEN JUMPS
• HARDER TO DECIDE: VENDOR, AGENT, ADVISOR CONTRIBUTES THE SECRET – THEN USES FOR OTHER CLIENTS
2011 17IP Survey – Trade Secrets
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
2011 18IP Survey – Trade Secrets 18
REMEDIES• INJUNCTION
• PREVAILING U.S. VIEW: IF INFO HAS BEEN MADE PUBLIC BY OWNER, INJUNCTION SHOULD: – BE LIMITED TO LEAD-TIME, NOT
PERPETUAL– TIME IT TOOK P minus TIME IT TOOK D IS
A ROUGH RULE OF THUMB
2011 19IP Survey – Trade Secrets
TEXAS VIEW WHERE OWNER PUBLISHES THE SECRET
• HYDE v. HUFFINES TEX. S. CT. 1958 IS AMBIGUOUS
• WHERE OWNER OF SECRET PUBLISHES:– MODERN INTERPRETATION OF HYDE (PER
RESTATEMENT OF UNFAIR COMPETITION) IS THAT LEAD-TIME INJUNCTION IS THE TEXAS RULE AS WELL AS THE NATIONAL RULE
– HYDE WAS ENJOINED LONGER ONLY BECAUSE HE SUBMITTED NO EVIDENCE OF LEAD-TIME
– PLAINTIFFS STILL ARGUE FOR A BROADER READING
2011 20IP Survey – Trade Secrets
WHERE WRONGDOER PUBLISHES THE SECRET
• CASES SEEM TO INDICATE LONGER-TERM INJUNCTION IS POSSIBLE, MAYBE EVEN PERPETUAL
• SITUATION IS UNCLEAR
2011 21IP Survey – Trade Secrets
DAMAGES
• ARE AVAILABLE– COMPENS. AND PUNITIVE [UTSA: TREBLING]
• CAN BE UNJUST ENRICHMENT OR P’S LOSS OF BUSINESS
• HIGH SETTLEMENT RATE• TR. SEC. CASES SOMETIMES INVOLVE
PRELIM. INJUNC. HEARING – SELDOM GO TO TRIAL
2011 22IP Survey – Trade Secrets
INJUNCTION AGAINST WORKING FOR A PARTICULAR COMPETITOR
• CAN BE HANDLED PER CONTRACT
• WHERE NO CONTRACT, THIS TYPE OF INJUNCTION IS COMMONLY SOUGHT TO PROTECT THE SECRET
– ARGUMENT: WORKING FOR “THEM” WILL INHERENTLY DIVULGE
– COUNTER-ARGUMENT: NEED TO EARN A LIVING
2011 23IP Survey – Trade Secrets
NON-COMPETE INJUNCTION WHERE NO CONTRACT PROVISION
• POSSIBLE SOLUTIONS:– INJUNCTION REQUIRES KEEPING
PERSON ON PAYROLL AND WORKING– INJUNCTION REQUIRES PROVIDING
MINIMUM CONSULTING FEES AND POSSIBLE WORK
– INJUNCTION LIMITED TO COMPETITOR DIVISION MOST LIKELY TO CAUSE BREACH
2011 24IP Survey – Trade Secrets
SPECIAL PROBLEM: CONTINUING TO ENJOIN WRONGDOER WHEN
OWNER HAS PUBLISHED
• COMMONLY UNDERSTOOD: NON-WRONGDOERS ARE RELIEVED OF COVENANTS WHEN OWNER PUBLISHES
• WHEN A WRONGDOER MOVES TO DISSOLVE: – SHOULD PREVIOUS WRONGDOER NOW BE
THE ONLY ONE PRECLUDED FROM USE?
2011 25IP Survey – Trade Secrets
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