Intellectual Property Outline

McDermott – Intellectual Property- Fall 2013
TRADE SECRET PROTECTION
·         2 Things Needed for Trade Secret Claim
                                          1.      Information that is protectable
                                          2.      Misappropriation
·         Elements of Claim
o   1. A Trade Secret
§  A trade secret is anything a company finds useful that is not common knowledge.
o   2. That the Corp took reasonable steps to protect AND
§  The corporation must use some degree of diligence to keep the things secret.  This is an additional substantive requirement on top of secrecy, but the two inform each other – secrets tend to be something you protect AND you tend to protect secrets. – Courts are mainly concerned that you took affirmative steps to prevent the “secret” from being disclosed.  You can’t just sit back and hope it doesn’t become public.  ALSO, you cannot MAKE something secret merely by taking security measures
ú  It also is possible to kill your secret by disclosing it in certain ways (including filing a patent).
o   3. Trade Secret was taken through inappropriate means (Misappropriation)
§  Since there is ONLY liability where a competitor takes the secret through inappropriate means, a competitor can get the idea through good means.
§  There are two primary methods of misappropriation:
ú  (1) taking the secret through improper means; AND
§  (2) breaching a confidential relationship by disclosing the secret.
·          1. Trade Secret Defined
o   Any info used in one’s business that gives its owner an opportunity to obtain an advantage over competitors who do not know or use it so long as the info was in fact a secret. 
§  It must be a secret.
§  Matters of general knowledge in an industry cannot be appropriated by one as is secret.
§  One’s subjective belief of a secret’s existence suggests that the secret exists.
§  It has to be something that they are getting some economic benefit from where their competitors don’t know about the secret.
o   Questions to ask
§  What is the trade secret?
§  Is it a secret?
§  How do you know it or how widely known is it?
§  How did you benefit from it?
ú  Cost
§  What measures have you taken to protect the secret?
ú  If they gave it to people, you want to know why they gave it to people?
§  Was there an agreement as to the confidentiality of the secret for those who have access to it?
·         2. Reasonable Steps to Protect Secrecy
o   1. Level of protection must be reasonable in relation to value of information protected.
§  Generally must include certain efforts to prevent theft or use of the idea by former employees.
o   2. Disclosure
§  Public disclosure of a trade secret destroys the “secret,” and therefore ends protection forever. – As long as a trade secret remains secret, it is protectable.
ú  Trade secrets do not last for a specific term of years but continue indefinitely until the occurrence of a particular event – the public disclosure of the secret.
§  Disclosure can occur in a number of ways:
ú  Publishing, By selling a product that embodies the secret, public disclosure, Inadvertent disclosure (leave on train), 3rd party publishes the secret, posting on internet makes it generally known.
·         3. Misappropriation of Trade Secrets
o   Acquisition or use of a trade is illegal only in two basic situations:
§  1. Where it is done through improper means
§  2. Where it involves a breach of confidence
o   Two Step Process
§  1. Reasonable precautions to ensure secrecy
§  2. Is the trade secret acquired by improper means
o   Improper Means
§  To obtain knowledge of a process without spending the time and money to discover it independently is improper unless the holder voluntarily discloses it or fails to take reasonable precautions to ensure its secrecy.
ú  One may use his competitor’s secret process if he discovers the process by reverse engineering applied to the finished product.
ú  One may use a competitor’s process if he discovers it by his own independent research, but one may not avoid these labors by taking the process from the discoverer without his permission at a time when he is taking reasonable precautions to maintain its secrecy.
o   Confidential Relationships
§  Confidential relationships can be either expressed or implied. In the absence of an express contract (which can either protect secrets or allow them) – look to whether the surrounding circumstances indicated that the defendant knew or reasonably should have known about the limited purpose of sharing the secret.
·         Proper Means of Disclosure
o   Reverse Engineering
§  Discovery by reverse engineering, that is by starting with the known product and working backward to find the method by which it was developed. The acquisition of the known product must, of course, also be by a fair and honest means, such as purchase of the item on the open market, for reverse engineering to be lawful.
ú  Reverse Engineering a product to determine its design specifications is therefore permissible so long as the means used to get the information necessary to reverse eng