Trade Secrets
I. Definition
a. Information that:
i. Derives actual or potential economic value from the fact that it is not known or readily ascertainable by others AND
ii. Is subject to reasonable efforts to maintain its secrecy.
II. Factors in Determining Trade Secret Status
a. How widely the information is known outside the claimant’s business
b. Who within the claimants company knows the information
c. Whether the claimant has taken reasonable measures to ensure that the information remains secret
d. How difficult it would be for others to properly acquire or duplicate the information
e. Whether the information gives the claimant a commercial, competitive advantage over others who do not know it
f. How much effort or money the claimant expended in developing or acquiring in the information
III. Trade Secret Misappropriation
a. Disclosure or use of a trade secret in a breach of confidence
b. Disclosure or use of a trade secret learned from a 3rd party with notice
c. Disclosure or use of a trade secret learned by mistake
d. Continued disclosure or use of a trade secret after receipt of notice
e. Disclosure or use of a trade secret acquired through improper means
f. Acquisition, disclosure, or use of a trade secret with notice that the provider acquired it through improper means
g. The effect of D’s modification of P’s trade secret
i. Does not relieve D of liability if P can demonstrate that the information D used or disclosed was “substantially derived” from disclosing the trade secret
IV. Use and Disclosure by Employees and Former Employees
a. No Express Agreement
i. Employees owe a duty of confidentiality to their employer
1. Prohibits employee from using or disclosing the trade secrets that the employer discloses to him within the scope of his employment
ii. If the employee was specially hired to create information of the type involved for the employer, and the employer has placed time and resources at the employee’s disposal for that purpose, then an implied agreement will be found between the parties that any resulting trade secrets developed by the employee will belong to the employer.
iii. When the trade secret belongs to the employee
1. Employee was not hired to create information of the type involved, but still creates a trade secret during the course of his employment
a. If the employee uses the employer’s work time, facilities, or supplies to develop the secret, the employer will have a “shop right” in it
i. A non-exclusive license to use the employee’s trade secret
b. Express Agreement
i. Usually include non-compete clause
ii. Generally, courts will only enforce these clauses if the employer demonstrates that the employee has the employer’s trade secrets or other confidential information
iii. Even then, courts hesitate to enforce the clauses UNLESS
1. Its reasonably necessary to protect to employer
2. The agreement is reasonable as to the time and geographical area in which the employee is restricted from competing
3. The restrictions are not harmful to the general public
4. The restrictions are not unreasonably burdensome to the employee
c. Doctrine of Inevitable Disclosure
Courts will sometimes enjoin a former employee from taking a new position if:
i. The former employee knows P’s trade secret
ii. The former employee’s new job duties are similar or related to those of his former position, and it would be difficult for him NOT to rely on or use P’s trade secret in the new position AND
iii. There is evidence that the former employee or his new employer cannot be relied on to avoid using the trade secrets.
V. Remedies for Misappropriation
a. Injunctions
i. Limited to the duration of secrecy
b. Damages
i. Measured by:
1. Lost profits
2. A reasonable royalty for D’s use of the secret
3. Amount of profits D made as a result of misappropriation
c. Criminal Prosecution
i. Economic Espionage Act of 1996
1. Federal crime in many misappropriation situations
Patents
I. Utility Patents
a. Nature and Term
i. Exclusive rights to the invention
ii. Filed before 6/8/95 – 17 years
iii. Filed after 6/8/95 – 20 years beginning when the application was filed
b. Limitations on Patents
i. Only available for non-obvious, novel and useful and fully disclosed inventions
ii. If the PTO grants a patent à Legal presumption that the patent its valid (meets the above criteria)
iii. All appeals in patent cases go to the Court of Appeals for the Federal Circuit
II. Statutory Subject Matter of Utility Patents
a. Naturally Occurring v. Man-made Things
i. Patents can only be granted for “man-made” things
ii. A patent may be granted for living matter that has been altered by the applicant to have characteristics it would not naturally have
b. Laws of Nature and Abstract Ideas
i. Laws of nature and abstract ideas themselves cannot be the subject of a patent
1. Computer programs themselves cannot be patented
2. A process or apparatus that incorporates a computer program as a step or element CAN be patentable
a. As long as the claimed program is applied to produce a useful, concrete, tangible result AND doesn’t preempt other uses of the mathematical principle.
c. Business Methods
i. Business methods are patentable subject matter
ii. P.35 Larry
d. Medical Procedures
i. Medical procedures are patentable, but remedies are limited
III. Novelty Standard
Ensures that the 1st to make an invention gets the patent. §§102(a), (e), (g) of the Patent Act
a. §102(a)
i. Patent must be denied if:
The applicant’s invention was know by others in the US before the applicant “invented”
The applicant’s invention was used by others in the US before the applicant “invented”
The applicant’s invention was described in a printed publication in the US or a foreign country before t
ant abandoned his invention
ii. Focus is on whether he abandoned his right to a patent
1. Express or implied through conduct that indicates an invent to forgo a patent
c. §102(d)
i. Prohibits a patent if
1. The applicant filed a patent application in a foreign country more than 12 months before he filed his US application AND
2. The foreign patent was granted before the US filing date
d. §102(f)
i. Requires that the applicant for the patent be the inventor
1. The person who conceived of the specific invention claimed
V. Non-obviousness Standard (Patent Act §103)
An invention is not patentable if, at the time it was made, it would have been obvious to a person having ordinary skill in the art
a. Courts must determine
i. Scope and content of the prior art
ii. Differences between the pertinent prior art and the invention
iii. Ordinary level of skill in the art
b. The prior art
i. Person with ordinary skill in the art is presumed to have knowledge of all the relevant prior art existing when the invention was made
ii. Prior art is pertinent if it’s in the same field as the invention, regardless of the problem to be solved, or if its reasonably related to the particular problem with which the inventor was concerned
iii. Novelty under §102 can be defeated by 1 prior reference that includes all of the elements of the invention in the same arrangement; obviousness can be demonstrated by combining 2 or more prior art references
c. Secondary considerations (Courts will also consider: )
i. Commercial success of the invention
ii. Length of time that the need for the invention had been felt before the invention was made
iii. Level of acquiescence of others to the patent
iv. Movement of persons skilled in the art in a different direction from that taken by the inventor
v. The existence of skepticism on the part of the experts regarding the approach taken by the inventor
vi. The fact that the defendant copied the invention, rather than existing alternatives
vii. These factors may provide circumstantial evidence of obviousness, but a nexus must be demonstrated b/w the objective factor and the issue of obviousness
