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Intellectual Property
Temple University School of Law
Mandel, Gregory N.

Intellectual Property Outline

IP Rights
Property rights an entity can obtain for a creation of the mind
Policy/Reasons for IP Rights
Natural Rights Perspective
Property is created by labor and enclosing it from the common

The Personhood Perspective
Property rights exist as a way to protect self expression
Part of being an individual means having control over external resources
Utilitarian/Economic Incentive Perspective
The dominant paradigm
Protection for new and improved works that are valuable to society
Economic incentive benefit
Encourage inventors to invest in the process of creation and to commercialize an idea
Most people think IP rights exist to prevent plagiarism but this is not true
Secrecy is expensive
Better to invest in research rather than protection
Encourage market competition
Trade Secrets
Primarily state law, most common area of IP, least litigated
Not itself enforceable in any jurisdiction but is adopted by 46 states
Improper means
Theft, bribery, misrepresentation, breach or inducement of a breach of a duty to maintain secrecy, or espionage through electronic or other means
Misappropriation means
Acquisition by a person who knows or has reason to know that the trade secret was acquired by improper means or
Disclosure or use of a trade secret of another without express or implied consent
Person means
Natural person, organization, or business
Trade Secret
Means information, including a formula, pattern, compilation, program, device, method, technique, or process, that derives economic value from not being generally known to and not being readily ascertainable and
Is the subject of efforts that are reasonable under the circumstances to maintain secrecy
The Elements of TS Misappropriation (P has burden of Proof)
Information is trade secret information as defined by UTSA
P must have taken reasonable precautions to maintain secrecy of the information (Absolute secrecy not required)
D must have wrongfully acquired the TS info (i.e. improper means described in the USTA)
Proper Means of Acquisition (Defenses)
Discovery by independent invention
Discovery by reverse engineering (start with known product and work backward to find method of development)
Acquisition of a known product must be by fair and honest means for reverse engineering to be lawful
License to use
Observation of the item in public use
Obtaining trade secret from published literature
Some Federal Law to Consider
18 USC 1831 (Economic Espionage)
1832 (Theft of Trade Secrets)
1833 (Exceptions to prohibitions)
1839 (Definitions)
Metalurgical v. Fourtek (Element 1: TS Info)
M consider zinc recovery process for carbide reclamation
Contract with T authorizing them to make two zinc recovery furnaces
M modified it because dissatisfied and had T make the second one based on these modifications
After T went bankrupt, B left T and formed company F who agreed to build the furnace for S
M sued B for misappropriating trade secret
Sent notices to B that disclosures were confidential
M put in considerable time, money and effort to modify furnaces
M gave this information to other companies before B allegedly misappropriated
District Court held no TS info b/c it was a modification of a process and the info was generally known
Matters of general knowledge cannot be appropriated by one as a secret
Secrecy need not be absolute but substantial element must exist so that except by use of improper means, there would be difficulty in acquiring the info
TS may consist of
any formula, pattern, device, or compilation of information which is used in one’s business, and which gives him an opportunity to obtain advantage over competitors who do not know or use it
M’s process was a combination of modifications and unknown to the public
Firms would not spend money unless they believed the info was not generally known (evidence of TS)
M’s disclosure to other companies was not a public announcement but rather to further their economic interests (i.e. no need for absolute secrecy)
M’s process gave them a competitive advantage (i.e. value)
TS can include secret combinations of items themselves publicly known
Must be some level of creativity
Restatement of Torts Factors
Extent to which info is known outside claimant’s business
Extent to which it is known by employees involved in business
Extent of measures taken by the claimant to guard secrecy
Value of info to business and its competitors
Amount of effort or money expended in developing the info
Ease or difficul

es less in width
There is an implied confidential relationship shown by conduct of the parties
P disclosed this info for the sole purpose of D’s intention to purchase the business and D understood this purpose
Although they never discussed confidentiality, D’s conduct violates business ethics
Maybe P did not take reasonable precautions
Confidential Relationships (R3D Unfair Competition)
Confidential relationship is established in the following circumstances:
Person made express promise of confidentiality prior to disclosure of the trade secret or
Trade secret was disclosed to the person under circumstances in which the relationship between the parties to the disclosure or other facts surrounding the disclosure, justify the conclusions that, at the time of disclosure
Person knew or had reason to know that the disclosure was intended to be in confidence and
The other party to the disclosure was reasonable in inferring that the person consented to an obligation of confidentiality
Kadant v. Sealy (Reverse Engineering)
D was hired by P as a machinist with the responsibility of assisting engineers, designing customer orders, and using a special drawing machine
D was fired, and designed a similar product for X claiming he did this by reverse engineering, but P says its TS misappropriation
D argues that products were in the public domain and that reverse engineering was not too difficult but P claims it would take them a while to reverse engineer
Reverse engineering is permissible as long as the means used to get the info is in the public domain and not through confidential relationship established with the maker of the product
DMCA prohibits reverse engineering of encryption systems that protect copyrighted work
Economic Espionage Act does not have a clause exempting reverse engineering (looks like it prohibits)