Intellectual Property Outline

INTRODUCTION TO INTELLECTUAL PROPERTY (2-32)
 
·         INS v AP (SCOTUS, 1918)
o    INS copied/rewrote AP news reports
o    Is there any property in the news? – No, but the news which AP sells as its own is quasi-property
o    This is a question of intent, and at no time did AP ever intend to abandon its story for public use upon its being published on a bulletin board.
o    Blatant taking, copying and retransmitting information from one news gatherer to another, there is an unfair competition in business.
o    Lefstin:
§ Why is free-riding such a bad thing?
·         Bad public policy to not encourage creation and investment
§ This is a very narrow decision against INS only, not the world
·         Has been severely limited in subsequent years
§ Was this the correct decision?
·         Policy-wise: probably
·         Legally: probably not (see dissent Holmes, Brandeis)
·         Stanley v. CBS (Supreme Court of California, 1950)
o    Idea for movie preview interaction w/ viewers
o    Dissent (Traynor)
§ Irony if copyright law, which is supposed to promote innovation, instead hampers it
o    Lefstin:
§ Need more than an idea, There has to be a balance
§ Abstract ideas are building blocks, and should not be removed from the public domain
·         Sears, Roebuck & Co v. Stiffel (SCOTUS, 1964)
o    Patents are statutory monopolies
o    Dual goals of the patent system: 1) promote invention, 2) preserve free competition
o    No patent in the pole lamp è Sears can copy it
 
 
TRADE SECRETS (34-103)
 
Sources of the Law: Restatement Torts, Restatement Unfair Comp, Uniform Trade Secrets Act (45 states)
 
Generally:
·         Subject of reasonable efforts to maintain its secrecy
·         Derives economic value from not being generally known
·         Covers things that are not patentable like customer lists
·         Trade secrets can theoretically last forever
·         There is no protection for independent creation, unlike with patents
·         A trade secret cause of action is stronger than a contract cause of action, because you can go after the person who took the secret, and those who used it
·         The general scenario is: employees leave and work for the competition or start their own company
·         The 2 major questions to be asked:
o    Is it a trade secret?
o    If so, then was the information wrongly obtained?
 
Six Factors Considered in determining trade secret status (Rest Torts §757):
1.       How widely is the idea or information known outside the claimants business?
2.       Who within the claimant’s company knows the idea or information?
3.       What measures has the claimant taken to ensure that the idea or information remains secret?
4.       How difficult would it be for others to acquire or duplicate the idea or information?
5.       How valuable is the idea or information to the claimant and its competitors?
6.       How much effort or money has the claimant expended in developing or acquiring the idea or information?
 
How do you establish whether something is a trade secret? (Lefstin)
1.       Mark information as “Company Confidential”
2.       Condition in employment contract à implied duty
3.       Efforts to conceal
4.       Fiduciary relationship
5.       Expert testimony
 
Difference between Restatement Torts and UTSA
Restatement requires continuous use in business
Almost all jurisdictions now follow the UTSA
 
Improper Means of obtaining trade secrets:
UTSA: includes theft, bribery, misrepresentation, breach, or inducement of a breach of a duty to maintain secrecy, or espionage through electronic or other means
Proper Means of obtaining trade secrets:
Reverse engineering, independent discovery
 
Issues from class:
Contractual (note 7, pg 49)
SW Shrink-wrap licenses: Split amongst the Circuit courts on whether they are valid
SW Click-wrap licenses: Presumed to be more valid than shrink wrap licenses, since you have to actively click and assent to terms
·         Secrecy – need not be absolute
·         Breaches of confidence
o    There must be duty, it need not be an express contract, but just notice of some sort
·         “Shop rights”
o    Irrevocable, non-exclusive, non-assignable right to use a trade secret developed by an employee that the employer does not own, but was developed with the employer’s resources
o    Not clear what the doctrinal basis is for a shop right, maybe contractual
o    Case law is mixed on whether there is a right to use the invention
3 types of inventors:
Specific inventive – Hired to invent something specific è employer owns inventions
General inventive – Hired to do general R&D è sometimes the employer owns inventions
Non-inventive – Hired to do something besides invent è company does not own generally
 
Protection for Information that Does Not Qualify as Trade Secret
Restrictive Covenants may not do the trick
Do not compete clauses are a matter of State law
Some times can be a restraint of trade, but they are okay if they are reasonably necessary
Iroquois Industries Corp v. Popik
Popik generated all clients himself via cold calling è customer lists not confidential in this case
Modern Controls v. Andreadakis
Can protect things that do not rise to the level of a trade secret
NDAs and Non-Compete Agreements
If unreasonable restraint of trade, then not enforceable
Just a list of customer names is not enough
Strong policy of employee mobility in CA
In CA, NCA’s are essentially unenforceable under Cal. Bus. Prof. Code § 16600
Edwards v. Arthur Andersen (Cal. 2008): non-solicit are also unenforceable
Policy: general restrictions on competition are unenforceable as a matter of policy
 
Cybertek Computer Products Inc v. Whitfield (California Supreme Court, 1977)
·         Whitfield quit Cybertek and developed a competing software system. He argued that Cybertek’s system could not constitute a trade secret insofar as it consisted of well-known concepts in the computer industry
·         Any information which provides a competitive advantage over competitors may well constitute a trade secret, and in the Court’s view it is obvious that the combination of factors involved in the Auto/Issue System must give the plaintiff its protection under this doctrine
·         Lefstin
o    Important factors: employee NDA, exit interview, info marked as confidential
o    Whitfield on notice early in the development process
o    Predated UTSA, so uses §757 Rest Torts
Fleming Sales Co., Inc v. Bailey (US District Court, Northern District of Illinois, 1985)
Bailey quit, and formed his own OEM company, taking some of the sales people with him. Bailey took no documents with him, but did contact former clients.
Customer lists, other information as to customers and principals are not trade secrets under the UTSA