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Intellectual Property
University of Kentucky School of Law
Frye, Brian L.

FRYE

INTELLECTUAL PROPERTY

FALL 2015

TRADE SECRET

Trade Secret­ A secret idea or process that the owner has kept secret. A trade secret allows holder of secret to share the secret in a controlled way, with confidence that law will protect the holder from invasive behaviors by others (misappropriation).

Basic Elements:

How easy it would be for someone to discover the information through proper means.
Owner took steps to keep information a secret.

JUDGE WITH CAUTION: We want to avoid incorrect rulings that may deter people from relying on trade secret protection, and that may increase baseless suits in which a plaintiff claims misappropriation merely to harass a competitor.

UTSA § 1: Trade Secret

“Trade Secret” : information, including a formula, pattern, compilation, program, device, method, technique or process, that:

Derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by, other persons who can obtain economic value from its disclosure or use; and

Is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.

Objective steps showing secret was valuable
Intensity of steps showing the relative value of the secret
The more effort the owner put into the secret, the more likely it will stay a secret.

Misappropriation: acquisition of a trade secret of another by a person who knows or has reason to know that the trade secret was acquired by improper means.

Amoco Production Co. v. Laird­ page 31

FACTS: Amoco located area for oil drilling. Paid scientist to analyze area. Scientist knew area had oil but recommended postponing buying/drilling land.

Amoco employee told Laird of about drilling site. Using this insider info, Laird purchased land.
Laird claimed that he could have afforded to do his own research, but didn’t.

RULE: To qualify as a trade secret, the information cannot be “readily ascertainable by proper means”.
RULE: Burden of Proof is on trade secret holder.
RULE: Misappropriation of trade secret if it would take “a substantial investment of time, expense, or effort” to acquire or duplicate.

FINDING: Doesn’t matter if Laird could have afforded to invest money, the fact that he acquired the information through improper means qualified as misappropriation.

CDI Energy Services, Inc. v. West River Pumps Inc.­ page 38

FACTS: CDI sells oilfield equipment and services to oil companies. 3 former employees left company and started a competing company(West River). West River Took client list and pricing information from CDI before they left. CDI claims that West River stole trade secrets.
FINDING: Not a trade secret because of the industry. A client list may be a trade secret in some industries, but not in oil equipment services. There is no economic value for client list or pricing information. Clients are obviously oil companies. The pricing and client list were readily ascertainable by proper means.

Cemen Tech Inc. v. Three D Industries­ page 42

FACTS: 3D initially went into negotiations for purchasing CT. After confidential information

was given to 3D, the company backed out and began another company using very similar formula for cement mixture. CT had many protective measures such as signing in/out information for employees and a non­disclosure agreement. CT claimed that they reverse engineered.

RULE: Reverse engineering is not an improper mean. Reverse engineering is allowed and needed for innovation.
FINDING: 3D must have used trade secret information through improper means. Had product made in less than 6 months, would have taken much longer if 3D only used reverse engineering. A jury could also reasonably find that 3D and its principals improperly used their positions as potential buyers to obtain CTI’s proprietary information for their own benefit.

DVD Copy Control v. Bunner­ page 46

FACTS: DVD created a “Content Scramble Sys

re the effective filing date of the claimed invention, it would be obvious to a person having ordinary skill in the art to which the claimed invention pertains.

Court Considers:

1.

Education level of inventor

2.

Types of problems encountered in the art

3.

Prior art solutions to those problems

4.

Rapidity with which inventions are made

5.

Sophistication of the technology

Duration:

6.

Education level of active workers in field

20 years.

Infringement:

Joint inventorship: allowed by the patent act, when 2 or more people working together contribute to the conception of the invention. The inventors do not have to contribute equal amounts to be considered “joint”

Direct Infringement

Literal Infringement Theory:

Every element of a device infringes on the original patent

Indirect Infringement: when the accused party has ont itself directly carried out each and every limitation of a claimed invention, but has brought someone else to the brink of infringement in a way that law deems blameworthy.
Doctrine of Equivalents:

Device performs substantially the same function in substantially the same way. Allows a court to find that a party infringed on a patent even though the infringing invention did not fall directly within the scope of a specific patent claim.

“function­way­result” test