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Intellectual Property
University of Oklahoma College of Law
Ragavan, Srividhya

Note: Exam – take home due back the 16th December
TRADE SECRETS
I) Introduction
1) Definition – Info including a formula, pattern, compilation, program, device, method, technique, or process
A) that derives independent economic value that is not 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
B) is the subject of efforts that are reasonable under the circumstances to maintain its secrecy
2) 2 Questions to ask
A) Is there a trade secret?
B) Was it acquired improperly?
3) TS is property in mind of ct since gov’t taking treated as property
4) Only have action against others improperly obtaining not individuals who obtained from others who got through improper means
5) Cannot have TS and patent at same time
6) W/o reverse engineering creates indefinite patent
7) Contracts to not reverse engineer TS are generally not upheld in ct
8) Cts attempt to avoid simple redistribution of wealth and will only rule in ones favor if other party did something wrong (only rule for P if P can prove D wrongfully obtained info or P can prove P was so protective of info that D must have wrongfully obtained info)
II) Theories
1) Utilitarian – protection against theft encourages investment
2) Property theory – assumption TS is a form of property
3) Tort theory – punishment for bad behavior so punish theft of secret
III)Elements
1) Must be subject matter that can qualify for trade secret
A) not generally known
B) not generally ascertainable
C) commercial value
D) Must Not disclose, or have others reverse engineer then lost
E) Factors courts consider in determining whether info constitutes a TS (factors a-d cover is the info a secret and e & f cover does the info have a competitive value)
a) How widely the information is known outside the claimant’s business;
b) Who within the claimant’s company knows the info
c) Whether the claimant has taken reasonable measures to ensure that the info remains secret
d) How difficult it would be for others properly to acquire or duplicate the info
e) Whether the info gives the claimant a commercial, competitive advantage over others who do not know it; AND
f) How much effort or money the claimant expended in developing or acquiring the info
2) Must take reasonable precautions under circumstances to prevent disclosure
A) Weigh cost and benefit (raising the cost lowers the incentive to invent)
B) Very subjective and vary from ct to ct
3) P must prove D acquired the information wrongfully
A) Improper means; or
a) Intention
b) Unreasonable cost need not be sunk in to protect TS
c) Importance of commercial morality
d) Cost / benefit analysis
e) Reverse engineering or not
B) Breach of confidence – express or implied
a) Express – agreement between parties prior to disclosure of trade
b) Implied – under circumstances person knew or had reason to know that they are in a confidential relationship
i) Some cts will only apply express agreement
c) Must have preexisting obligation (contractual or implied duty)
IV)BOP is on the one trying to prove TS violation (often difficult to prove)
1) Assumption is invention was reversed engineered appropriately BOP on P to prove stolen
2) Ct looks at
A) Complexity of task
B) Elapsed time
C) P must make clear showing
3) P can prove by showing D acquired wrongfully or that the precautions so high that D could not have acquired rightfully
V) Duration: until info is discovered
VI)When acquisition, use, or disclosure of a TS constitutes an actionable misappropriation
1) Disclosure or use of a TS in breach of confidence
A) Is D unauthorized use of a TS was in breach of confidence then it is actionable
B) Situation arises through express or implied agreement or special relationship ie agent/principal or fiduciary
2) Disclosure or use of a TS learned from a 3rd party w/ notice
A) If A reveals a TS to B under circumstances which impose a duty of confidentiality on B, and B breaches the confidence by revealing the secret to C, C will have a duty not to disclose or use the secret.
3) If learn of TS by mistake and have notice it is a TS cannot use
4) If learned of TS by mistake but did not have notice it was a TS may use
A) BUT must stop using once notice is given it is a TS UNLESS:
a) Paid value for the secret in good faith; OR
b) Change position in reliance of TS
5) Liable for TS if acquired through improper means
6) Modification or improvement of a TS before use still can be sued if can be shown it “substantially derived” from TS
VII) Departing employees
1) Struggle between preventing unfair competition and labor mobility
2) Departing employees are usually allowed to carry general knowledge, dexterity, and skill
3) Balance unfair competition and labor mobility
4) In the absence of an express agreement
A) Employee owes a duty of confidentiality to her employer, which prohibits using or distributing TS
a) But employee may take general knowledge, aptitude, dexterity, skill
B) If employee was hired to develop TS an implied agreement that the TS belongs to employer also exists
C) With expressed agreements not to compete cts will uphold only if:
a) It is reasonably necessary to protect the employer
b) The agreement is reasonable as to the time and geographical area in which the employee is restricted
c) Restrictions are not harmful to general public; AND
d) The restrictions are not unreasonably burdensome to the employee
5) Employee inventions
A) Belong to employer if hired to invent or invented in employer’s shop (shop right)
B) Independent invention owned by employee
VIII) Defenses
1) Obtained through proper means
2) Reversed engineered
3) Observation and deduction of item from view
4) Obtaining from published literature
IX)Remedy
1) Put injured party were they would have been had they not had their secret stolen
2) Injunction (usually time that it would take to reverse engineer called head start injunctions)
A) Duration as long as trade secret exists and possibly add’l reasonable period to eliminate commercial advantage
3) Damages
A) Compensatory
a) Actual – profits lost as a result of the D’s misappropriation
b) Unjust enrichments –
i) reasonable royalty for D use of TS; OR
ii) the amount of profits that D made as a result of misappropriation
B) Exemplary
a) If willful and malicious misappropriation
b) Up to double compensation
C) Attorney Fees

(a printed publication)).
(II)b. WHEN: Determine whether it existed in at least one acceptable form BEFORE the date of invention by the applicant.
(III)c. WHERE: Finally, determine whether at least one of the pre-existing forms existed in the required GEOGRAPHIC territory.
c) WHAT – The rules for determining when a prior art reference is “the same as the claimed invention” – the “identity” test which triggers the rest of the § 102(a) inquiry regarding the reference – requires:
i) 1. Each and every element of the claimed invention appear in a single prior art reference (regardless of form) either expressly or inherently (meaning those of ordinary skill in the field would recognize the element as necessarily present in the invention as stated in the reference). Discovering how the invention works or a new use to which it may be put are NOT sufficient additional “elements” to avoid identity. If the elements of the claimed invention are the same, identity exists (although a previously unknown use may be patentable as a process, the patent does NOT give rights to the original invention standing alone).
ii) 2. It is the substance of the element which must be present, NOT that identical language be used. It is not, however, sufficient to show “identity” that others in the field would readily recognize an alternative implementation – any difference in substance raises § 103 obviousness, NOT § 102(a) novelty.
iii) 3. Even an “identical” prior statement of the invention is not sufficient if the prior statement is not enabled (does not permit those of ordinary skill in the field to implement it based on their knowledge; although a use/product reference may not require enablement).
iv) 4. Finally, it is the existence of such a reference which is important, NOT whether the subsequent claimant knew or did not know about the reference.
C) Requirement for “NEW;” DENIED IF:
i) ***Focus is on actions of others prior to date applicant invented
ii) If prior invention is different, then doesn’t bar novelty even if difference is so minute it will not pass obviousness test; still novel but fails another section
b) Known by others in US before applicant invented
i) Invention must have been:
(I) Reduced to practice; actually or constructively or otherwise described in a writing sufficient to enable a person w/ ordinary skill in the relevant art to make it w/o undue experimentation; AND
(II)Accessible by public
c) Used by others in US before applicant invented
i) Invention must have been:
(I) Reduced to actual practice
(II)Used in the manner for which it was intended by its inventor