IP Survey Outline-Gibbons 2009
I. Introduction
A. Utilitarian / Economic incentives
1. Society’s goal: “greatest happiness for the greatest number”
B. Power is granted in the US Constitution
1. Article 1§8, cl. 8
a. Congress shall have the power: To promote the progress of science and the useful arts, by securing for limited times, to authors and inventors, the exclusive right to their respective writings and discoveries.
C. Patents
1. Patent is from the Latin word patere (to open).
2. Innovation is the reason we have patents, need it b/c we have market failure
3. Inventions occur though:
a. Flash of genius: very rarely results in innovation (built upon other peoples work)
b. Cumulative innovation
i. Technologies undergo a gradual, evolutionary development which is intimately bound up with the course of their diffusion.
ii. Secondary inventions-including essential design improvements, refinements, and adaptations to a variety of uses-are often as crucial to the generation of societal benefits as the initial discovery.
D. Innovation Policies: Comparative Institutional Analysis
1. Government R&D subsidies
2. Prizes
3. Intellectual Property
E. IP exists against a backdrop
1. Contracts: CDA’a, License agreements *P/TM/C/TS
2. Property *P/TM/C
3. Torts: Fraud/Trespass (if you break in to steal trade secrets) *TM/TS
4. This is all also under the backdrop of Antitrust
Trade Secret
I. Introduction
A. Law and Theory: Patent and Copyright cases are Federal. Trade Secret is largely a matter of state law.
1. Sources:
a. State Common Law
i. Restatement of Torts § 757 (1939)
ii. Restatement of Unfair competition (1995)
*These can be adopted by the legislature
b. State Statute
i. Uniform Trade Secrets Act (UTSA)
c. Federal Economic Espionage Act
2. Trade Secret: Information that is not generally known or readily ascertainable and there has been reasonable efforts under the circumstances to maintain its secrecy. It must also have commercial value.
EXAM HINT: If you have a specific jurisdiction (Texas) then apply the law of Texas (don’t apply the restatements/general principles) if it is in the state of Anxiety then you can use the general principles/rest
-“Rocket Docket”: Very fast way to get a patent in Texas courts
-Two jurisdictions for Trade Secrets: Property and Bad Act (see Rockwell below)
a. How to get in fed court: diversity
b. Very hard to figure out the value of a trade secret
2. Federal Preemption: Not going to have both a patent and a trade secret!
a. Trade Secret: keep idea secret/not the equivalent of a patent
b. Patent: allows open knowledge
c. assuming your invention is patentable material what would you rather have the patent or the trade secret=hard to tell. Trade secrets last longer. Seems like gibbons says trade secret
d. Whether that law “stands as an obstacle to the accomplishment and execution of the full purposes and objectives.”
3. Federal vs. State Protection
a. Growth of IP has limited state protection
4. Trade Secret: Recurrent Tensions/Themes
a. Preventing unfair competition ←→ Labor Mobility
i. Courts favor mobility
b. Existence of a trade secret ←→ Punishing bad acts
i. There is no crime if it is not a trade secret and you stole it. It did not belong to anyone.
EXAM HINT: There are lots of definitions of trade secrets, depending on which definition you use will affect the outcome.
1. Definition of Trade Secret: UTSA §1(4)
a. Trade Secret: Information, including a formula, pattern, compilation, program, device, method, technique, or process that:
(1) 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
(2) is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.
b. Duration: until information is disclosed.
2. Definition of Trade Secret: Restatement of Torts 757
-A trade secret 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 an advantage over competitors who do not know or use it.
-It may be a formula for a chemical compound, a process of manufacturing, treating or preserving materials, a pattern for a machine or other device, or a list of customers….Generally, it relates to the production of goods, as, for example, a machine or formula for the production of an article. It may however relate to the sale of goods or to other operations within the business, such as a code for determining discounts, rebates or other concessions in a price list or catalogue, or a list of specialized customers or a method of bookkeeping or other office management.
3. Restatement of Unfair Competition Definition:
A trade secret is “any information that can be used in the operation of a business or other enterprise that is sufficiently valuable and secret to afford an actual or potential economic advantage over others.
a. This definition does not seem like it would protect not-for-profit organizations.
4. Pet peeve on exam: When question is asking what is reasonable…. confidentiality agreements and locking something up in a safe, is this enough. Use the common sense definition of reasonable. Reasonable under the circumstances. This is adequate for business purposes. Do not have to get crazy on exam (lobotomies…haha)
5. Must have economic value: it is only valuable if it is a secret.
6. Trade Secret Law: Elements
1) Subject matter qualifies as a trade secret
-information not generally known
-information not readily ascertainable (not required in Cal)
-reasonable efforts under circumstances to maintain secrecy
-commercial value
B. General Trade Secret Principles
1. No matter the definition, the following criteria assist in the determination of whether information constitutes a trade secret:
1) The extent to which the information is known outside of the business;
2) The extent to which the information is known by employees and others involved in the business;
3) The extent of measures taken to guard the secrecy of the information
4) The value of the information for business and to competitors;
5) The amount of effort or money expended in developing the information; and
6) The ease or difficulty with which the information could be properly acquired or duplicated by others.
C. Metallurgical Industries v. Fourtek, 1986
1. Case dealt with a trade secret for the reclamation of spent Carbide.
2. Trade secret:
a. Info not generally known: Prior art, novelty, leaks
b. Info not readily ascertainable: availability, ease of reverse engineering, non- obviousness
c. Reasonable efforts to maintain secrecy: precautions, security, NDA’s
d. Commercial value: technology
l took to maintain the secrecy of the piece part drawings, the lower the probability that DEV obtained them properly and the higher the probability that it obtained them through a wrongful act; the owner had taken pains to prevent them from being obtained otherwise.
e. Under the second theory of trade secret protection, the owner’s precautions still have evidentiary significance, but now primarily as evidence that the secret has real value. For the precise means by which the defendant acquired it is less important under the second theory, though not completely unimportant; remember that even the second theory allows the unmasking of a trade secret by some means, such as reverse engineering. If Rockwell expended only paltry resources on preventing its piece part drawings from falling into the hands of competitors such as DEV, why should the law, whose machinery is far from costless, bother to provide Rockwell with a remedy? The information in the drawings could not have been worth much if Rockwell did not think it worthwhile to make serious efforts to keep the information secret.
4. Court held it was a trade secret.
II. Misappropriation and Proper Means
A. Proper Means Include:
1. Discovery by independent invention (creation)
2. Discovery by reverse engineering-starting with the known product and working backward to find the method by which it was developed. The acquisition of the main product must also be by a fair and open means for reverse engineering to be lawful.
3. Observation of the item in public use/ public display/ or permitted tour of facility when they are making.
4. Obtaining the trade secret by public literature
*Restatement of Torts §757
5. Freedom of Information Act Request-Government Filings
a. Can get design plans for certain things
6. Purchase it.
B. Misappropriation
1. Can be done by Improper Means or Breach of Confidence
a. Improper Means
i. Spying
ii. Theft
iii. trespassing
iv. coercion
v. computer hacking
vi. Reverse engineering with contractual obligation
b. Breach of Confidence (Rst. 3rd Unfair Competition §41)
i. A confidential relationship is established in the following circumstances:
1) Express
(a) the person made an express promise of confidentiality prior to the disclosure of the trade secret.
2) Implied
(b) the trade secret was disclosed to the person under circumstances in which, at the time of the disclosure
