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Intellectual Property
University of Toledo School of Law
Gibbons, Llewelyn Joseph

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