UTSA § 1(4) defines a trade secret as any piece of information that
(1) is not generally known or readily ascertainable (i.e., secret);
Metallurgical Indus. looked to factors to see if information was secret:
(1) efforts to keep the information secret (a subjective belief of secrecy can actually prove secrecy);
(2) industry standards;
(3) costs of development;
(4) value of the information.
This is a jury question.
Public disclosure of the information destroys secrecy. There are a few kinds of disclosure and different consequences for each:
(1) Advertent: secrecy is totally destroyed.
(2) Embodiment in a product: only if the information is apparent or if reverse engineering uncovers the information is secrecy destroyed.
(3) Accidental: secrecy is not necessarily destroyed unless disclosure is widespread; recipients of the disclosure cannot further disclose if they know the disclosure was accidental.
(4) Limited: secrecy is not destroyed if the disclosure furthers the trade-secret owner’s economic interests.
(2) has “independent economic value”;
This value can be either actual or potential.
(3) derives its independent economic value from its secrecy; and
(4) is subject to reasonable efforts to maintain secrecy.
Some disclosure of the secret might be reasonable. This is a jury question. This gets tied to efficiency—we don’t want to overburden industry. See Rockwell Graphic Systems.
The owner gets to sue people who have “misappropriated” his trade secret. Misappropriation is defined as using or disclosing a trade secret
(1) that you have reason to know was obtained through improper means or
The means need not be illegal to be improper. See Christopher (plane flying over factory was improper though not illegal). Courts envision a kind of “commercial morality” less permissive than the law.
If the means could be prevented only by unreasonable precautions, then the means are likely to be improper. The propriety of the means is defined in terms of the reasonableness of the precautions necessary to prevent them. See Christopher.
(2) in breach of a confidential relationship.
If there’s an express confidentiality agreement, then a breach thereof is misappropriation.
Implied duties of confidentiality can be found where the parties’ relationship somehow warranted confidentiality. An implied duty of confidentiality arises where all parties understand that a disclosure is being made only for a limited purpose. See, e.g., Smith v. Dravo (finding an implied duty of confidentiality in corporate-acquisition negotiations).
(1) Reverse engineering of a product that is properly obtained.
If reverse engineered, there are no improper means. But the possibility of reverse engineering is not a defense—you must actually have reached the secret by reverse engineering.
Where confidential information is used during the reverse-engineering process, the means can still be improper.
(2) Independent discovery.
If independently discovered, there are no improper means.
Head-start injunctions are allowed where reasonable.
Where a person misappropriates a trade secret and thereby gains a competitive head start, we allow that person to be enjoined from using the trade secret for a reasonable period to eliminate the competitive advantage.
If head-start injunctions would be unreasonable, then the court can force the person to pay royalties for future use.
Compensatory damages are also available to the plaintiff.
The plaintiff can recover actual damages plus any amounts by which the defendant was unjustly enriched (but no double counting is allowed).
Elements of patentability.
A patent is void if it does not have all of the following elements:
(1) patentable subject matter;
(4) non-obviousness; and
(5) disclosure (enablement and written description).
Patentable subject matter.
Organisms are sometimes patentable.
If it’s new and made by human kind, then it’s patentable. See Chakrabarty. Thus, organisms created by inventors are patentable. Id. But organisms merely discovered are not: things that are merely the handiwork of nature are not patentable by their discoverer. See Funk Brothers. The rule today is that something which is “isolated and purified” from nature is patentable but not the thing itself that occurs in nature. See Parke-Davis.
Software and business methods are patentable.
Although you cannot patent something that would only pre-empt a mathematical formula, Benson, you can patent a process which uses a formula. See Diamond v. Deihr.
This was expanded to include any process that achieves a useable, concrete, and tangible result. State St. Bank.
Abstract ideas are not patentable.
Bilski rejected all tests for what counts as an abstract idea a
could imitate the invention except by independent experimentation, the claim to that invention is void. See Incandescent Lamp Patent.
A claim must be totally enabled. Partial enablement is not enough. Thus, if a claim claims a whole range of inventions but only one of that range is enabled (i.e., it would take undue experimentation to imitate the rest of the range), that entire claim is void. But note that genus claims are okay as long as they’re fully enabled.
(3) sets fourth the best mode of carrying out the invention.
Section 102(a) prevents a person from patenting something that was already around before the person “invented” it. Where the prior art can be said to have anticipated the invention, the invention is not novel enough to get a patent.
We must ascertain the date of invention (i.e., the date on which the patentee claims to have invented the thing). If a reference in the art prior to that date anticipated the patentee’s invention, then no patent should issue.
(1) Prior art: we look to things known or publicly used in this country and to things patented or described in a printed publication in any country.
A trade secret is not prior art here because trade secrets are not generally known.
(2) Anticipation: we follow an all-elements rule. A reference anticipates an invention only if it describes all of the invention’s elements. It must also enable the invention.
A reference that anticipates a single species may anticipate the whole genus.
Section 102(b) prevents a person from patenting something he’s been sitting on for a while. If one year from certain statutorily defined events passed before filing for a patent, then the invention is not novel enough to get a patent.
We must ascertain the date of filing for the patent. If one of the statutorily defined events occurred more than one year before that date, then no patent should issue. This is a strict one-year deadline. The events include the following: