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Intellectual Property
Villanova University School of Law
Carroll, Michael W.

Four Areas of IP Law
Trade Secret
Quick Economics Stuff
Perfect competition drives the price down to the marginal costs, creating an incentive to be efficient for a producer
IP is an exception to our general preference for perfectly competitive markets
Balance: How many comparative advantages are we willing to tolerate for the public to eventually reap the benefits of the new technology/creation?
IP Set-Up
Subject matter
Scope of rights
Two Schools of Thought Behind IP Laws
Innovation Policy
Creating incentives to create/invent without fear of the innovations being instantly copied, losing the comparative advantage and not recouping the innovation costs
Commercial Morality
More like tort law, where we want business to act with good faith towards each other
Subject Matter
Information that derives economic value from not being generally known (or knowable) by the public or the competition
Subject to reasonable efforts to keep it secret
Scope of Rights
Basically a tort action against someone who misappropriates that information
Right to keep the comparative advantage from your trade secret
Lasts in perpetuity until it is no longer a secret
Elements of a Trade Secret Claim
Information has an independent economic value from being generally unknown and is not readily ascertained;
Information has been subject to reasonable security; AND
Defendant misappropriated the information
Reasonable Security Requirement
Incredibly fact-based inquiry
What is the evidence of security measures? Does everything have to be marked “TOP SECRET”?
Confidentiality/Non-disclosure agreements with employees and contractors
When in the course of dealing with another party it is necessary to divulge the secret, confidentiality agreements are very important to prove you took reasonable security measures
Confidential relationships may arise by express contract or by implication
Restricted access
Physical security and limiting the number of people who are involved in the secret is a good sign of reasonable security
Why have this requirement?
Subjective belief that the secret is valuable can be used as proof that the secret actually is valuable
Theoretically we would assume

ntainer nonsense, where def. was considering buying operation so he got a full tour, then decided to do it himself using the information he got from the tour
Even though the information could have been properly publicly acquired, it is improper to instead acquire it by breaching a confidential relationship
There can be no implied confidential agreement when there is express intent to the contrary
Reverse Engineering
Defined: The process of starting with a known product and working backward to find the method by which it was developed
Acquisition of the known product must be by a fair and honest means, such as purchase on the open market
When challenged, Court will look to the ease of the reverse engineering, and its correlation to how quickly the competitor came out with their own product using the newly public trade secret
As a policy matter, why don’t we punish competitors for reverse engineering?