trade secret

Trade Secret Law

A form of private IP law under which creators establish contractual limitations to protect their creations from misappropriation.

Subject Matter Eligibility

Business or technical information of any sort that is secret qualifies for trade secret protection.

Owner's Responsibility

The owner of a trade secret must take reasonable steps to maintain the secrecy of the information.

Duration of Protection

Trade secrets are protected for as long as they remain secret with no definite term for protection.

Misappropriation Criteria

Misappropriation occurs when secrets are obtained by theft or disclosed in violation of a confidentiality agreement.

Reverse Engineering Protection

Trade secret law does not protect against independent discovery or reverse engineering.

Definition of Trade Secret

'A trade secret may consist of any formula, pattern, device, or compilation of information giving a business advantage over competitors.'

Justification for Trade Secret Protection

-Property rights and unfair competition grounded in tort law justify the protection of trade secrets.

-Encourages innovation beyond what a patent can protect

Commercial Morality

The principle that trade secret law is grounded in encouraging good faith dealings in commerce.

• focuses on infringement

Uniform Trade Secrets Act (UTSA)

A state statute that unified trade secret protections, providing a framework for the law.

• federal law is more narrow

Defend Trade Secrets Act (2016)

Federal law that offers protections for trade secrets and establishes penalties for misappropriation.

Trade Secret Claim Elements

Claims require valid trade secrets, reasonable efforts to protect them, economic value, and wrongful acquisition.

Improper Means of Acquisition

Acquisition through methods like physical force, espionage, or fraudulent misrepresentation is deemed wrongful.

Confidential Relationships

Established when a promise of confidentiality is made prior to the disclosure of a trade secret.

Established when:

• The person made an express promise of confidentiality prior to the disclosure of the trade secret; OR

• The trade secret was disclosed to the person under circumstances in which the relationship between the parties to the disclosure or other facts surrounding the disclosure justify the conclusions that, at the time of the disclosure, 

  1. The person knew or had reason to know that the disclosure was intended to be in confidence, and

  2. The other party to the disclosure was reasonable in inferring that the person consented to an obligation of confidentiality

Employee Mobility vs. Trade Secret Protection

A conflict balancing an employee’s right to work against an employer’s right to protect trade secrets.

1. Elements: 

   1. Value of the information to its owners and competitors

   2. The ease or difficulty with which the information may be properly acquired or duplicated

Inevitable Disclosure Doctrine

Allows courts to prevent employment with a competitor if a former employee possesses trade secrets.

Remedies for Trade Secret Misappropriation

Include injunctions, disgorgement of profits, and sometimes reasonable royalties.

UTSA Damages and Disgorgement

Allows recovery of economic losses and disgorgement of profits from misappropriation.

Federal Criminal Trade Secret Statutes

In some cases, misappropriation of trade secrets is classified as a crime.

Rockwell Graphic v. DEV Indus

Rule: The owner of a trade secret does not forfeit protection by providing the trade secret to outside vendors

E. I. du Pont deNemours & Co. v. Christopher

Rule: The discovery of trade secrets by any improper means is wrongful and constitutes a cause of action

Ownership of Employee Inventions

Determined by Common Law Obligation to Assign Ownership

• If no Contract

  • Employees hired to invent

  • Employees who invent on the employers time or using its resources

  • Employees independent invention