20111IP Survey – Trade Secrets TRADE SECRET SEGMENT PROF. JANICKE 2011

2IP Survey – Trade Secrets SOURCES OF LAW 45 STATES: UNIFORM TRADE SECRETS ACT – CIVIL TEXAS: CASELAW DOCTRINES BASED ON 1st REST. OF TORTS (1939); ALSO CRIMINAL STATUTE TEX. PENAL CODE § 32.05

20113IP Survey – Trade Secrets FEDERAL: –GOVERNMENT CIVIL ACTIONS AND CRIM. PROCEEDINGS – ECONOMIC ESPIONAGE ACT (1997) –NO PRIVATE CIVIL ACTION

20114IP Survey – Trade Secrets WHAT IS A “TRADE SECRET” (1) ANY COMPETITIVELY VALUABLE INFORMATION (2) THAT’S NOT WIDELY KNOWN OR EASILY FOUND OUT (3) THAT THE POSSESSOR HAS TAKEN REASONABLE STEPS TO KEEP FROM DISCLOSURE

20115IP Survey – Trade Secrets EXAMPLES MFG. METHODS MFG. MATERIALS BUSINESS PLANS

20116IP Survey – Trade Secrets USE, OR EVEN PLANNED USE, IN POSSESSOR’S BUSINESS IS NOT NEEDED SECRECY OF INDIVIDUAL COMPONENTS OR STEPS IS NOT NEEDED

20117IP Survey – Trade Secrets THE PROBLEM OF CUSTOMER LISTS HAS CAUSED A CASE LAW QUAGMIRE OFTEN ARE EASILY LEARNED BY RIGHTFUL MEANS; HENCE NOT A “TRADE SECRET” CAN BECOME A SECRET BY ADDING PURCHASE HISTORY, PLANS, CONTACTS, ETC.

20118IP Survey – Trade Secrets HARD-TO-GET REQUIREMENT LIBERALLY CONSTRUED TO HELP TRADE SECRET OWNER EXAMPLE: OBSCURE PUBLICATION OR SUPPLIER NAME

20119IP Survey – Trade Secrets REASONABLE-MEASURES-FOR- SECRECY REQUIREMENT TYPICAL: EMPLOYEE AGREEMENTS MARKING DOCUMENTS AND DRAWINGS “CONFIDENTIAL” CIRCULATING WRITTEN POLICY POSTING WRITTEN POLICY

201110IP Survey – Trade Secrets TYPICAL MEASURES (CONT’D): LIMIT TYPES OF EMPLOYEES WHO HAVE ACCESS LIMIT ACCESS TO PROJECT MEMBERS EXIT INTERVIEWS

201111IP Survey – Trade Secrets PROTECTIVE MEASURES CAN BE BY IMPLICATION RATHER THAN EXPRESS, BUT RISKY TO LITIGATE

201112IP Survey – Trade Secrets OWNERSHIP OF ON-THE-JOB DEVELOPMENTS CONTRACT PROVISION CONTROLS, IF THERE IS ONE IF THERE IS NO CONTRACT PROVISION, RESULT GOES BY THE EQUITIES GENERAL SKILLS OF A CALLING ARE ALWAYS OK FOR EMPLOYEE TO TAKE WITH HIM –DEFINING THESE IS DIFFICULT

201113IP Survey – Trade Secrets WHAT IS “MISAPPROPRIATION” USING UNDER WRONGFUL CONDITIONS: –OBTAIN RIGHTFULLY, BUT USE IN BREACH OF AGREEMENT [MANY CASES] –OBTAIN BY FRAUD OR INDUCING A BREACH OF CONFIDENCE [A FEW CASES]

201114IP Survey – Trade Secrets WHAT IS NOT COPYING AN OPENLY AVAILABLE PRODUCT REVERSE ENGINEERING OF AN OPENLY AVAILABLE PRODUCT WHOLLY INDEPENDENT DESIGN ADOPTING THE DESIGN, AFTER DISCLOSURE UNDER CONTRACT OF NON- CONFIDENCE

201115IP Survey – Trade Secrets MOST CASES INVOLVE RIGHTFUL LEARNING, AND THEN MISAPPROPRIATING TYPICAL PATTERNS: EMPLOYEES LEARN, THEN JUMP JOINT VENTURE PARTNER LEARNS, THEN VENTURE TERMINATES POTENTIAL BUYER OF BUSINESS LEARNS, AND SALE FALLS THROUGH

201116IP Survey – Trade Secrets TYPICAL PATTERNS (CONT’D): HARDER TO DECIDE: EXECUTIVE DRIVES THE DEVELOPMENT, THEN JUMPS HARDER TO DECIDE: VENDOR, AGENT, ADVISOR CONTRIBUTES THE SECRET – THEN USES FOR OTHER CLIENTS

201117IP Survey – Trade Secrets HARDEST CASES: FLY-OVERS ONE DECIDED CASE TRAILING SHOULD BE OK TRASH COLLECTING MAY BE OK ON THE TRADE SECRET FRONT; PERILOUS ON CRIMINAL FRONT; AND BAD PRESS

201118IP Survey – Trade Secrets 18 REMEDIES INJUNCTION PREVAILING U.S. VIEW: IF INFO HAS BEEN MADE PUBLIC BY OWNER, INJUNCTION SHOULD: –BE LIMITED TO LEAD-TIME, NOT PERPETUAL –TIME IT TOOK P minus TIME IT TOOK D IS A ROUGH RULE OF THUMB

201119IP Survey – Trade Secrets TEXAS VIEW WHERE OWNER PUBLISHES THE SECRET HYDE v. HUFFINES TEX. S. CT IS AMBIGUOUS WHERE OWNER OF SECRET PUBLISHES: –MODERN INTERPRETATION OF HYDE (PER RESTATEMENT OF UNFAIR COMPETITION) IS THAT LEAD-TIME INJUNCTION IS THE TEXAS RULE AS WELL AS THE NATIONAL RULE –HYDE WAS ENJOINED LONGER ONLY BECAUSE HE SUBMITTED NO EVIDENCE OF LEAD-TIME –PLAINTIFFS STILL ARGUE FOR A BROADER READING

201120IP Survey – Trade Secrets WHERE WRONGDOER PUBLISHES THE SECRET CASES SEEM TO INDICATE LONGER- TERM INJUNCTION IS POSSIBLE, MAYBE EVEN PERPETUAL SITUATION IS UNCLEAR

201121IP Survey – Trade Secrets DAMAGES ARE AVAILABLE –COMPENS. AND PUNITIVE [UTSA: TREBLING] CAN BE UNJUST ENRICHMENT OR P’S LOSS OF BUSINESS HIGH SETTLEMENT RATE TR. SEC. CASES SOMETIMES INVOLVE PRELIM. INJUNC. HEARING –SELDOM GO TO TRIAL

201122IP Survey – Trade Secrets INJUNCTION AGAINST WORKING FOR A PARTICULAR COMPETITOR CAN BE HANDLED PER CONTRACT WHERE NO CONTRACT, THIS TYPE OF INJUNCTION IS COMMONLY SOUGHT TO PROTECT THE SECRET –ARGUMENT: WORKING FOR “THEM” WILL INHERENTLY DIVULGE –COUNTER-ARGUMENT: NEED TO EARN A LIVING

201123IP Survey – Trade Secrets NON-COMPETE INJUNCTION WHERE NO CONTRACT PROVISION POSSIBLE SOLUTIONS: –INJUNCTION REQUIRES KEEPING PERSON ON PAYROLL AND WORKING –INJUNCTION REQUIRES PROVIDING MINIMUM CONSULTING FEES AND POSSIBLE WORK –INJUNCTION LIMITED TO COMPETITOR DIVISION MOST LIKELY TO CAUSE BREACH

201124IP Survey – Trade Secrets SPECIAL PROBLEM: CONTINUING TO ENJOIN WRONGDOER WHEN OWNER HAS PUBLISHED COMMONLY UNDERSTOOD: NON- WRONGDOERS ARE RELIEVED OF COVENANTS WHEN OWNER PUBLISHES WHEN A WRONGDOER MOVES TO DISSOLVE: –SHOULD PREVIOUS WRONGDOER NOW BE THE ONLY ONE PRECLUDED FROM USE?

201125IP Survey – Trade Secrets SPECIAL PROBLEM: STATUTE OF LIMITATIONS ONE VIEW: MISAPPROPRIATION IS AN ONGOING TORT, NEW VIOLATION EVERY DAY HENCE, ONLY OLD MISUSES ARE CUT OFF; DAMAGES AND INJUNCTION ARE AVAILABLE FOR RECENT/FUTURE VIOLATIONS

201126IP Survey – Trade Secrets SPECIAL PROBLEM: STATUTE OF LIMITATIONS ANOTHER VIEW: ORIGINAL MISAPPROPRIATION STARTS THE ONLY CLOCK; WHEN IT RUNS, ALL ACTION IS BARRED TEXAS SOLUTION: SINGLE WRONG, SINGLE RUNNING -- BUT FROM DISCOVERY DATE (KNEW OR SHOULD HAVE KNOWN)