F2009 TRADE SECRET SEGMENT PROF. JANICKE JUNE 2008

F2009 Trade Secret Segment2 SOURCES OF LAW 45 STATES: UNIFORM TRADE SECRETS ACT TEXAS: COURT-BUILT DOCTRINES AROUND REST. OF TORTS (1 ST – 1939) FEDERAL: GOVERNMENT CIVIL ACTIONS AND CRIM. PROCEEDINGS – ECONOMIC ESPIONAGE ACT (1997)

F2009 Trade Secret Segment3 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

F2009 Trade Secret Segment4 EXAMPLES MFG. METHODS MFG. MATERIALS BUSINESS PLANS

F2009 Trade Secret Segment5 USE, OR EVEN PLANNED USE, IN POSSESSOR’S BUSINESS IS NOT NEEDED SECRECY OF INDIVIDUAL COMPONENTS OR STEPS IS NOT NEEDED

F2009 Trade Secret Segment6 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 DATA, PLANS, ETC.

F2009 Trade Secret Segment7 HARD-TO-GET REQUIREMENT LIBERALLY CONSTRUED TO HELP TRADE SECRET OWNER EXAMPLE: OBSCURE PUBLICATION OR SUPPLIER

F2009 Trade Secret Segment8 REASONABLE-MEASURES-FOR- SECRECY REQUIREMENT TYPICAL: EMPLOYEE AGREEMENTS MARKING DOCUMENTS AND DRAWINGS “CONFIDENTIAL” CIRCULATING WRITTEN POLICY POSTING WRITTEN POLICY

F2009 Trade Secret Segment9 TYPICAL (CONT’D): LIMIT TYPES OF EMPLOYEES WHO HAVE ACCESS LIMIT ACCESS TO PROJECT MEMBERS EXIT INTERVIEWS

F2009 Trade Secret Segment10 PROTECTIVE MEASURES CAN BE BY IMPLICATION RATHER THAN EXPRESS, BUT RISKY TO LITIGATE

F2009 Trade Secret Segment11 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

F2009 Trade Secret Segment12 WHAT IS “MISAPPROPRIATION” USING UNDER WRONGFUL CONDITIONS: –OBTAIN BY FRAUD OR BREACH OF CONFIDENCE –OBTAIN RIGHTFULLY, BUT USE IN BREACH OF CONFIDENCE

F2009 Trade Secret Segment13 WHAT IS NOT COPYING AN OPENLY AVAILABLE PRODUCT REVERSE ENGINEERING OF AN OPENLY AVAILABLE PRODUCT INDEPENDENT DESIGN ADOPTING THE DESIGN, AFTER DISCLOSURE UNDER CONTRACT OF NON- CONFIDENCE

F2009 Trade Secret Segment14 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 THRO

F2009 Trade Secret Segment15 TYPICAL PATTERNS (CONT’D): HARDER: EXECUTIVE DRIVES THE DEVELOPMENT, THEN JUMPS VENDOR, AGENT, ADVISOR LEARNS – THEN USES FOR OTHER CLIENTS

F2009 Trade Secret Segment16 HARD CASES: FLY-OVERS TRAILING TRASH COLLECTING

F2009 Trade Secret Segment17 REMEDIES INJUNCTION BETTER VIEW IS IT SHOULD BE LIMITED TO LEAD-TIME TIME IT TOOK P minus TIME IT TOOK D IS A ROUGH RULE OF THUMB

F2009 Trade Secret Segment18 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

F2009 Trade Secret Segment19 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 PROBLEM: EARNING A LIVING

F2009 Trade Secret Segment20 NON-COMPETE INJUNCTION POSSIBLE SOLUTIONS: –INJUNCTION REQUIRES KEEPING PERSON ON PAYROLL AND WORK –INJUNCTION REQUIRES PROVIDING MINIMUM CONSULTING FEES AND WORK –INJUNCTION IS TAILORED TO DIVISION MOST LIKELY TO CAUSE BREACH

F2009 Trade Secret Segment21 SPECIAL PROBLEM: CONTINUING TO ENJOIN WRONGDOER WHEN OWNER HAS PUBLISHED COMMONLY UNDERSTOOD NON- WRONGDOERS ARE RELIEVED OF COVENANTS WHEN OWNER PUBLISHES MOVES TO DISSOLVE: SHOULD PREVIOUS WRONGDOER NOW BE THE ONLY ONE PRECLUDED FROM USE?

F2009 Trade Secret Segment22 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

F2009 Trade Secret Segment23 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