Trade Secrets Flashcards
What does trade secret law protect?
Certain secret business information against unauthorized …
Trade Secrets v. Patents
Some are also eligible for patent protection
There must be reasonable efforts to keep the trade secret secret
Patented inventions must be disclosed
Trade secret protection is unlimited in duration - until they are no longer secret, another independent development (not ok under patent), or it’s reverse engineered (not ok under patent)
Patent - 20 years protection
Independent development and reverse engineering are not defenses to patent infringement, but are to TS misappropriation claims
Patent is exclusively federal law; trade secret is both state and federal
Sources of Trade Secret Law
State Common Law (torts + property)
Uniform Trade Secrets Act (adopted by almost all states)
CA Code §3426
The Federal “Defend Trade Secrets Act” - allows ts owners to bring a federal cause of action, under federal discovery it does not need to be disclosed (unlike common and state)
What is a trade secret?
Information, including a formula, pattern, compilation, program, device, method, technique or process
Must derive independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by other persons who can obtain economic value from its disclosure or use
and is the subject of efforts that are …..
Trade Secret Factors
see: slide
1) The extent to which the information is known outside of plaintiff’s business
2) The extent to which the information is known by employees and others involved in the plaintiff’s business
3) the extent of measures taken by the plaintiff to guard the secrecy of the information
4) the value of the information to the plaintiff’s business and to its competitors
5) the amount of time, effort, and money expended by the plaintiff in developing the information and
6) the ease of difficulty with which the information could be properly acquired or duplicated by others
Trade Secret Misappropriation
Acquisition of a trade secret through improper means or
Disclosure or use of a trade secret by either in breach of a confidentiality obligation or that was acquired through improper means
Improper means includes theft, bribery, misrepresentation, breach or inducement of a breach of a duty to maintain secrecy, or espionage through electronic or other means. Reverse engineering or independent derivation alone shall not be considered improper means.
Learning Curve Toys, Inc. v. Playwood Toys
Bondpro Corp. v. Siemens Power Generation, Inc.
Incase, Inc. v. Timex
E.I. DuPont v. Christopher
DuPont was creating a process to make methanol
Proctor & Gamble v. Stoneham
Non-compete against former exec. Stoneham.
Stoneham signed non-compete for 3 years and got stock options in exchange. Ended up with a job at a competitor.
P&G filed suit over an immediate threat that P&G’s trade secrets would be exposed.
Following factors weigh in favor of finding that a noncompete agreement is reasonable:
(1) the agreement contains time and space limitations,
(2) the employee is the sole contact with the customer,
(3) the employee has access to confidential information and trade secrets,
(4) the agreement seeks to limit only unfair competition,
(5) the agreement does not seek to stifle the employee’s skills and experience,
(6) the employer’s benefit is not disproportionate to the employee’s detriment,
(7) the agreement does not bar the employee’s sole means of support,
(8) the restricted skills were developed during the employment, and
(9) the forbidden employment is not merely incidental to the main employment.
California Business & Professions Code § 16600
No non-completes usually; are exceptions
CA Labor Code §2860
Everything which an employee acquires by virtue of his employment, except the compensation which is due to him from his employer, belongs to the employer, whether acquired lawfully or unlawfully, or during or after the expiration of the term of his employment
