Trade Secrets

Question 1

Trade Secret Elements

Answer 1

1. Secret business information (not generally known to industry members)
2. Value because the information is secret
3. Reasonable measures to guard secrets
4. Ownership of that information

Question 2

An employee can take from his company his:

Answer 2

1. General skills
2. Knowledge
3. Training
4. Experience

Question 3

Does a trade secret need to be fixed?

Answer 3

No, it can be a mere idea

Question 4

A combination trade secret is:

Answer 4

The idea of combining publicly available information in a new combination.

Question 5

Types of Trade Secret Misappropriation

Answer 5

1. Wrongful Acquisition
2. Unlawful Disclosure
3. Unauthorized Use

Question 6

Ways to Misappropriate a Trade Secret

Answer 6

1. Theft (unauthorized access)
2. Lawful acquisition, subsequent misuse
3. Lawful acquisition, mistaken legality

Question 7

Where a defendant modifies a trade secret:

Answer 7

Plaintiff need only show that defendant’s product was substantially derived from trade secrets

Question 8

Defenses to Misappropriation of a Trade Secret

Answer 8

1. Reverse Engineering
2. Independent Derivation
3. Non-secrecy
4. No acquisition or knowledge of the secret
5. Lack of reasonable measures to preserve secrecy

Question 9

Examples of independent derivation:

Answer 9

1. Independent learning from an honest source (e.g. door-to-door looking for customers)
2. Pre-existing knowledge - e.g. employee already knew the customer list
3. Demonstrate no disclosure of trade secrets to the persons responsible for creating the similar trade secret
4. Demonstrate pre-existing creation of trade secret

Question 10

Types of Trade Secret Misappropriation Damages

Answer 10

1. Actual Loss (lost sales, lost market share, reduced sales price)
2. Unjust Enrichment
3. Reasonable Royalty (where can’t prove actual loss or unjust enrichment)
4. Exemplary Damages (where willful and malicious)

Question 11

Equitable Remedies for Trade Secret Misappropriation

Answer 11

1. Head-start Injunction
2. Regular Injunction
3. Inevitable Disclosure

Question 12

Head start injunction will last:

Answer 12

the approximate period of time it would take a competitor to develop a competing product after the time of publishing the trade secret

Question 13

Injunctions must ___ to avoid being overbroad:

Answer 13

1. Clearly define the off-limit trade secret

2. List the specific information the defendant cannot use

Question 14

Legal fees are available where:

Answer 14

There is a bad faith claim or defense.

Question 15

Factors to consider for Injunction for Inevitable Disclosure

Answer 15

1. Has the mobile employee acted dishonestly or already done something wrong?
2. Has the hiring employer demonstrated a good faith commitment to respect the trade secrets of the former employer
3. Does the hiring company already have a body of information that the new employee can work from?
4. Whether the employee is a technical person with detailed product knowledge
5. Degree of overlap in competition
6. Is there a non-competition covenant in place?

Question 16

Test for enforcability of a non-competition covenant

Answer 16

1. Is stopping the employee from joining a competitor necessary to protect a legitimate business interest of the former of employer [Legitimate Business Interest]
2. Would stopping the former employee from taking the new job impose an undue hardship on the former-employee [Undue Hardship test]
3. Does public policy support enforcement or nonenforcement of the non-competition covenant [Public Policy]

Question 17

When does the employer own the employee’s intellectual products:

Answer 17

1. Where an invention is created on the time of the employer
2. Where an invention is created using the employer’s equipment, supplies, or facilities
3. Where the invention uses an employer’s trade secret information
4. Where the invention relates to the employer’s business at the time of conception
5. Where the invention relates to actual or demonstrably anticipated research or development of the employer
6. Where the invention results from any work performed by the employee for the employer