f2009 trade secret segment prof. janicke june 2008
TRANSCRIPT
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F2009
TRADE SECRET SEGMENT
PROF. JANICKEJUNE 2008
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F2009 Trade Secret Segment 2
SOURCES OF LAW
• 45 STATES: UNIFORM TRADE SECRETS ACT
• TEXAS: COURT-BUILT DOCTRINES AROUND REST. OF TORTS (1ST – 1939)
• FEDERAL: GOVERNMENT CIVIL ACTIONS AND CRIM. PROCEEDINGS – ECONOMIC ESPIONAGE ACT (1997)
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F2009 Trade Secret Segment 3
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
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F2009 Trade Secret Segment 4
EXAMPLES
• MFG. METHODS
• MFG. MATERIALS
• BUSINESS PLANS
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F2009 Trade Secret Segment 5
• USE, OR EVEN PLANNED USE, IN POSSESSOR’S BUSINESS IS NOT NEEDED
• SECRECY OF INDIVIDUAL COMPONENTS OR STEPS IS NOT NEEDED
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F2009 Trade Secret Segment 6
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.
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F2009 Trade Secret Segment 7
HARD-TO-GET REQUIREMENT
• LIBERALLY CONSTRUED TO HELP TRADE SECRET OWNER
• EXAMPLE: OBSCURE PUBLICATION OR SUPPLIER
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F2009 Trade Secret Segment 8
REASONABLE-MEASURES-FOR-SECRECY
REQUIREMENTTYPICAL:
• EMPLOYEE AGREEMENTS
• MARKING DOCUMENTS AND DRAWINGS “CONFIDENTIAL”
• CIRCULATING WRITTEN POLICY
• POSTING WRITTEN POLICY
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F2009 Trade Secret Segment 9
TYPICAL (CONT’D):
• LIMIT TYPES OF EMPLOYEES WHO HAVE ACCESS
• LIMIT ACCESS TO PROJECT MEMBERS
• EXIT INTERVIEWS
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F2009 Trade Secret Segment 10
• PROTECTIVE MEASURES CAN BE BY IMPLICATION RATHER THAN EXPRESS, BUT RISKY TO LITIGATE
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F2009 Trade Secret Segment 11
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
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F2009 Trade Secret Segment 12
WHAT IS “MISAPPROPRIATION”
• USING UNDER WRONGFUL CONDITIONS:– OBTAIN BY FRAUD OR BREACH OF
CONFIDENCE– OBTAIN RIGHTFULLY, BUT USE IN
BREACH OF CONFIDENCE
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F2009 Trade Secret Segment 13
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
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F2009 Trade Secret Segment 14
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
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F2009 Trade Secret Segment 15
TYPICAL PATTERNS (CONT’D):
• HARDER: EXECUTIVE DRIVES THE DEVELOPMENT, THEN JUMPS
• VENDOR, AGENT, ADVISOR LEARNS – THEN USES FOR OTHER CLIENTS
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F2009 Trade Secret Segment 16
HARD CASES:
• FLY-OVERS
• TRAILING
• TRASH COLLECTING
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F2009 Trade Secret Segment 17
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
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F2009 Trade Secret Segment 18
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
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F2009 Trade Secret Segment 19
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
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F2009 Trade Secret Segment 20
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
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F2009 Trade Secret Segment 21
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?
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F2009 Trade Secret Segment 22
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
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F2009 Trade Secret Segment 23
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