Professional Documents
Culture Documents
How does trade secret (TS) law relate to federal statutory IP?
Preemption cases
General principles: federalism, interrelationship
Sources of TS Law
Common law (business tort) State statutory law
Uniform Trade Secret Act Similar to the UCC Uniform (model) Act, codified in 44+ states
Features of TS Law
Protection of potentially unlimited duration (as long as info is (a) valuable and (b) secret)
TS cases often, but not always, arise from pre-existing relationships
Employment contracts Expectations of confidentiality
Kewanee Oil
Employee mobility case Basic question: is TS law compatible with federal statutory IP scheme? Answer: Yes; mutually supportive incentive systems, TS law and patent law
Kewanee holding:
State trade secret law is not preempted by federal IP scheme
TS law is a sieve, as opposed to a barrier like patent law
Why? Reverse engineering/independent invention; commercial ethics as well as innovation policy
Survey evidence: Yale survey (Levin, Klevorick, Nelson, and Winter 1983) Carnegie-Mellon survey (Cohen, Nelson, and Walsh 1994) Berkeley-Kauffman Survey 2009 Firms value trade secret protection more highly than patent, copyright, TM in protecting investment in innovation
(T)rade secret protection is an important part of intellectual property, a form of property that is of growing importance to the competitiveness of American industryThe future of the nation depends in no small part on the efficiency of industry, and the efficiency of industry depends in no small part on the protection of intellectual property. --Rockwell Graphics (Posner, J.)
Facts
Metallurgical sued when Fourtek signed K with a Metallurgical competitor
Common situation: the (informal) joint venture, leading to technology exchange, leading to an IP conflict
Robert P. Merges
Property Rights Create a Legal Field Around an Information Asset (i), Protecting Seller (S) During Buyers (B) Precontractual Evaluation
Metallurgical Industries
Were the incremental and public domain contributions by plaintiff trade secrets as defined by Texas law?
Unitary heating elements, vacuum filters, chill plates: all combined to form a useful and secret set of improvements in furnace design
Metallurgical holding
*Trial court+ abused discretion in excluding evidence
New trial, with evidence of existence of TS
Definition of TS
Information, including a formula, pattern, compilation, program, device, method, technique, or process, that: derives independent economic value from not being generally known or readily ascertainable by proper means by other persons and; is the subject of efforts that are reasonable under the circumstances to maintain its secrecy
UTSA
Provides cause of action for misappropriation of trade secrets 3 year statute of limitations - action must be brought within 3 years after misappropriation is discovered or should have been discovered
Blum testimony
First, notice the complex organization of this new piece of technology
Supplier customer consultant
Definitional issue
[It is a TS if it] . . . derives 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
(2) Misappropriation means: (i) acquisition of a trade secret of another by a person who knows or has reason to know that the trade secret was acquired by improper means; or (ii) disclosure or use of a trade secret of another without express or implied consent by a person who (A) used improper means to acquire knowledge of the trade secret; or
(B) at the time of disclosure or use, knew or had reason to know that his knowledge of the trade secret was (I) derived from or through a person who had utilized improper means to acquire it; (II) acquired under circumstances giving rise to a duty to maintain its secrecy or limit its use; or (III) derived from or through a person who owed a duty to the person seeking relief to maintain its secrecy or limit its use; or
(C) before a material change of his [or her] position, knew or had reason to know that it was a trade secret and that knowledge of it had been acquired by accident or mistake. . . .