Trade Secrets

University Basics

Kristine H. Johnson MacMillan Sobanski & Todd, LLC

johnson@mstfirm.com & (970) 227-8008

Brief Legal History

Moral obligations

Economic incentives

Brief Legal HistoryState laws: “unfair competition”

Federal Courts use state law*

All: Close relatives of U.T.S.A.

* Except for the Economic Espionage Act

Brief Legal HistoryUniform Trade Secret Act

The Long Definition of "Trade Secret"

The whole or any portion or phase of any scientific or technical information, design, process, procedure, formula, improvement, confidential business or financial information, listing of names, addresses, or telephone numbers, or other information relating to any business or profession which is secret and of value. To be a “trade secret” the owner thereof must have taken measures to prevent the secret from becoming available to persons other than those selected by the owner to have access thereto for limited purposes.

Brief Legal HistoryUniform Trade Secret Act

The Short Definition of "Trade Secret"

A Secret with Value

A Trade Secret is

Information held by a pretty good, but not necessarily perfect, fence.

A Trade Secret is

Information that is often a compilation of known information.

A Trade Secret is

Information that gives the holder an economic advantage over competitors.

A Trade Secret is

What the good guys have -- and the bad guys don't.

A Trade Secret is not

Publicly known, Unfenced, Valueless,Something the bad guys have.

Failed Amendment to Economic Espionage Act (18 USC §1832)Proposed by Sen. Coons (D-Del), on October 5, 2011, in S. 1619,

in the Currency Exchange Rate Oversight Reform Act:

& Kolb (D-Wi) “would protect U.S. businesses from the theft of trade secrets by allowing victimized companies to sue for trade-secret theft in federal court. The legislation would allow for a single, uniform, nationwide cause of action instead of the patchwork of state laws now in place, and would elevate trade-secret intellectual property on the same level as copyright, trademark and patent violations.”

& Grassley (R-Iowa), “would help U.S. Customs and Border Protection by amending the Trade Secrets Act to give the Secretary of Homeland Security the legal authority to share basic information — like UPC codes and product samples — with American intellectual property holders to determine if a shipment contains counterfeit or infringing products. Current law strictly limits the information that CBP may share with a right holder pre-seizure.”

! October 11, 2011 voted down due to gross federalism problems !

Failed Amendment to Economic Espionage Act (18 USC §1832)

Complaint must identify –“reasonable measures taken to protect” secrecy–sworn representation of “substantial need for nationwide service . . . or misappropriation . . . to another country”

Ex parte seizure of property or evidence

Remedies–injunctive relief against violation or requiring actions to protect secrets; reasonable royalty–actual loss, unjust enrichment; exemplary damages for malicious or willful misappropriation

Fees awardable

Three-year statute of limitations

Trade Secret Fences

Legal – no brainer

Practical - brainer

University Trade SecretsLegal – no brainer

Agreements, of course

Must parse TS out, and be as specific as possible

University Trade SecretsLegal – hot spots

All non-public info is not trade secret info

“Know-how” is not one-size fits all

University Trade SecretsPractical - operation & trade secret specific

Notebook security Computer security Lab security

University Trade Secrets Universities imply trade secret ownership all the time when they “regulate” scientific publication: publication rights and attribution rights.

University Trade Secret ValueStop and think about real trade secrets in any deal

Identify specific trade secrets

Most likely source: ongoing work that is not patentable

Failure is valuable

American Invents Act makes Trade Secrets more important

Prior use rights – better for TS holder now, if you can prove held as a trade secret for more than one year prior to the patent filing

Best mode – demolished, so TS don’t need to be disclosed

Derivation proceedings - if a patent applicant derives their invention from petitioner’s TS (eg. a pseudo trade secret misappropriation)