Trade SecretsChapter 6

presented by Marina DeykunDecember 3, 2011

“Have you ever had a secret, but then a friend learned it, either by mistake or because you told? ”

StatisticsAnnual losses to U.S. firms are

between $250 and $300 billion.

Over 60% of departing employees admit that they took confidential information with them when they left their firms

DefinitionTrade secret = information, including a

formula, pattern, compilation, program, device, method, technique, or process, that:

(1) Derives independent economic value, actual or potential, from not being generally known to the public or to other persons who can obtain economic value from its disclosure or use; and

(2) Is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.”

CUTSA § 3426.1, subd. (d)

DefinitionA trade secret is a formula, practice, process, design, instrument, pattern, or compilation of information which is not generally known or reasonably ascertainable, by which a business can obtain an economic advantage over competitors or customers.

="confidential information" or "classified information".

Wiki

Trade Secret v. Patent

Patent covers completed inventions and processes

Trade Secret extends to almost any kind of information that has been kept secret

Trade Secret v. PatentImportant Factors

• Stage of development • Subject matter • Standards for protection • Expense • Difficulty of maintaining secrecy • Company culture • Length of protection

Governing Laws and PoliciesState : Uniform Trade Secrets Act (UTSA) Restatement (Third) of Unfair Competition . Federal: Economic Espionage Act

Most of the states have ratified the UTSA, except for Massachusetts, New York, New Jersey, North Carolina, and Texas.

CUTSA - The California Uniform Trade Secrets Act (Cal. Civ. Code §§ 3426)

Elements of a Trade Secret

1. Valuable information 2. Secrecy 3. Reasonable security

measures

Misappropriation of Trade Secrets

may be achieved through three types of conduct:

AcquisitionDisclosureUse

CUTSA § 3426.1, subd. (b) NB: Reverse engineering is not misappropriation

Remedies for Trade Secret Misappropriation

Injunctions: For actual or threatened misappropriation Preliminary or permanent Potential impact on employee mobility

Monetary damages

Criminal remedies:• State laws • Federal Economic Espionage Act

Nondisclosure AgreementNondisclosure Agreement (NDA) or also knows as

Confidentiality Agreement (CA)

-is one of the most effective ways to protect trade secrets

Historical trade secrets’ disputes:Apple v. NeXTIBM v. SeagateWal-Mart v. Amazon.comIntel v. BroadcomMicrosoft v. GoogleHitachi and Mitsubishi v. IBM

SILVACO DATA SYSTEMS VS.

INTEL CORPORATIONCalifornia Court of Appeal

04/29/2010

FIRACT

PayPal v. Google

http://youtu.be/oUGhjs1VT0c

http://youtu.be/oUGhjs1VT0c