Trade Secret – (1) Validity • Information must be Secret • Metallurgical -- “matters of general knowledge in an industry cannot be appropriated by one as his secret” (p. 41) • Restatement of Torts – pp. 45, note 5
Trade Secret – (1) Validity • Information must be Secret • UTSA § 1 (4)(i)(“from not being generally known to, and not being readily ascertainable by proper means, other persons . . . .” • CA UTSA § 3426.1(d)(1) “from not being generally known to the public or to other persons . . . .”
Trade Secret – (1) Validity • Information must be of Value • UTSA § 1 (4) “information, including a formula, pattern, compilation, program, device, method, technique, or process, that: (i) derives independent economic value, actual or potential” from being secret
Trade Secret – (1) Validity • Must take Reasonable Efforts to Maintain Secrecy of information • UTSA § 1 (4) (ii) “is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.” • Reasonable under circumstances – cost v. benefit
Trade Secret – (2) Misappropriation
Trade Secret – (2) Misappropriation • Misappropriate a trade secret if acquired by Improper Means • What is “improper”? • Is mere possession “misappropriation” when obtained by improper means? • 3rd party/indirect liability
Trade Secret – (2) Misappropriation • Misappropriate a trade secret if acquired by Breach of Confidence • Expressed v. Implied • Is mere possession “misappropriation” in breach of confidence situation?
Trade Secret – (4?) Reverse Eng’g • Defense (?) to misappropriation is Reverse Engineering • Is focus on “improper means”? • Or whether information is “secret”? • Or “reasonable efforts”?
Trade Secret – Employees • Common Law Obligation to Assign Inventions • Trailer Clauses • Must be reasonable • Contracts to Restrict Use of Trade Secrets • Express v. Implied • Particular v. General Knowledge • Restrictions on non-trade secrets?
Trade Secret – Employees
Trade Secret – Employees • Noncompetition Agreements • Edwards v. Arthur Andersen (CA S.Ct.) • “If you leave the Firm, for eighteen months after release or resignation, you agree not to perform professional services of the type you provided for any client on which you worked during the eighteen months prior to release or resignation. This does not prohibit you from accepting employment with a client. [¶] For twelve months after you leave the Firm, you agree not to solicit (to perform professional services of the type you provided) any client of the office(s) to which you were assigned during the eighteen months preceding release or resignation. [¶] You agree not to solicit away from the Firm any of its professional personnel for eighteen months after release or resignation.”
Trade Secret – Employees • Noncompetition agreements generally not favored • Compare California: • Section 16600. “Except as provided in this chapter, every contract by which anyone is restrained from engaging in a lawful profession, trade, or business of any kind is to that extent void.” • To Virginia: • must be “reasonable as to its duration, geographical area, and type of employment or line of business”
Trade Secret – Employees
Trade Secret – Employees • Inevitable Disclosure Doctrine • Nonsolicitation Agreements
Trade Secret – (3) Remedies Damages Injunction Date of PI/Judgment • Injunction
Trade Secret – (3) Remedies • What if no longer a Trade Secret? Winston Research • Head-Start Injunction Injunction—Delay Infringer Misappropriation Head start Secret Disclosed • Other options? • No injunction – Conmar (2d Cir.) • Permanent injunction – Shellmar (7th Cir.)
Trade Secret – (3) Remedies Injunction—Delay Infringer Misappropriation Head start Secret Disclosed
Trade Secret – (3) Remedies • Damages
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