Intellectual Property Boston College Law School February 10, 2009 Trade Secret – Part 2

Uniform Trade Secrets Act §1. Definitions –(4) “Trade secret” means information, including a formula, pattern, compilation, program, device, method, technique, or process, that: (i) derives independent economic value … from not being generally known to, and not being readily ascertainable by proper means..., and (ii) is the subject of efforts that are reasonable under the circumstances to maintain its secrecy

Uniform Trade Secrets Act §1. Definitions –(1) “Improper means” includes theft, bribery, misrepresentation, breach or inducement of a breach of a duty to maintain secrecy, or espionage through electronic or other means ….;

Hypo: Acquisition Facts –Company A wants to acquire competitor B –Company B has certain trade secrets Questions –What advice to give company A? –What advice to give company B?

Uniform Trade Secrets Act § 1. Comment –“Proper means include: 1. Discovery by independent invention; 2. Discovery by reverse engineering, … … 4. Observation of the item in public use … 5. Obtaining the trade secret from published literature”

Problem 2-11 Facts –Atech makes diagnostic equipment –Alpha hires 3 rd party to buy – studies it –Picks internal locks to access secrets inside Questions –Did Atech take “reasonable efforts”? If not, what more could they have done? –Impact of an end-user licensing agreement?

Patent Ownership Rules Common law default rules –Hired to invent: company owns –Invented in shop: company gets shop right –Independently invented: employee owns

Non-Compete Agreements Some jurisdictions, unenforceable Other jurisdictions, reasonableness –Employer’s legitimate interests in protection –Employee’s interest in mobility –Public policy

Hypothetical Facts –Associate at a high-power Boston law firm –Valuable proprietary litigation techniques –Sign non-compete agreeing not to work for another Boston firm for 1 year Enforceable?

Trade Secret Remedies Remedies –Injunction –Reasonable royalty –Damages Actual damages Unjust enrichment Exemplary damages –Attorneys fees

Economic Espionage Act 18 U.S.C. § 1831(a) –Punishes individual who “(1) steals, or without authorization appropriates, takes, carries away, or conceals, or by fraud, artifice, or deception obtains a trade secret; “(2) without authorization copies, duplicates, … alters, destroys, photocopies, … transmits, delivers, … a trade secret; “(3) receives, buys, or possesses a trade secret knowing the same to have been stolen or appropriated, obtained, or converted without authorization …. ”

Administrative Assignment –Patents – through IV.B.2 – Utility