Seattle Intellectual Property Inn of Court TRADE SECRETS Introduction

DEFINITION: “TRADE SECRET” Information, including a formula, pattern, compilation, program, device, method, technique, or process that: (a) 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; and (b) Is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.

STATE LAW SOURCES RCW , et. seq. Uniform Trade Secrets Act (46 states and District of Columbia) Common law of Massachusetts, New York, New Jersey and Texas See also Restatement (Third) Unfair Competition

BROAD SCOPE No Subject Matter Constraints Competitive advantage from information’s secrecy Technical and non-technical Negative know how/what does not work License forever, even if in public domain: Warner –Lambert v. John F. Reynolds (the Listerine case) 178 F. Supp. 655 (S.D.N.Y. 1959), aff’d 280 F.2d 197 (2d. Cir. 1960)

NO NOVELTY/USEFULNESS/ OBVIOUSNESS CONSTRAINT Novelty not required; can exist in a combination of known characteristics and components Usefulness is not required; knowing what does not work is protectable Difficulty to Reverse Engineer

REASONABLE MEASURES Efforts that are reasonable under the circumstances to maintain secrecy or confidentiality “Relative Secrecy”/Not absolute secrecy Contract/lock and key/safe not required

NONDISCLOSURE, NONCOMPETE, NONSOLICITATION Statehouse efforts to “reform” noncompetes: MA, OR, GA Enforcement harder to predict Reluctance to deny a person actual employment in dismal job market

TRADE SECRET MISAPPROPRIATION Proof of “Trade Secret” Misappropriation - Unauthorized acquisition - Unauthorized disclosure - Unauthorized Use Proof: direct, circumstantial Defense: Independent development, reverse engineering, “Clean room”

REMEDIES Actual losses Unjust enrichment/disgorgement of ill-gotten gains Reasonable royalty damages Exemplary damages for “willful and malicious misappropriation” Injunctive relief: “a trade secret once lost, is lost forever” - Doctrine of inevitable disclosure

COMPARISON OF TRADE SECRETS AND PATENTS Trade Secrets: Not generally known/ relative secrecy Secret Indefinite Protection Established through reasonable measures and litigation More than one holder Patents Novel, useful, non- obvious Public 20-year term Established through USPTO Only one holder

THE COMPUTER FRAUD AND ABUSE ACT, 18 U.S.C. §1030(a)-(b) Access to federal court Defendant accessed a computer “without authorization” or in a way that “exceeds authorized access” - develop a formal computer usage policy Loss of at least $5,000

AMERICA INVENTS ACT Effective September 16, 2011 Raises many issues to be considered, including impact on trade secret/patent calculus… …But not here