1 SSHHHH! It’s a Trade Secret Steve Baron April 3, 2003

2 What Is A Trade Secret?

3 Information  Economic value  Not generally known  Reasonable efforts to maintain secrecy

4 Types of Trade Secret Information  Technical or non- technical data  Formula  Pattern  Compilation  Program  Device  Method  Technique  Drawing  Process  Financial data  List of actual or potential customers

5 Economic Value  Actual  Potential

6 Availability of Information  Not generally known by competitors

7 “Reasonable” Efforts to Maintain Secrecy  Absolute secrecy not required  Reasonable under the circumstances  Comprehensive program

8 Examples of Methods to Maintain Secrecy  Lock & Key  Passwords  Restricted access  Sign-in sheets  Confidential stamps  Non-Disclosure Agreements

9 The sum may be a trade secret, even if each part is not.

10 Famous Trade Secrets  Formula for Coca-Cola  Recipe for Kentucky Fried Chicken  Formula for Smith’s Cough Drops

11 Advantages of a Trade Secret  No time limit  No public disclosure  No governmental filing process

12 What Law Governs  Historically – Common Law  Uniform Trade Secrets Act  Illinois Trade Secrets Act  Economic Espionage Act

13 Historically – Common Law – Six Factor Test 1. Extent known outside company 2. Extent known by employees 3. Measures taken to guard secrecy 4. Value to company and competitors 5. Time, effort and money to develop 6. Difficulty of proper acquisition

14 Uniform Trade Secrets Act 1. Adopted by nearly 40 states

15 Illinois Trade Secrets Act 1. Effective since Adjunct to common law 3. Gives “teeth” to infringement claims

16 Illinois Trade Secrets Act Remedies  Injunction  Compensatory damages  Punitive damages  Attorney’s fees

17 Economic Espionage Act  Gives U.S. Attorney sweeping powers to prosecute any person or company involved in trade secret misappropriation  Punishes intentional stealing, copying or receiving of trade secrets  For product produced or placed in interstate commerce

18 Economic Espionage Act  Penalities  Individual fines up to $500,000  Company fines up to $5 million  Prison – up to 10 years for individuals and 15 years if theft performed for foreign government

19 Proper Methods to Obtain Trade Secrets  Legitimate Observation  Reverse Engineering  Independent Invention

20 Inevitable Disclosure Doctrine  Pepsi v. Redmond

21 Inevitable Disclosure Doctrine  Even in the absence of actual or threatened misappropriation of a trade secret, where a person who has acquired trade secrets from one employer, will inevitably disclose those secrets to a competing employer, the court may issue an injunction.

22 Pespsi v. Redmond  Who’s the plaintiff?  Who’re the defendants?  Why does the plaintiff sue defendants?  Under what legal theory?  What happens in the trial court?  What happens on appeal?

23 WWII Posters of the Day

24

25

26