1. 1 SSHHHH! It’s a Trade Secret Steve Baron April 6, 2006

2. 2 What Is A Trade Secret?

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

4. 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. 5 Economic Value  Actual  Potential

6. 6 Availability of Information  Not generally known by competitors

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

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

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

10. 10 Famous Trade Secrets  Formula for Coca-Cola  Recipe for Kentucky Fried Chicken  Formula for Smith’s Cough Drops  Specifications for a product with the code name “Asteroid”

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

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

13. 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. 14 Uniform Trade Secrets Act 1. Adopted by nearly 40 states

15. 15 Illinois Trade Secrets Act 1. Effective since 1988 2. Adjunct to common law 3. Gives “teeth” to infringement claims

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

17. 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. 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. 19 Proper Methods to Obtain Trade Secrets  Legitimate Observation  Reverse Engineering  Independent Invention

20. 20 Inevitable Disclosure Doctrine  Pepsi v. Redmond

21. 21 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?

22. 22 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.

23. 23 Learning Curve v. Playwood

24. 24 Learning Curve v. Playwood  Plaintiff/Counterdefendant = Learning Curve  Defendant/Counterplaintiff = Playwood  Learning Curve = Licensee of Thomas products  Playwood = Canadian toy maker  Learning Curve and Playwood meet  Playwood discloses idea for track  Parties do not form relationship  Learning Curve exploits “Clickety-Clack Track”

25. 25 Learning Curve v. Playwood  Learning Curve sues  Playwood countersues – alleges misappropriation of trade secrets  Playwood obtains jury verdict  Trial judge reverses  Playwood appeals to Seventh Circuit

26. 26 Learning Curve v. Playwood  Seventh Circuit reverses  Playwood had legitimate trade secret  Learning Curve learned of secret in confidence  Ease of reverse engineering does not matter

27. 27 Gonzales v. Google  Who is Gonzales and what does he want?  Who is Google and what does it want to keep from Gonzales?

28. 28 Gonzales v. Google  Gov’t wants to evaluate the effectiveness of on-line filters for purpose of COPA. ACLU v. Gonzales – Challenge to COPA ACLU v. Gonzales – Challenge to COPA  Google wants to protect its “crawling, collecting, and sorting techniques” as trade secrets.

29. 29 Gonzales v. Google  Trial Court Splits the Baby: Google must turn over 50,000 URL’s from its search index Google must turn over 50,000 URL’s from its search index Google need not turn over sample queries from its search logs Google need not turn over sample queries from its search logs Court makes the data subject to a protective order Court makes the data subject to a protective order

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