Would You Even Know A Trade Secret
If It Jumped Up and Bit You Somewhere?
By Steve McDaniel, PhD JD
Technology Litigators
Contributing Editor
smcdaniel@technologylitigators.com
OK. We all know what trade se- crets are, right? The formula for Coca Cola is supposedly in a
heavily guarded vault in Atlanta (yeah,
right). We can all probably agree that if
someone swipes the Coke formula, they
are guilty of trade secret theft (among numerous other things, including Darwinian
Award stupidity). But, what about a
hacker getting through your firewall to
the raw data files in your formulations
lab, who then publishes these data on an
anonymous website, and these illegally-obtained data fall into the hands of your
competitor through no illegal act on their
part? Hhhhhmmmm. Dicey.
Our industry lives and breathes on its
highly valuable trade secrets. So, here’s a
little quiz to test your ability to identify
information that has, or has not, been
held to constitute a legally protectable
trade secret. To see the right answer, turn
the coatings world on its head – the magazine you’re holding called Coatings
World.
Scoring: 5 correct, You-Should-Litigate-This-Stuff; 3-4 correct, In-Vegas-The-House-Would-Own-You; 0-3 correct,
Lock-Your-Front-Gate-Immediately-Seek-Professional-Help.
Hypo One: You are building a new
plant, the layout of which you have
spent much time and research on de-
signing for maximum efficiency, and
which layout will be covered from view
in your final construction. You take rea-
sonable steps to prevent access like high
fences blocking the view, rent-a-cops,
badge-access only, etc. Using a hovering
toy helicopter fitted with a high-resolu-
tion camera, but operating in public air-
space, some wannabe black-ops boys
take several hundred pictures of your
layout that capture its technical essence,
contact some lower level employees of
various competitors, and arrange to sell
the pictures to the highest bidder. Are the
pictures legally protectable trade secrets
in whose use you can prevent your com-
petitor from engaging?
Hypo Two: Despite years of false starts
and failed experiments, your resin lab gets
the new resins to not only meet but to exceed automotive industry specifications
for interior soft touch coatings. You are
set to enter the market in a big way only
to find that your arch rival has an identical offering. Smelling a rotten fish, you investigate and find that one of your chief
scientists working on the project became
disgruntled with the repeated failures on
the project and left to go to work for the
same competitor in a similar research capacity. But, there’s a problem. He left prior
to the breakthrough, even before the solution was recognized. If it can be shown
that the departed employee provided
nothing to his new employer but the “
negative show-how” (i.e., “we tried that
where I used to work, and it bombed”),
and never provided the rival paint company any other roadmap to success, can
you stop the competitor from using its
own “breakthrough?”
(S D N Y 1 9 8 9). Sig nifica nt a m o u nts of
tim e and m oney spentinvestigating altern ativesth atin the e n d are n otfruitful
(n e g ativ e info r m atio n) is a p r otecta ble
tra d e secret.
Hypo Three: Your vice president of research and development has left to become VP R&D at your chief competitor.
Because he had access to literally ever
technical trade secret and piece of confidential information about your formulations that you have, you are very
worried that he will breach that agreement no matter how hard he tries not to
do so (inevitably). Trouble is, although
he signed a nondisclosure agreement
with you at the start of his employment,
he did not sign a noncompetition agreement. And, let’s be fair, the guy ain’t your
slave - he deserves to seek employment
and use the skills he used for you, right?
Still, can you file a trade secret misap-propriation case seeking a preliminary
injunction to prevent this guy from
working for your arch nemesis on the
theory that he knows so much of your
trade secret and proprietary information
that he cannot help but use that information in his new virtually identical position, and that your company will suffer
irreparable harm if he does?
