Hypo Four: Your method for making a
coating for glass display screens on electronic devices is held by your company
as a trade secret. At least a part of the
reason you chose to take the trade secret
approach (rightly or wrongly) was that
every element in the process (the chemical reactions, the raw materials, all the
individual steps of the process, etc.) are
well known in the art of making such
clear coats. The arduous task of compiling these disparate, albeit entirely publicly available, elements of your
manufacturing process cost you money
and took you significant amounts of
time. An employee conversant with all of
this information leaves her job with your
company, heads off to a foreign country,
and sets up the same process in a plant
owned by a US parent company competitor of yours. You sue the US parent
company for trade secret misappropria-tion. The chief defense to your claims of
theft is that everything you claim to be a
trade secret is well known as to every aspect, even if they have never actually
been put together in such a fashion, i.e.,
your trade secret information would
never be protectable as a patented invention. Will you prevail?
A NS W ER: Y es. PepsiC o v. R ed m o n d,
5 4 F. 3 d 1 2 6 2 (F ed. C ir. 1 9 9 5). It’s factin-
tensive, a n d n ot w ith o ut a great deal of
legal g n ashin g of teeth, b ut w h e n R e d-
m ond left PepsiC o w here he kne w all
a b o u t m a k i n g a s p o rt d ri n k c alle d A ll-
S p ort to w ork for Q u a k er’s G atora d e di-
visio n, h e w as e ve ntu ally e njoin e d fr o m
i m m e diately ta kin g th e p ositio n to directly
c o m p ete w ith his for m er e m plo yer sin ce it
w as h eld h e c o uld n ot h elp disclo sin g P e p-
si C o’s tra d e secrets in bre ac h of his n o n-
disclosure agree m ent.
A NS W ER: Y es. S y nte x O pth al m ics v.
N ovicky,591 F.Supp. 28( N.D.Ill.1983).
S y nte x h a d a tra d e secret in its o verall
p r o cess, e v e n if th e literatu re disclo se d
every step an d reagentspecificatio n.
Hypo Five: In alternative years, your director of marketing/sales visits the American or European Coatings Shows. A
part of his assigned duties is to identify
potential new customers, you know, the
standard sales guy stuff. The way he actually does this is to use the show exhibitors list handed out to all attendees
(and which is also published online for
anyone to see). He simply circles those
potential new customers he met and intends to follow-up with, and where he
can, he adds a comment about how it is
he thinks your product would specifically address concerns raised by the new
customer about its current supplier’s
product. It’s a very disorganized and
sloppy way to do it, but it seems to
work. He uses this information to guide
“cold” sales calls he makes after the
show. One of his buddies who works for
one of your competitors visits your
plant, signs in at the front where you
badge everyone, and has coffee in your
employee’s office. They talk shop, and
during a bathroom break when your employee is momentarily out of his office,
the competitor decides he will take a few
quick iPhone photos of the annotated
exhibitor list. The very next day, this
clown uses this list to make some pre-emptory calls to each of the circled customers and invite them to lunch. Upon
investigation, you find out this happened
and bring suit against your competitor.
But, your only evidence is the annotated,
publicly available exhibitor list, and the
circumstantial fact that every company
circled on your employees list was called
within 24 hours of his visit to your plant.
The competitor’s defense of the case rests
chiefly on the argument that a mere annotated publicly available list of customers that everyone-and-their-uncle is
free to call upon is not a protectable
trade secret. What do you think?
A NS W ER: Yes. Elm er M illerv. Landis.
625 N E 2d 338(Ill.A pp.1993).Ifthecus-
to m erlist c o ntain sinfor m atio n n ot g e n erally kno w ninthetrade and notgenerally
used by go o d faith co m petitors, an d ifthe
tra d e secret o w n er to o k reaso n a ble sec u-rity ste ps to preserv e th e secrecy, s u c h list
are p r otecta ble re g ar dless of its a p p are nt
p u blicly a v aila ble n atu re.
Don’t feel badly if you didn’t score so
well. Even lawyers who do this stuff for a
living have to convene from time to time
to remind themselves of the answers.
Here’s how they do it.
First, the trade secret cases that have
been or are currently being litigated give
them suggestions of how to determine
what is or isn’t a trade secret, and these
collectively form the common law. The
lawyers will occasionally look at the common law cases and summarize or “restate”
the case law – generating what is called
the Restatement of Torts, or Restatement
of Unfair Competition.
Sometimes, they will suggest statutes
to govern what is and isn’t a protectable
trade secret—for instance in what’s
called the Uniform Trade Secrets Act.
Sometimes states adopt these suggestions
from one or the other of these bodies of
law into their own state laws—that’s
called statutory state law. The Feds do
the same thing, ergo, federal statutory
trade secret laws like the Economic Espionage Act. It gets really mind-numbing
when you cross back and forth over national borders to protect your company’s
crown jewels.
All in all, since our industry is one
that thrives on its ability to maintain
trade secret information, we all need to
be good stewards of these assets. Being
good managers of such assets means we
need to be able to identify them and to
understand the steps we must take to
protect them. Embedding processes in
the operation of your business to identify, list, valuate and routinely update
your trade secret assets is advisable. The
more international business you do, the
more critical are these processes. Give
yourself extra credit on the quiz above if
you spend a few minutes thinking about
something you would like to protect as a
trade secret in your business that you
never thought was possible to protect
and you’ll have started a potentially very
valuable process. CW
Technology Litigators (McDaniel &
Assoc. P.C.) was founded in 1999 by Steve
McDaniel, Ph.D., J.D. in Austin, Texas.
The firm is a full-service intellectual property law firm with a particular focus on
trade secret protection. For more information visit them online at www.technol-ogylitigators.com.
