Trade Secret Elements
- Secret business information (not generally known to industry members)
- Value because the information is secret
- Reasonable measures to guard secrets
- Ownership of that information
An employee can take from his company his:
- General skills
- Knowledge
- Training
- Experience
Does a trade secret need to be fixed?
No, it can be a mere idea
A combination trade secret is:
The idea of combining publicly available information in a new combination.
Types of Trade Secret Misappropriation
- Wrongful Acquisition
- Unlawful Disclosure
- Unauthorized Use
Ways to Misappropriate a Trade Secret
- Theft (unauthorized access)
- Lawful acquisition, subsequent misuse
- Lawful acquisition, mistaken legality
Where a defendant modifies a trade secret:
Plaintiff need only show that defendant’s product was substantially derived from trade secrets
Defenses to Misappropriation of a Trade Secret
- Reverse Engineering
- Independent Derivation
- Non-secrecy
- No acquisition or knowledge of the secret
- Lack of reasonable measures to preserve secrecy
Examples of independent derivation:
- Independent learning from an honest source (e.g. door-to-door looking for customers)
- Pre-existing knowledge - e.g. employee already knew the customer list
- Demonstrate no disclosure of trade secrets to the persons responsible for creating the similar trade secret
- Demonstrate pre-existing creation of trade secret
Types of Trade Secret Misappropriation Damages
- Actual Loss (lost sales, lost market share, reduced sales price)
- Unjust Enrichment
- Reasonable Royalty (where can’t prove actual loss or unjust enrichment)
- Exemplary Damages (where willful and malicious)
Equitable Remedies for Trade Secret Misappropriation
- Head-start Injunction
- Regular Injunction
- Inevitable Disclosure
Head start injunction will last:
the approximate period of time it would take a competitor to develop a competing product after the time of publishing the trade secret
Injunctions must ___ to avoid being overbroad:
- Clearly define the off-limit trade secret
2. List the specific information the defendant cannot use
Legal fees are available where:
There is a bad faith claim or defense.
Factors to consider for Injunction for Inevitable Disclosure
- Has the mobile employee acted dishonestly or already done something wrong?
- Has the hiring employer demonstrated a good faith commitment to respect the trade secrets of the former employer
- Does the hiring company already have a body of information that the new employee can work from?
- Whether the employee is a technical person with detailed product knowledge
- Degree of overlap in competition
- Is there a non-competition covenant in place?
Test for enforcability of a non-competition covenant
- Is stopping the employee from joining a competitor necessary to protect a legitimate business interest of the former of employer [Legitimate Business Interest]
- Would stopping the former employee from taking the new job impose an undue hardship on the former-employee [Undue Hardship test]
- Does public policy support enforcement or nonenforcement of the non-competition covenant [Public Policy]
When does the employer own the employee’s intellectual products:
- Where an invention is created on the time of the employer
- Where an invention is created using the employer’s equipment, supplies, or facilities
- Where the invention uses an employer’s trade secret information
- Where the invention relates to the employer’s business at the time of conception
- Where the invention relates to actual or demonstrably anticipated research or development of the employer
- Where the invention results from any work performed by the employee for the employer
