This document discusses trade secret protection and considerations. It notes that trade secrets extend to confidential information providing a competitive edge, do not require formal registration, and are balanced against independent development. Trade secrets last as long as information is kept secret but disclosure destroys protection. Key considerations for trade secrets include the commercial life of products, ease of keeping information secret, ability for competitors to reverse engineer, potential patent protection, and economic effects. Remedies for trade secret misappropriation include injunctions and monetary damages. Examples of potential trade secrets are provided across various industries.

1. Protecting Trade Secrets in the
Current Economy
Kirby B. Drake

2. Trade Secrets
• Protection extends to confidential information that
gives a company a competitive edge
• No formal registration requirement
• Balancing test

3. Trade Secrets
• Disclosure may destroy protection
• Trade secrets usually endure as long as the
information is kept secret

4. Trade Secret Considerations
Commercial Life of Product Reverse Engineering
Independent Development Tipping Off Competitors
Type of Subject
Matter/Industry
Ease of Keeping Secret
Time Needed to Obtain Patent Economic Effects

5. Trade Secret Considerations
• Non-exclusive rights
• Independent development not actionable
• Must breach non-disclosure obligation or obtain
trade secret via improper means to be actionable

6. Trade Secret Considerations
• Commercial life of product
• Economic considerations
• Patents may give a signal that IP was created –
good for future investments, competitive
positioning
• Less upfront investment to maintain as trade
secret but loss may be financially devastating

7. The Overlap – Patents and Trade Secrets
• Innovations protectable with patents or trade secrets
• Cannot usually protect same innovation by both
patents and trade secrets
Patent?
Trade Secret?
Both?
Neither?

8. What Is Protectable as a Trade Secret?
• Manufacturing processes
• Ideas
• Manufacturing drawings
• Software
• Chemical formulae and processes

9. Examples of Possible Trade Secrets
Customer Lists Know-How
Pricing Information Negative Know-How
Product Technical Specs Computer Hardware
Marketing Plans Computer Software
Business Methods Chemical Formulae

10. Effects of Trade Secret Disclosure
• Claim for Trade Secret Misappropriation
• Preliminary Injunction
• Reassignment of Patent
• Destruction of Trade Secret Protection

11. Remedies
• Injunctive relief
• Monetary damages (royalty)
• Attorneys’ fees
• Punitive damages

12. Remedies

13. Damages for Trade Secret
Misappropriation
• Remedies are state-specific (whether in federal or
state court), though most have some version of the
UTSA and include:
1. Actual loss by plaintiff
• Lost profits
• Out-of-pocket expenses
• Loss-in-value of business or trade secrets
• Other losses (consequential)

14. Damages for Trade Secret
Misappropriation
2. Alternatively, or in addition, to actual loss
• Unjust enrichment by the defendant
• Defendant’s profits
• Market value of misappropriated trade
secrets
• Cost savings or value of “head start”
benefit gained by defendant
3. Alternatively…
• Reasonable royalty for use of trade secrets
• Use of patent damages construct

15. Change in Employment –
The English Muffin Injunction
• Chris Botticella (former employee of Bimbo
Bakeries) prevented from working for competitor
(Hostess Brands)
• Conduct after acceptance of job offer indicated
likelihood of trade secret misuse

16. DuPont, Competitor, and Employees
• DuPont lawsuit against former employee
• DuPont lawsuit against Invista
• Invista lawsuit against DuPont partner
• DuPont lawsuit against Kolon Industries

17. Coca-Cola and Pepsi
• Coca-Cola sued former employee for trade secret
misappropriation (formula for Coke)
• Former employee had offered knowledge of formula
to Pepsi but Pepsi did not use

18. The New Economy – Trade Secrets
• Opting for trade secret protection in lieu of other
forms of intellectual property protection
• Rise of trade secret audits
• Increased enforcement of non-competes and NDAs
• Modifications to damages model in litigation
• Other considerations?

19. For more information, please contact:
Kirby B. Drake
KLEMCHUK KUBASTA LLP
214-367-6000
kirby@kk-llp.com
www.kk-llp.com
Thank You!