This document discusses protecting trade secrets in the current economy. It provides an overview of trade secret law, noting that protection extends to confidential information providing a competitive edge without formal registration. Key considerations for choosing trade secret protection over patents include the commercial life of the product, ability to reverse engineer, and time needed to obtain a patent. Common trade secrets include customer lists, pricing information, and software. Remedies for trade secret misappropriation include injunctive relief, monetary damages, and attorneys' fees. The new economy has seen a rise in trade secret audits and enforcement of non-compete agreements.

1. PROTECTING TRADE SECRETS
IN THE CURRENT ECONOMY
BY:
KIRBY 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 Secrets
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 Secrets 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 Secrets 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?