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Trade Secrets

Trade Secrets. Chapter 6 presented by Marina Deykun December 3, 2011. “Have you ever had a secret, but then a friend learned it, either by mistake or because you told? ”. Statistics. Annual losses to U.S. firms are between $250 and $300 billion.

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Trade Secrets

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  1. Trade Secrets Chapter 6 presented by Marina Deykun December 3, 2011

  2. “Have you ever had a secret, but then a friend learned it, either by mistake or because you told? ”

  3. Statistics • Annual losses to U.S. firms are between $250 and $300 billion. • Over 60% of departing employees admit that they took confidential information with them when they left their firms

  4. Definition • Trade secret = information, including a formula, pattern, compilation, program, device, method, technique, or process, that: • (1) Derives independent economic value, actual or potential, from not being generally known to the public or to other persons who can obtain economic value from its disclosure or use; and • (2) Is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.” CUTSA § 3426.1, subd. (d)

  5. Definition A trade secret is a formula, practice, process, design, instrument, pattern, or compilation of information which is not generally known or reasonably ascertainable, by which a business can obtain an economic advantage over competitors or customers. ="confidential information" or "classified information". Wiki

  6. Trade Secret v. Patent • Patent covers completed inventions and processes • Trade Secret extends to almost any kind of information that has been kept secret

  7. Trade Secret v. PatentImportant Factors • Stage of development • Subject matter • Standards for protection • Expense • Difficulty of maintaining secrecy • Company culture • Length of protection

  8. Governing Laws and Policies State : • Uniform Trade Secrets Act (UTSA) • Restatement (Third) of Unfair Competition . Federal: • Economic Espionage Act • Most of the states have ratified the UTSA, except for Massachusetts, New York, New Jersey, North Carolina, and Texas. • CUTSA - The California Uniform Trade Secrets Act (Cal. Civ. Code §§ 3426)

  9. Elements of a Trade Secret • Valuable information • Secrecy • Reasonable security measures

  10. Misappropriation of Trade Secrets may be achieved through three types of conduct: • Acquisition • Disclosure • Use CUTSA § 3426.1, subd. (b) NB: Reverse engineering is not misappropriation

  11. Remedies for Trade Secret Misappropriation • Injunctions: • For actual or threatened misappropriation • Preliminary or permanent • Potential impact on employee mobility • Monetary damages • Criminal remedies: • State laws • Federal Economic Espionage Act

  12. Nondisclosure Agreement Nondisclosure Agreement (NDA) or also knows as Confidentiality Agreement (CA) -is one of the most effective ways to protect trade secrets

  13. Historical trade secrets’ disputes: • Apple v. NeXT • IBM v. Seagate • Wal-Mart v. Amazon.com • Intel v. Broadcom • Microsoft v. Google • Hitachi and Mitsubishi v. IBM

  14. SILVACO DATA SYSTEMS VS. INTEL CORPORATION California Court of Appeal 04/29/2010 FIRACT

  15. PayPal v. Google http://youtu.be/oUGhjs1VT0c http://youtu.be/oUGhjs1VT0c

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