Posts in Trade Secrets

While trade secrets cannot fully replace patent protection in all respects, they do offer a viable alternative to patents for protecting intellectual property in some cases. In addition, while the value of patents in protecting IP has been under attack this year, trade secret protection has been on the rise with, for example, the California appellate court decision in Altavion, Inc. v. Konica Minolta Systems Laboratory, 226 Cal.App.4th 26. 171 Cal.Rptr.3d 714 (1st Dist. 2014) that broadened the definition of what information can qualify as a trade secret. Moreover, there is a real possibility that Congress will finally pass a civil trade secrets protection law, which will mean that trade secrets will not be considered patent’s ugly step sister any longer.

While normally no single factor is dispositive in determining whether information has been kept secret enough to qualify as a trade secret, the focus is on determining whether reasonable efforts to preserve secrecy were employed is of paramount importance. What is reasonable will, of course, vary depending upon the resources of the company or individual claiming the trade secret and the value of the secret being protected. Notwithstanding, the failure to employ any protection protocols would suggest that the information is not a trade secret. In other words, while what is reasonable will vary, failure to do anything to protect the valuable information will not be reasonable. Said another way, reasonable efforts to preserve secrecy necessarily means that there must be at least some effort to preserve secrecy.

The general value of trade secret protection, perhaps taken for granted in less scrutinized trades, also applies to the private election equipment industry. The private election companies that create election equipment and software are in competition with other companies supplying their own versions. Trade secret protection provides incentives to put effort and capital into product development, product innovation, and advances in procedure and industry innovation. There are less incentives to do this, however, when competitors can appropriate the benefit of the work as soon as it is released. Those companies investing in computer source code development particularly benefit from trade secret protection.

There is some conflict with trade secrecy policy application to private election companies and a desire for transparency in government. When the issue is as critical to the interaction between the citizens and their government as elections are, the policy behind trade secrets must be examined to determine whether an exception should be made. Transparency is generally a desired trait in government. It is a means of holding elected officials accountable for their actions and reducing corruption among those officials. If the consequences are serious enough, there are exceptions to the desire for government transparency, however, such as when national security is determined to be at stake. Government itself does not necessarily suffer consequences for lack of innovation if not granted trade secret protection of its governmental secrets and the public policy reasons do not apply as much.

Voting machine companies have responded to these requirements with streamlined computerized equipment, running more sophisticated software than ever before. Many states upgraded their voting equipment to Direct Electronic Voting systems (“DREs”). These systems offer the benefit of easy-to-use interfaces that allow voters to make their selections efficiently and effectively. They raise accountability and reliability issues, however, as they store their vote totals in computer memory… In recent cases, courts in North Carolina and Florida have held that despite problems encountered with election equipment, election companies are entitled to maintain their trade secrets. On this reasoning, the source code of voting machine software is shielded from discovery.

Employers often spend considerable resources recruiting, hiring and training key talent, only to face potential disaster when those trusted employees quit to join a competitor, often taking sensitive files on their way out the door. Even if they don’t act in bad faith, departing employees carry critical, confidential information inside their heads, which can’t be deleted. Fortunately, various remedies may be available for the former employer, from confidentiality and non-competition agreements, to lawsuits for actual or threatened misappropriation of trade secrets and the doctrine of inevitable disclosure. But there’s a conflict. Employers have a legitimate interest in preventing misappropriation of trade secrets, while employees have a legitimate interest in utilizing knowledge and skills gained through work experience and working for employers of their choosing.

Last week, police detained three employees of Taiwanese smartphone-maker HTC, raided their homes and offices and seized their computers and cellphones to search for evidence, as HTC is accusing them of stealing sensitive technology to sell to HTC’s competitors. The three men – a vice president of product design, director of R&D, and senior designer – are accused of stealing secrets relating to HTC’s Sense 6.0 smartphones, which are scheduled for launch later this year. The accused purportedly formed design companies in Taiwan and China and began speaking with Chinese phone-makers about selling them the stolen secrets. They are also accused of defrauding HTC out of more than US$300,000, by use of forged documents, apparently to raise capital for their new venture.

United States Marine, Inc. (USM) sued the United States government in the United States District Court for the Eastern District of Louisiana under the Federal Tort Claims Act (FTCA), 28 U.S.C. § 1346(b) and 28 USC §2674. USM alleged that the United States misappropriated USM’s trade secrets. Specifically, USM claimed that the United States Navy, which had lawfully obtained USM’s proprietary technical drawings under a contract (to which USM was not a party), owed USM a duty of secrecy that it breached by disclosing those drawings to a rival private firm for use in designing military boats for the government.

Capone, an Illinois corporation, did not have authorization to use the Tommy Gun trademarks on alcoholic beverages that carry a reproduction of the Tommy Gun marks. Additionally, Saeilo claims that Capone’s infringement not only violates federal trademark law, but also Illinois state law and common law.