Posts Tagged: "trade secret"

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.

Not every claimed invention will be able to be re-patented, but there will undoubtedly be some that will be able to be re-patented. This is possible thanks to 35 U.S.C. 102(b)(2)(C). So, if a patent or published patent application is commonly owned it may not be considered prior art against an identical set of claims in a subsequently filed patent application. Of course, 102(b)(2)(C) does not eliminate prior art that qualifies under 102(a)(1), but 102(a)(2) makes the patent application prior art as of its effective filing date of the claimed invention. So if you keep your invention secret and file a patent application it will be secret (and not prior art) up until the application publishes 18 months after filing. If you then re-file a second application with identical claims before publication of the first application there would be no 102(a)(1) prohibition. 102(a)(2) would make that first filing prior art as of its effective filing date, but if you remove 102(a)(2) through common ownership then a common owner would be able to effectively extend their patent term by up to 18 months; longer if publication doesn’t occur at 18 months.

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.

There are some exceptions whereby a person who files second can still prevail, but those exceptions are infinitesimally insignificant, and the law surrounding the parameters of the exceptions is non-existent and unfortunately rather ill defined by the USPTO at this point. It is also critical to understand that the new law contains traps and loopholes. For those who have not spent adequate time considering the many nuances of the law you will be surprised to learn what it really means. For example, did you know that long held and previously unpatentable trade secrets can now be patented? It seems unthinkable, but then again it is also unthinkable that the law will allow for the repatenting of inventions, but it does that as well.

Not long after it was reported that a Chinese military unit might be responsible for a number of cyber attacks that have taken place on US infrastructure and businesses, the Obama Administration unveiled its strategy to put an end to the theft of US trade secrets by foreign governments and foreign competitors.

During the last six days of a session the Speaker of the House of Representatives is allowed to suspend Rules in order to expeditiously dispose of non-controversial matters quickly before the end of a session. This year there will be several intellectual property bills that will move under suspension of House Rules on Tuesday afternoon, December 18, 2012. One is a substitute version of HR 6621, the America Invents Act (AIA) technical corrections bill. Another is a bill to undo a recent decision of the Second Circuit relative to trade secrets and the Economic Espionage Act.

Yesterday, Kolon Industries Inc. and several of its executives and employees were indicted for allegedly engaging in a multi-year campaign to steal trade secrets related to DuPont’s Kevlar para-aramid fiber and Teijin Limited’s Twaron para-aramid fiber. The conspiracy and theft of trade secrets counts each carry a maximum penalty of 10 years in prison and a fine of $250,000 or twice the gross gain or loss for individual defendants and a fine of $5 million or twice the gross gain or loss for the corporate defendant. The obstruction of justice count carries a maximum penalty of 20 years in prison and a fine of $250,000 or twice the gross gain or loss for individual defendants and a fine of $500,000 or twice the gross gain or loss for the corporate defendant.

These first-level-thinkers just assume that information would be disseminated at the same rate without a patent system, which is so ridiculous it is hard to take anyone seriously who actually professes to believe such nonsense. Can anyone really believe that? This is why it seems overwhelmingly clear to me that there is an anti-patent agenda in many newsrooms across the country. No intelligent person who has reviewed history and has any knowledge about how business works would think that businesses would randomly disclose proprietary information in the volume that occurs today absent a patent system that incentivizes such disclosure.

Protecting trade secrets is critically important if for no other reason than making sure that the time, money and energy you spend building your business is not wasted. If your employees could simply leave without having any contractual obligations that would prevent them from taking information, stealing employees away and/or soliciting your existing customers then they would be able to set up a business and compete with you for a fraction of what it cost you to do the same. After all, you were the one who spent the time and money for marketing to attract customers in the first place, and you were the one who spent the time and money necessary to train your employees. Without the cost of acquiring new customers and the costs associated with training employees that new business set up by your former employee would compete with you and have only a fraction of the start-up and overhead costs you faced. That can make it difficult for any business to keep the doors open.