JANUARY 2012
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Trade Secrets and Confidential Information United States
Trade secrets are a vitally important aspect of Intellectual Property,
although they are relatively little-reported. To find out about the issues
surrounding trade secrets and confidential information, Lawyer
Monthly speaks to R. Mark Halligan, Esq., Partner at Nixon Peabody one of the largest law firms in the world. Mark is an accomplished trial
lawyer who focuses his practice on intellectual property litigation and
complex commercial litigation in federal and state courts throughout
the United States. An experienced patent litigator, Mark has also
developed an extensive practice as an intellectual property litigator
focused on protection and enforcement of trade secrets. Mark has
successfully represented both individuals and corporations as plaintiffs
and defendants in federal and state courts in the United States.
Q
Please introduce yourself and your firm.
Nixon Peabody LLP is recognized as a Global 100 law
firm and with approximately 700 attorneys collaborating
across major practice areas across the U.S. and in
European and Asian commercial centers, the firm's size,
diversity and advanced technological resources enable it
to offer comprehensive legal services to individuals and
organizations of all sizes in local, state, national and
international matters.
Nixon Peabody's longstanding Trade Secrets Group is
comprised of talented and seasoned professionals, many
with backgrounds in intellectual property, labor and
employment, business litigation, government
investigations/white collar, and privacy/information law,
who have extensive experience deadline with all aspects
of trade secret identification and protection.
Q
Trade secrets and confidential information
are a relatively little-reported aspect of
Intellectual Property; why do you think this
is?
Trade secrets are less well known in the IP space because
they involve an area of law that is shared with
Intellectual Property, Labor & Employment, White Collar, Privacy/Data Protection and Commercial Litigation
attorneys. It is an active space with many lawyers
involved in it. At Nixon Peabody, we focus our efforts
under one umbrella to provide coordinated services to
clients in this area — bringing all of our resources to
support our clients' efforts to protect their trade secrets
from disclosure and vigorously pursue those who steal
secrets.
Q
Have there been any major cases within this
practice area that have interested you
particularly? What was so interesting about
it?
Vickery v. Welch, 36 Mass. 523 (1837). The first American
case involving trade secrets.
Kewanee Oil Co. V. Bicron, 416 U.S. 470, 94 S. Ct. 1879
(1974). In this seminal decision, the United States
Supreme Court recognized the importance of trade secrets
and rejected patent pre-emption arguments.
Ruckelshaus v. Monsanto Co., 467 U.S. 986, 104 S. Ct.
2862 (1984). Trade secrets are property protected under
the Fifth Amendment.
Q
How can companies manage the risk of
inevitable trade secret disclosure?
The two cardinal rules of trade secret protection are
need-to-know and break-up-the-pieces-of-the-puzzle
access.
JANUARY 2012
Legal Focus
www.lawyer-monthly.com
Trade secrets should only be accessed or disclosed on a
`need to know' basis. If there is no need to know, then
there should be no access to the trade secret information.
Secondly, employees should only have access to 'pieces
of the puzzle'. This fragmentation/segregation approach
will prevent someone from absconding with the entire
trade secret.
Q
What are the risks companies face if they
steal another company's trade secrets? What
actions can companies take to protect this
information?
The theft of trade secrets is a federal criminal offense
under the Economic Espionage Act 1996. 18 U.S.0
Section 1831 et seq.
There is also a civil liability under the Uniform Trade
Secrets Act (enacted in all but four states) including
injunctive relief, compensatory damages, punitive
damages, and the recovery of attorney's fees and costs for
the wilful and malicious misappropriation of trade
secrets.
Q
Have there been any legislative changes in
this area in your jurisdiction recently? Do
you see the need for any?
Leahy —Smith America Invents Act. Companies can take
advantage of these new protections for trade secrets with
effective trade secret audits to identify trade secrets as
well as the implementation of effective protocols and
measures to protect trade secrets. In the coming months,
the Nixon Peabody trade secrets team will be addressing
these issues.
In the new economy, in the Information Age, and in the
international arena of global competition, the protection of
trade secret assets of U.S. companies is now
paramount. The enactment of the Economic Espionage
Act of 1996 (EEA) recognized that the protection of trade
secret assets is in the national economic interest of the
United States. However, the EEA is a criminal statute
with no private cause of action. See R. Mark Halligan,
"Protection of U.S. Trade Secret Assets: Critical
Amendments to the Economic Espionage Act of 1996," 7 J.
MARSHALL REV. INTELL. PROP. L. 656 (2008).
Efforts are now underway to enact a federal civil cause
of action for trade secret misappropriation. LM
Contact Details:
R. Mark Halligan, Esq.
Partner
Nixon Peabody LLP
300 S. Riverside Plaza,
The Leahy-Smith American Invents Act (AIA) was signed
into law on September 16, 2011. The new legislation
impacts 71 sections in the existing provisions of the U.S.
patent statute. There are many issues to be considered by
the patent bar. At the most fundamental level, the United
States will change from a first-to-invent (FTI) system to a
first-inventor-to-file (FITF) system.
16th Floor
However, the America Invents Act also recognizes the
importance of U.S. trade secret assets in the new world
economy. This is accomplished by extending the scope of
prior user rights to all inventions with amendments to 35
U.S.C. Section 273.
Web: www.nixonpeabody.com
Prior user rights protect trade secret owners against
patent infringement lawsuits. Take a simple example.
Company A invents 'X' but decides for economic or
strategic reasons not to seek patent protection for 'X' and
instead elects to protect the invention as a trade secret.
However, independently, Company B invents 'X' but
Company B elects to file and prosecute a patent
application resulting in a patent for X. Under prior law,
except for certain 'method' patents Company B could sue
Company A for patent infringement and Company A
could not assert a 'prior user' (or 'earlier inventor')
defense.
Trade secret owners and licensees now have new
protection against patent infringement suits with the
extension of prior user rights to all inventions under the
Chicago, IL 60606
Tel: 312-425-3970
Fax: 866-770-4974
Email: rmhalligan@nixonpeabody.com
NIXON PEABODYLLP