Protecting Trade Secrets in the
United States
2007 US / China Legal Exchange
(Xian, Beijing, Shanghai)
Rex Hockaday, Caterpillar (China) Investment Co., Ltd.
2007 US/China Legal Exchange (Oct 22-26, 2007)
Protecting Trade Secrets in the US
• US Trade Secret Law
• Enforcing Trade Secret Rights
• Trade Secrets as Part of Your Business
2007 US/China Legal Exchange (Oct 22-26, 2007)
Protecting Trade Secrets in the US
• US Trade Secret Law
• Enforcing Trade Secret Rights
• Trade Secrets as Part of Your Business
2007 US/China Legal Exchange (Oct 22-26, 2007)
Protecting Trade Secrets in the US
• US Trade Secret Law
– State Law
– Common Law
– Federal Law
2007 US/China Legal Exchange (Oct 22-26, 2007)
Protecting Trade Secrets in the US
•
US Trade Secret Law
–
State Law. Uniform Trade Secrets Act (UTSA)
– What is a Trade Secret (TS)
– Misappropriation of Trade Secrets
2007 US/China Legal Exchange (Oct 22-26, 2007)
Protecting Trade Secrets in the US
•
US Trade Secret Law
–
State Law. Uniform Trade Secrets Act (UTSA)
–
What is a Trade Secret
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–
–
Information …
Independent economic value
Not generally known or readily ascertainable
Reasonable efforts to maintain secrecy
2007 US/China Legal Exchange (Oct 22-26, 2007)
Protecting Trade Secrets in the US
•
US Trade Secret Law
–
State Law. Uniform Trade Secrets Act (UTSA)
•
What is a Trade Secret
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–
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• technical & non-technical
• physical & electronic
• combinations
Information …
Independent economic value
Not generally known or readily ascertainable
Reasonable efforts to maintain secrecy
2007 US/China Legal Exchange (Oct 22-26, 2007)
Protecting Trade Secrets in the US
•
US Trade Secret Law
–
State Law. Uniform Trade Secrets Act (UTSA)
•
What is a Trade Secret
–
–
–
–
• actual or potential
Information …
• to owner and others
Independent economic value
Not generally known or readily ascertainable
Reasonable efforts to maintain secrecy
2007 US/China Legal Exchange (Oct 22-26, 2007)
Protecting Trade Secrets in the US
•
US Trade Secret Law
–
State Law. Uniform Trade Secrets Act (UTSA)
•
What is a Trade Secret
–
–
–
–
• secret
Information …
• not “absolutely” secret
Independent economic value
Not generally known or readily ascertainable
Reasonable efforts to maintain secrecy
2007 US/China Legal Exchange (Oct 22-26, 2007)
Protecting Trade Secrets in the US
•
US Trade Secret Law
–
State Law. Uniform Trade Secrets Act (UTSA)
•
What is a Trade Secret
–
–
–
–
• internal & external secrecy
Information …
• nature & value of information
Independent economic value
Not generally known or readily ascertainable
Reasonable efforts to maintain secrecy
2007 US/China Legal Exchange (Oct 22-26, 2007)
Protecting Trade Secrets in the US
• US Trade Secret Law
– State Law. Uniform Trade Secrets Act (UTSA)
• Misappropriation of Trade Secrets (TS)
– Acquisition of TS and know or have reason to know it was
acquired by improper means, or
2007 US/China Legal Exchange (Oct 22-26, 2007)
Protecting Trade Secrets in the US
• US Trade Secret Law
– State Law. Uniform Trade Secrets Act (UTSA)
• Misappropriation of Trade Secrets (TS)
– Use or disclosure of a TS by person who
» used improper means to acquire knowledge of TS, or
»
knew or had reason to know TS was:
° derived by improper means,
° derived from/through person with duty to protect, or
° acquired in manner creating a duty to protect, or
» before a material change in position, knew/reason to
know it was a TS acquired by accident or mistake
2007 US/China Legal Exchange (Oct 22-26, 2007)
Protecting Trade Secrets in the US
•
US Trade Secret Law
–
Common Law. §757, Restatement of Torts (1939); and
39-45, Restatement (Third) of Unfair Competition (1995)
–
–
What is a Trade Secret (TS)
Misappropriation of Trade Secrets
2007 US/China Legal Exchange (Oct 22-26, 2007)
§§
Protecting Trade Secrets in the US
•
US Trade Secret Law
–
Common Law. §757, Restatement of Torts (1939); and
§§ 39-45, Restatement (Third) of Unfair Competition (1995)
–
What is a Trade Secret
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–
Information …
Sufficiently valuable
Sufficiently secret
Provides economic advantage
2007 US/China Legal Exchange (Oct 22-26, 2007)
Intended to be consistent with the
definition of trade secrets in the
UTSA.
Protecting Trade Secrets in the US
• US Trade Secret Law
– Common Law. §757, Restatement of Torts (1939); and
39-45, Restatement (Third) of Unfair Competition (1995)
• Misappropriation of Trade Secrets (TS)
– Acquisition, use or disclosure of a trade secret
– Wrongfulness (misappropriation)
Consistent with the UTSA.
2007 US/China Legal Exchange (Oct 22-26, 2007)
§§
Protecting Trade Secrets in the US
• US Trade Secret Law
– Federal Law
•
•
•
•
•
The Trade Secrets Act
The Computer Fraud and Abuse Act
The Economic Espionage Act of 1996
The National Stolen Property Act
Mail Fraud, Wire Fraud, etc.
2007 US/China Legal Exchange (Oct 22-26, 2007)
Protecting Trade Secrets in the US
• US Trade Secret Law
• Enforcing Trade Secret Rights
• Trade Secrets as Part of Your Business
2007 US/China Legal Exchange (Oct 22-26, 2007)
Protecting Trade Secrets in the US
• Enforcing Trade Secret Rights
– Enforcement Authorities
– Protecting Trade Secrets in Litigation
– Case Studies
2007 US/China Legal Exchange (Oct 22-26, 2007)
Protecting Trade Secrets in the US
•
Enforcing Trade Secret Rights
–
Enforcement Authorities
•
State Courts (TS Statute, common law, breach of contract)
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–
•
Legal Relief
» temporary & permanent injunctions
» court-ordered affirmative actions
Equitable Relief
» royalties
» compensatory damages
» punitive damages
Federal Courts (Statute, breach of contract)
2007 US/China Legal Exchange (Oct 22-26, 2007)
Protecting Trade Secrets in the US
• Enforcing Trade Secret Rights
– Protecting Trade Secrets in Litigation
•
•
•
•
Request protective order during discovery
Request in-camera proceedings
Courts may seal records
Courts may order a person not to disclose alleged
trade secrets without court approval
• Always at risk—hard to “un-ring the bell”
2007 US/China Legal Exchange (Oct 22-26, 2007)
Protecting Trade Secrets in the US
• Enforcing Trade Secret Rights
– Case Studies
2007 US/China Legal Exchange (Oct 22-26, 2007)
Protecting Trade Secrets in the US
QUESTIONS / COMMENTS ?
2007 US/China Legal Exchange (Oct 22-26, 2007)
Protecting Trade Secrets in the US
• US Trade Secret Law
• Enforcing Trade Secret Rights
• Trade Secrets as Part of Your Business
2007 US/China Legal Exchange (Oct 22-26, 2007)
Protecting Trade Secrets in the US
• Trade Secrets as Part of Your Business
– Importance of Protecting Trade Secrets
– General Business Practices to Protect Trade
Secrets
2007 US/China Legal Exchange (Oct 22-26, 2007)
Protecting Trade Secrets in the US
• Trade Secrets as Part of Your Business
– Importance of Protecting Trade Secrets
• Broadly defined, potentially everywhere
• Define & differentiate your business
• You can only protect what you know & understand
2007 US/China Legal Exchange (Oct 22-26, 2007)
Protecting Trade Secrets in the US
• Trade Secrets as Part of Your Business
– General Business Practices to Protect TS’s
•
•
•
•
•
Identify & understand your [key] trade secrets
Protection linked to secrecy
Practical Protection Measures
Who is responsible for protection?
How do you protect responsibly?
2007 US/China Legal Exchange (Oct 22-26, 2007)
Protecting Trade Secrets in the US
• Trade Secrets as Part of Your Business
– General Business Practices to Protect TS’s
• Identify & understand your [key] trade secrets
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–
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–
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What are your trade secrets?
Where are your trade secrets?
Why they are valuable?
Who knows about them?
How are you protecting them?
2007 US/China Legal Exchange (Oct 22-26, 2007)
Protecting Trade Secrets in the US
• Trade Secrets as Part of Your Business
– General Business Practices to Protect TS’s
• Identify & understand your [key] trade secrets
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–
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–
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What are your trade secrets?
Where are your trade secrets?
Why they are valuable?
Who knows about them?
How are you protecting them?
2007 US/China Legal Exchange (Oct 22-26, 2007)
• what differentiates your products
• what differentiates your business
• what is “secret”
Protecting Trade Secrets in the US
• Trade Secrets as Part of Your Business
– General Business Practices to Protect TS’s
• Identify & understand your [key] trade secrets
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–
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–
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What are your trade secrets?
Where are your trade secrets?
Why they are valuable?
Who knows about them?
How are you protecting them?
2007 US/China Legal Exchange (Oct 22-26, 2007)
• manufacturing/R&D facilities
• business centers
• computer systems!
Protecting Trade Secrets in the US
• Trade Secrets as Part of Your Business
– General Business Practices to Protect TS’s
• Identify & understand your [key] trade secrets
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–
–
–
–
What are your trade secrets?
Where are your trade secrets?
Why they are valuable?
Who knows about them?
How are you protecting them?
2007 US/China Legal Exchange (Oct 22-26, 2007)
• how much competitive advantage
• how easy/expensive to protect
• what is the life span
Protecting Trade Secrets in the US
• Trade Secrets as Part of Your Business
– General Business Practices to Protect TS’s
• Identify & understand your [key] trade secrets
–
–
–
–
–
What are your trade secrets?
Where are your trade secrets?
Why they are valuable?
Who knows about them?
How are you protecting them?
2007 US/China Legal Exchange (Oct 22-26, 2007)
• how many people “need to know”
• internally & externally
• who should “own” them
Protecting Trade Secrets in the US
• Trade Secrets as Part of Your Business
– General Business Practices to Protect TS’s
• Identify & understand your [key] trade secrets
–
–
–
–
–
What are your trade secrets?
Where are your trade secrets?
Why they are valuable?
Who knows about them?
How are you protecting them?
2007 US/China Legal Exchange (Oct 22-26, 2007)
• responsible parties
• processes & contracts
• auditing
Protecting Trade Secrets in the US
• Trade Secrets as Part of Your Business
– General Business Practices to Protect TS’s
• Protection linked to secrecy
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How secret (extent TS is known inside/outside the company)
Value of TS to company
Extent of protection measures
Cost to develop TS
Ease of acquisition/duplication
2007 US/China Legal Exchange (Oct 22-26, 2007)
Protecting Trade Secrets in the US
•
Trade Secrets as Part of Your Business
–
General Business Practices to Protect TS’s
•
Practical Protection Measures
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–
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–
“Reasonable under the circumstances”
Processes, documentation & contracts
» Employees
» Third parties
» Business
Security (physical & systems)
Hide your secrets
2007 US/China Legal Exchange (Oct 22-26, 2007)
Protecting Trade Secrets in the US
• Trade Secrets as Part of Your Business
– General Business Practices to Protect TS’s
• Who is responsible for protection?
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Everyone is responsible to protect trade secrets
Executive leadership should take ultimate responsibility
Experienced managers should have direct responsibility
Everyone must feel responsible to protect trade secrets
2007 US/China Legal Exchange (Oct 22-26, 2007)
Protecting Trade Secrets in the US
• Trade Secrets as Part of Your Business
– General Business Practices to Protect TS’s
• How do you protect responsibly?
– Review: “trade secrets” are very broadly defined
– How many trade secrets can you afford to protect
– Understand costs:
» good business practices
» incremental protection
– Sell the value to the company and the relevant partners
2007 US/China Legal Exchange (Oct 22-26, 2007)
Protecting Trade Secrets in the US
QUESTIONS / COMMENTS ?
2007 US/China Legal Exchange (Oct 22-26, 2007)
Protecting Trade Secrets in the US
Rex Hockaday
Senior Corporate Counsel
Manager, Asia Pacific IP Office
Caterpillar (China) Investment Co., Ltd.
Room 1701 China Life Tower
No. 16 Chaoyangmenwai Avenue
Beijing 100020, P.R. China
Phone:
Mobile:
Fax:
Email:
+86 (10) 5921 0595
+86 139 1117 2352
+86 (10) 5921 0099
hockaday_rex_d@cat.com
2007 US/China Legal Exchange (Oct 22-26, 2007)
Protecting Trade Secrets in the
United States
2007 US / China Legal Exchange
(Xian, Beijing, Shanghai)
Rex Hockaday, Caterpillar (China) Investment Co., Ltd.
2007 US/China Legal Exchange (Oct 22-26, 2007)