Wednesday, August 1, 2012

Enforcing Trade Secret Protection

Enforcing Trade Secret Protection 

So last time I talked about what makes something a trade secret.  The next question is what do you do to enforce trade secret protection.   When someone improperly acquires, uses, or discloses a trade secret, the owner of the trade secret can sue the one who acted improperly. 

Probably the most common trade secret cases involve situations in which a trusted person discloses or uses a trade secret in a breach of confidence.  The trusted person in these cases had a duty of confidentiality to the owner of the trade secret.  This duty of confidentiality requires the person to refrain from disclosing or using the trade secret without permission.  There are several scenarios which result in a duty of confidentiality, as follows:

1- Special relationships:  these are folks who are in an employer-employee relationship, partners, joint venturers, or other types of agents.  This could also include special fiduciary relationships, such as the attorney-client relationship. 

2- Confidentiality contracts:  these are folks who expressly agree to maintain a trade secret in confidence.  These can include things confidentiality agreements, but can also include shrink-wrap licenses and lick-wrap licenses for software. 

3- Implied confidentiality contract: these folks are on notice that they are about to learn a trade secret in confidence, they agree to hear the secret, and are then deemed to have implicitly agreed to retain the information in confidence.

Next time, I'll talk about the disclosure of trade secrets by third parties.  Let me know if you have any questions.

Tuesday, July 31, 2012

Trade Secrets, or Why We Still Don't Know The Secret Recipe

Today I want to start talking a bit about a different kind of intellectual property.  In many businesses, valuable ideas and information is developed, such as a special manufacturing process, a computer program, or a method of doing business.  These ideas and information can give the business a competitive advantage in producing or selling their goods and services.  Of course, this competitive advantage only exists so long as the competitors don't have access to the ideas and information.  This is the basis of what are known as "trade secrets."  Businesses may prohibit their employees and associates from divulging its trade secrets, and the law prohibits competitors from using improper means to gain access to its trade secrets.  

What is a trade secret?  First, what is not a trade secret?  Business owners can protect their know-how by several methods.  But most protections exist in exchange for the business giving access to the know-how to the public.  For example, patent protection requires that the inventor tell the world how to make and use his invention in exchange for giving the inventor the right to keep others from using it without his permission for a period of time.  After that period of time expires, the world is free to use the invention.  Trade secrets are secrets, so they are not the same as patents.  

Generally, trade secrets are defined as "any formula, pattern, device or compilation of information which is used in one's business, and which gives him an opportunity to obtain an advantage over competitors who do not know or use it.". Coca-Cola's formula is a trade secret.  

Generally courts consider several factors to determine if information or an idea deserves trade secret status and protection.  These factors include:
(1) How widely is the idea or information known outside the business?  The information must be "substantially secret."
(2) Who within the business knows the idea or information? The business must exercise reasonable precautions, such as limiting exposure to those who need it and assuring that all who have exposure to the information or idea are aware that it is to be kept confidential. 
(3) What measures has the business taken to ensure that the idea or information remains secret?   The business must take reasonable precautions to prevent disclosure to others.
(4) How valuable is the information to the business and it's competitors?  There must be commercial value to the information or idea. 
(5) How much effort or money has the business expended in developing or acquiring the idea or information?  The greater the expenditure, the more likely the information or idea will be considered a trade secret.
(6) How difficult would it be for others to properly acquire or duplicate the idea or information?  If simple library research or data gathering can duplicate it, it is unlikely to be protected. 

Next time, I'll talk about the protection of trade secrets under the law.

If you have any questions about trade secrets, or any other aspect of intellectual property law, please don't hesitate to contact me at  

Monday, July 30, 2012

Copyright Infringement: Downloading, Part 2

Back in March, I talked a little about downloading copyright cases.  We can help you if you receive correspondence from someone accusing you of copyright infringement via downloading of material. 

Here is the big picture on how we can help out.   First, I should make clear my thoughts on how best to handle these cases is evolving.  For some clients, the best option will certainly be to try to settle the case by paying a negotiated amount to the copyright holder.  We can usually save clients some money by helping with the negotiations, and are glad to help.  

Settling works, but we are increasingly interested in handling these matters in other ways.  The way the legal system is supposed to work for copyright infringement is as follows:

1:   A infringes B's copyright.  
2:  B sues A in a proper lawsuit in a proper jurisdiction. 
3:  B then has the burden of proving that A infringed his copyright.  

These downloading copyright cases are different.  In my opinion, these cases are a sort of an extortion where the copyright owners file cheap cases in which big groups of defendants are improperly joined together in a single lawsuit in the wrong jurisdiction.  Then the accusers pretend that an IP address  is the same thing as a person, and that proof of downloading at an IP address is proof that the owner of the IP address is the infringer.  Add in the common fact that any times the copyright owners are known to be the ones who plant their works on bit torrent sites as bait.   And never mind that the copyright owners don't really want to prove anything, as they instead offer a settlement fee that is low enough to discourage fighting.

So the whole thing is somewhat offensive to my understanding of how these things should be.  So I generally recommend a strategy other than settling. Here's what I like to do.  After being retained,   I will figure out the current state of your case, and get some information from you on your situation with regard to the infringement - stuff like is your ip router open to others, are you the only user, etc.  Then I'll figure out how to best respond in a way that might make you an unattractive defendant for what i have come to believe is a misuse of the system.  The whole thing is based on what is best for you, with a goal of not paying the settlement unless it is warranted. 

As always, drop me a note at if you have any questions.

Wednesday, March 21, 2012

Copyright Infringement: Downloading, Part 1

Over the past year, we've talked alot about the basics of United States copyright law.  For lots of folks, this might've been a handy way to be introduced to the subject.  But there is another mechanism by which more Americans are being introduced to the copyright system, often rudely.

It starts with a letter, usually from the recipient's internet service provider.  In that letter, the recipient learns that he is apparently being sued, or might be sued, or something like that, for copyright infringement due to downloading copyright-protected subject matter from the Internet.  In what can only be described as an avalanche of lawsuits, hundreds of thousands of Americans have been sued for allegedly sharing copyright-protected material, usually based on use of the BitTorrent system.  

It seems clear that a certain segment of copyright owners has embraced filing lawsuits and demanding settlements as a new revenue stream.  Some of the protected subject matter is conventional subject matter, such as the award-winning movie "The Hurt Locker."  a lot of it is, frankly, pornography.  Whatever the subject matter, many lawsuits have been filed.  

Here is the typical pattern:  first, the copyright holders file a suit, naming the defendants by using their Internet Protocol address.  An Internet Protocol address (IP address) is a numerical label assigned to each device (e.g., computer, printer) participating in a computer network that uses the Internet Protocol for communication.  It is a unique number, and the copyright holders presumably determine that there subject matter has been downloaded to the IP addresses named in the complaints filed.  After the lawsuit is filed, the court issues a subpoena, ordering the Internet Service Providers to provide them with the personal details of the owner of the IP address.  Then, the copyright holder starts his efforts to extract a settlement from the owner of the IP address.

I'm going to talk more about this sort of action over the next few days.  Before going on, I want to clarify a few things.  Downloading copyright protected material without permission is almost certainly copyright infringement.  You should not do this.  But you also shouldn't be subject to extortive settlement efforts, and you have to remember that, in order to be found liable for copyright infringement, the copyright holder must prove certain facts, including that a specific person violated the copyright.  

Despite the massive number of defendants, none of the cases have made it into a full jury trial as the copyright holders ask for in their original complaint. This calls into question the evidentiary value of the information held by the copyright holders when they file their complaint.  It seems clear that the goal is not to go to court, but to reach a settlement.  

Next time, I'm going to attempt to talk about some of the technical stuff, and we'll work toward figuring out how you might deal with this kind of situation if you have to. 

As always, drop me a note at if you have any questions.


Sunday, January 22, 2012

Common Copyright Problems: You Must Register Your Copyright!!

Today, i thought a bit about my resolutions for the New Year.  So I went to church, I went to the gym, I watched some football.  But one of my resolutions just started nagging at me just now-- it was the one about doing a better job posting on my blog.  And so, while I'm watching the Giants play the Niners, I want to work toward finishing up copyright law by briefly discussing a few of the more common problems experienced by ordinary folks. 

For you artists and authors out there, you must register your works with the U.S. Copyright Office!!! Many many times I am contacted by folks who believe that their artistic works have been copied.  There are things you can do in such situations, but, as I wrote in an earlier blog post,  it is essentially impossible to rely upon the courts to protect your copyright in the absence of registration with the Copyright Office.  U.S. copyright owners must register their copyrights before they can bring a lawsuit for copyright infringement.  And if a work is not registered before the alleged infringement, or within a short period of time following publication of the work, the owner of the copyright cannot receive what are known as "statutory damages" and won't be eligible to receive attorney fees.  

You see, if you sue someone for copyright infringement, you can collect damages based on your lost profits or the infringers unlawful monetary gain.   One big problem with copyright protection is that many instances of copyright infringement do not have any significant economic value.  For example, if I photocopy a book instead of buying a copy, the actual damages might be the cost of the book, clearly not enough to file a lawsuit.  So owners of copyrights might be discouraged from pursuing lawsuits against infringers, because lawsuits are expensive.  The US Congress fixed this by including the possibility of copyright owners receiving their legal fees and a set statutory amount of up to $150,000 for willful infringement.  The only criteria for being eligible for this possible award ( instead of the lower actual economic damages) is that the work must be registered with the United States Copyright Office before the infringement occurs.  Needless to say, the possibility of a larger damages award may make a big difference in determining whether a person can afford to file a lawsuit, and can result in the copyright owner having more leverage in any settlement negotiations. 

Lots of folks seem to think their work is protected if it s registered with one of the performing rights organizations, like ASCAP, or if it s registered with a commercial site like  You need to know that this is not the case.  While these other types of registration may have their place, they are not a substitute for registration with the Copyright Office.  So it's very important that your work is registered with the US Copyright Office.  

Another common problem experienced by the public at large is the possibility of being sued for the unauthorized downloading of video or audio content from the Internet.  We'll talk a bit about this situation next time.  If you have any questions about copyright law, email us or post them on the blog.  The email is