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 JDellinger@mainspringlaw.com.  

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 JDellinger@mainspringlaw.com if you have any questions.