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Trade Secrets II. Intro to IP – Prof Merges 4.7.09. Agenda. Misappropriation “Reasonable precautions” – Rockwell Graphics Improper means: DuPont v. Christopher Confidential relationship: Smith v. Dravo Reverse engineering: Kadant v. Seeley. Rockwell. Facts Posner opinion.

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Trade secrets ii

Trade Secrets II

Intro to IP – Prof Merges

4.7.09


Agenda
Agenda

  • Misappropriation

    • “Reasonable precautions” – Rockwell Graphics

    • Improper means: DuPont v. Christopher

    • Confidential relationship: Smith v. Dravo

    • Reverse engineering: Kadant v. Seeley


Rockwell
Rockwell

  • Facts

  • Posner opinion



Goss Graphic Systems, Inc. (formerly Rockwell) designs, manufactures, and markets Web offset printing press systems. The company offers newspaper press systems for newspaper publishers; commercial press systems for brochures, books, etc. It also provides after sales service and replacement parts for its equipment. Founded, 1885, based in Illinois.


Rockwell facts
Rockwell manufactures, and markets Web offset printing press systems. The company offers newspaper press systems for newspaper publishers; commercial press systems for brochures, books, etc. It also provides after sales service and replacement parts for its equipment. Founded, 1885, based in Illinois. facts

  • Piece part drawings

  • Assembly drawings

  • Vendors (subcontractors); customers


Elements of a trade secret action
Elements of a Trade Secret Action manufactures, and markets Web offset printing press systems. The company offers newspaper press systems for newspaper publishers; commercial press systems for brochures, books, etc. It also provides after sales service and replacement parts for its equipment. Founded, 1885, based in Illinois.

  • Eligible Subject Matter

    • Information that derives economic value from being kept secret

    • Must be secret

  • Reasonable Precautions to Keep Secret

  • Misappropriation


Trial court
Trial Court manufactures, and markets Web offset printing press systems. The company offers newspaper press systems for newspaper publishers; commercial press systems for brochures, books, etc. It also provides after sales service and replacement parts for its equipment. Founded, 1885, based in Illinois.

  • Held: Drawings did not contain trade secrets

  • No “reasonable efforts” to maintain secrecy


Posner opinion
Posner opinion manufactures, and markets Web offset printing press systems. The company offers newspaper press systems for newspaper publishers; commercial press systems for brochures, books, etc. It also provides after sales service and replacement parts for its equipment. Founded, 1885, based in Illinois.

  • Reviews precautions Rockwell did take

    • Vault, confidentiality agreements

  • “The mere fact that Rockwell gave piece part drawings to vendors . . . Did not forfeit trade secret protection” – p. 51


Two conceptions of ts law p 51
Two conceptions of TS law: p. 51 manufactures, and markets Web offset printing press systems. The company offers newspaper press systems for newspaper publishers; commercial press systems for brochures, books, etc. It also provides after sales service and replacement parts for its equipment. Founded, 1885, based in Illinois.

  • Tort-oriented/commercial ethics: deter efforts at “sterile” wealth redistribution – i.e., theft

  • Encourage inventive activity: incentive, “property”-like orientation


Role of precautions
Role of precautions manufactures, and markets Web offset printing press systems. The company offers newspaper press systems for newspaper publishers; commercial press systems for brochures, books, etc. It also provides after sales service and replacement parts for its equipment. Founded, 1885, based in Illinois.

  • Shows that info must have been taken wrongfully – evidence of bad acts by defendant

  • Evidence of real value; shows info is worth protecting through legal system


Rockwell graphics
Rockwell Graphics manufactures, and markets Web offset printing press systems. The company offers newspaper press systems for newspaper publishers; commercial press systems for brochures, books, etc. It also provides after sales service and replacement parts for its equipment. Founded, 1885, based in Illinois.

Share with

Confidentiality

Don’t Publish/

No Efforts

Tell

No One

Publication

Perfect

Secrecy

No

Secrecy

“Secrecy Continuum”


Elements of a trade secret action1
Elements of a Trade Secret Action manufactures, and markets Web offset printing press systems. The company offers newspaper press systems for newspaper publishers; commercial press systems for brochures, books, etc. It also provides after sales service and replacement parts for its equipment. Founded, 1885, based in Illinois.

  • Eligible Subject Matter

    • Information that derives economic value from being kept secret

    • Must be secret

  • Reasonable Precautions to Keep Secret [P. 36, UTSA; compare Rest. 3d p. 54]

  • Misappropriation


The handwritten recipe that launched a fast-food dynasty and made Colonel Harland Sanders world famous is locked away at KFC headquarters—its contents so guarded that not even the chain’s top executive knows the ingredients. . . . Only a few people know the recipe and are sworn to secrecy. The employees have access to the recipe because of their roles making sure suppliers and KFC live up to Sanders’ culinary legacy. Two companies supply the herbs and spices, but their knowledge of the recipe is limited. Each supplier formulates only part of the ingredients . . . and neither supplier knows the other’s identity. The Colonel’s own handwritten recipe is tucked away in a safe at KFC headquarters. As a backup, KFC has portions of the recipe locked away in safety deposit boxes at undisclosed places elsewhere around the country.


Disclosure of trade secret p 58
Disclosure of Trade Secret: P. 58 made Colonel Harland Sanders world famous is locked away at KFC headquarters—its contents so guarded that not even the chain’s top executive knows the ingredients. . . . Only a few people know the recipe and are sworn to secrecy.

Publication

Revealed when sell product

Disclosure by third party

Inadvertent disclosure

Government-required publication


Improper means
Improper means made Colonel Harland Sanders world famous is locked away at KFC headquarters—its contents so guarded that not even the chain’s top executive knows the ingredients. . . . Only a few people know the recipe and are sworn to secrecy.

  • DuPont v. Christopher

  • Overflight not per se illegal

  • Was it wrongful?


Dupont
DuPont made Colonel Harland Sanders world famous is locked away at KFC headquarters—its contents so guarded that not even the chain’s top executive knows the ingredients. . . . Only a few people know the recipe and are sworn to secrecy.

  • Tests difference between 2 conceptions of TS law mentioned by Posner

    • Tort/ethics

    • Property/incentive


Dupont holding
DuPont holding made Colonel Harland Sanders world famous is locked away at KFC headquarters—its contents so guarded that not even the chain’s top executive knows the ingredients. . . . Only a few people know the recipe and are sworn to secrecy.

  • Overflight is “improper means”

  • TS law in Texas supports “higher standards of commercial morality in the business world”


Confidential relationship
Confidential Relationship made Colonel Harland Sanders world famous is locked away at KFC headquarters—its contents so guarded that not even the chain’s top executive knows the ingredients. . . . Only a few people know the recipe and are sworn to secrecy.

  • Smith v. Dravo


Dravo
Dravo made Colonel Harland Sanders world famous is locked away at KFC headquarters—its contents so guarded that not even the chain’s top executive knows the ingredients. . . . Only a few people know the recipe and are sworn to secrecy.

  • Classic “squeezeout” case

  • Interested buyer obtains info from would-be seller; then squeezes that seller out by entering the business/making the product themselves


Confidential relationship1
Confidential relationship made Colonel Harland Sanders world famous is locked away at KFC headquarters—its contents so guarded that not even the chain’s top executive knows the ingredients. . . . Only a few people know the recipe and are sworn to secrecy.

  • Why necessary?

    • Secrecy; reasonable precautions: duty

  • Established here?

    • Implied duty: Steel Car Co. case, p. 69

    • Compare Omnitech p. 70; Rest 3d., p. 71


A transactional view of property rights 20 berkeley tech l j 1477 2005

A Transactional View of Property Rights, made Colonel Harland Sanders world famous is locked away at KFC headquarters—its contents so guarded that not even the chain’s top executive knows the ingredients. . . . Only a few people know the recipe and are sworn to secrecy. 20 Berkeley Tech. L.J. 1477 (2005)

Robert P. Merges


Reverse engineering
Reverse Engineering made Colonel Harland Sanders world famous is locked away at KFC headquarters—its contents so guarded that not even the chain’s top executive knows the ingredients. . . . Only a few people know the recipe and are sworn to secrecy.

  • Kadant v. Seely Machine


  • Corlew’s work history made Colonel Harland Sanders world famous is locked away at KFC headquarters—its contents so guarded that not even the chain’s top executive knows the ingredients. . . . Only a few people know the recipe and are sworn to secrecy.

  • Reverse engineering of nozzles and other items

  • 1.7 years to duplicate?


Restatement of torts 757
Restatement of Torts made Colonel Harland Sanders world famous is locked away at KFC headquarters—its contents so guarded that not even the chain’s top executive knows the ingredients. . . . Only a few people know the recipe and are sworn to secrecy. § 757

A trade secret may consist of 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. It may be a chemical compound, a process of manufacturing, treating, or preserving materials, a pattern for a machine or other device or a list of customers.


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