Trade Secrets and Related Contracts

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Trade Secrets and Related Contracts
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Trade Secrets

• Restatement of Torts 757
• Any formula, pattern, device or compilation of
  information
• Used in ones business
• Giving user an opportunity for advantage over
  competitors

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Trade Secret Factors

• 1. Info known outside business?
• 2. Known by insiders?
• 3. Has owner taken steps to guard it?
• 4. Is info valuable?
• 5. Was info expensive to create?
• 6. Could others easily replicate info?

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Metallurgical Industries

• An example of trade secret litigation . . .
• Trade secret involved? Substantial element, R1
  Torts section 757
• Defendant disclosed or used secret without
  privilege?
• Confidential relationship?
• Defendant learned of secret with notice of
  secrecy and breach of confidence?

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Related Applications

• DuPont industrial espionage is unlawful under UC
• Reverse engineering, in contrast, is generally
  okay as based on originators disclosure and
  waiver
• Criminal liability Intel recently pressed
  criminal charges against a chip copyist

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Covenants Not to Compete

• Contracts prohibiting competition by an
  individual
• Judicially suspect blue pencil rule
• Three tests of viability
• Time (limited to 2-5 years, or time to re-invent
  expertise)
• Subject matter (limited to prior work)
• Geography (limited to relevant market)

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Trade Secrets Compared

• Covenants not to compete can exist even though no
  trade secret exists
• But often the two are intertwined
• Duration Permanent (TS) v. limited (CNTC)
• BOP High (TS) v. low (CNTC)
• Relief Extends to new employer (TS) v. limited
  to old employee (CNTC) absent a claim for
  interference with contractual relations

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