Trade Secrets

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Trade Secrets by Mind Map: Trade Secrets

1. Assigned Cases

1.1. Wexler v. Greenberg

1.1.1. Case History

1.1.1.1. 1949 - Greenberg joins Buckingham Wax

1.1.1.1.1. 1952-1956 - Dickler operates Gem Shine Sales Co., purchases from Buckingham

1.1.1.2. Buckingham Wax Company (Wexler) filed suit against Brite Products Co. Inc. (Greenberg et al)

1.1.1.2.1. Lower court decided in favor of Wexler, formulas constituted trade secrets, and Greenberg violated employee trust of Buckingham

1.1.1.3. Argued 1959 at Supreme Court of Pennsylvania

1.1.2. Facts

1.1.2.1. No contract of employment between Buckingham and Greenberg

1.1.2.2. After Greenberg came in, Brite product line significantly changed

1.1.2.3. Final formulations claimed to be trade secrets were not DISCLOSED to Greenberg, rather were DEVELOPED by him as he reverse engineered other company's products

1.1.3. Applicable Laws

1.1.3.1. Employer must show (1) legally protectable trade secret and (2) a legal basis, either a covenant or a confidential relationship, upon which to predicate relief

1.1.3.1.1. Court of equity will protect an employer from the unlicensed disclosure or use of trade secrets by ex-employee provided:

1.1.3.1.2. Where an employer has NO LEGALLY PROTECTABLE TRADE SECRET, an employee's aptitude, skill, dexterity, manual and mental ability and other subjective knowledge as he obtains while in the course of his employment are not the property of the employer

1.1.4. Issues explored

1.1.4.1. Can a former employer WITHOUT THE AID OF ANY EXPRESS COVENANT, restrict an ex-employee because employer claims the use of trade secrets?

1.1.4.1.1. Must be mindful of whether the decision will be disruptive of employee mobility

1.1.4.2. SOLE ISSUE for APPEAL: Did a CONFIDENTIAL RELATIONSHIP exist between Greenberg and Buckingham?

1.1.4.3. Usual situation involving misappropriation: employer discloses to his employee pre-existing trade secret

1.1.4.3.1. trust and confidence upon which legal relief is predicated stems from the TURNING OVER the PRE-EXISTING secret

1.1.4.4. Only avenue for appellees - show that nature of employment relationship gave rise to a duty of nondisclosure

1.1.4.4.1. Two good examples

1.1.5. Findings

1.1.5.1. No confidential relationship exists

1.1.5.1.1. Greenberg as employee of Buckingham never engaged in research, conducted experiments = undisputed

1.1.5.1.2. Since no experimentation or research done, development by change and modification were fruits of Greenberg's own skill as chemist, without appreciable assistance by Buckingham

1.1.5.1.3. No indications that those results were what Buckingham expected him to find

1.1.5.2. Greenberg violated no trust or confidential relationship, the information forms part of the technical knowledge and skill he has acquired by virtue of employment with Buckingham

1.1.5.2.1. Greenberg was privileged to diclose and use the formulas in issue

1.1.5.3. Ownership of a trade secret does not give the owner a monopoly in its use, but merely a PROPRIETARY RIGHT which equity protects against usurpation by UNFAIR means

1.1.5.3.1. former customers are legally entitled to compete with suppliers, even if they use identical goods

1.1.5.3.2. Greenberg approached Dickler/Brite, not in reverse

1.1.5.3.3. Brite also needed a qualified chemist, not Buckingham's trade secrets

1.1.5.3.4. Greenberg divulged only information which he had a privilege to divulge

1.1.6. Decision

1.1.6.1. DECREE REVERSED, AT APPELLEES COSTS

1.2. Whyte v. Schlage

1.2.1. Case History

1.2.1.1. Ingersoll Rand (Schlage) sues Whyte in Colorado State Court, June 2000

1.2.1.1.1. Colorado denies request for injunction (inevitable disclosure) on June 27, 2000

1.2.1.2. At first hearing, court rejected inevitable disclosure doctrine, but considered an injunction based upon misappropriation

1.2.1.2.1. Whyte files motion to dissolve TRO

1.2.1.3. At second hearing on October 24, 2000 court states it would deny application for injunction

1.2.1.3.1. Court states that info Schlage sought to protect was not trade secrets

1.2.1.4. Schlage and Ingersoll Rand appeal October 24 order

1.2.1.4.1. Finally heard by California Appeals Court, 2002

1.2.2. Facts

1.2.2.1. Whyte was Sales VP at Schlage and responsible for Sales to Home Depot and big box retail

1.2.2.1.1. Whyte signed confidentiality agreement to protect IP.. Did not sign a non-compete clause

1.2.2.2. Home Depot conducts line review to determine what to sell.. Asks vendors to submit proposals for pricing and present product changes

1.2.2.3. Feb 2000 - Home Depot conducts line review with Schlage and Kwikset, Whyte participates and impresses Kwikset

1.2.2.3.1. June 3, 2000 - Whyte accepts position with Kwikset

1.2.2.4. Schalge contends Whyte left to belittling comments made by Schlage President, and disavowed a confidentiality agreement, stole trade secret information and lied about returning company information

1.2.2.4.1. Whye denies taking trade secrets, reaffirmed confidentiality agreement, in exit interview Schlage president vows to destroy his career

1.2.3. Applicable Laws

1.2.3.1. Doctrine of Inevitable Disclosure

1.2.3.1.1. Permits a trade secret owner to prevent a former employee from working for a competitor despite owner's failure to prove employee has taken or threatens to use trade secrets

1.2.3.1.2. No published California decision had accepted or rejected this before this case

1.2.4. Issues Explored

1.2.4.1. I. Is the Appeal moot?

1.2.4.1.1. Whyte suggests trade secret information has become "stale"over two years

1.2.4.1.2. Appeal becomes moot when an event occurs which renders any appellate decision ineffective in providing relief

1.2.4.2. II. Trade Secrets - Has Schlage sufficiently identified information constituting trade secrets?

1.2.4.2.1. Trade secret is: INFORMATION, including a formula, pattern, compilation, program, device, method technique or process that:

1.2.4.2.2. Schlage sought to enjoin use of a broad range of alleged trade secrets

1.2.4.3. III. Did Whyte engage in actual or threatened misappropriation?

1.2.4.3.1. Actual or threatened misappropriation

1.2.4.3.2. Schlage contends evidence of misappropriation

1.2.4.3.3. Whyte denied these charges

1.2.4.4. IV. Is Inevitable Disclosure Doctrine the Law of California?

1.2.4.4.1. Alternative tack to III by Schlage

1.2.4.4.2. "Plaintiff may prove a claim of trade secret misappropriation by demonstrating that defendant's new employment will inevitably lead him to rely on the plaintiffs trade secrets."

1.2.4.4.3. Inevitable disclosure doctrine results in an injunction prohibiting employment, not just use of trade secrets

1.2.4.4.4. Justification: unless employee has uncanny ability to compartmentalize information, the employee will rely upon knowledge of former employer's trade secrets.

1.2.4.4.5. Things to consider:

1.2.5. Findings

1.2.5.1. II. Generally, Schlage did sufficiently identify trade secrets.

1.2.5.1.1. II.A. SOME of the information Schlage sought to protect WAS sufficiently identified as trade secret

1.2.5.1.2. II.B. Is the Information Identified by Schlage actually trade Secret? YES.

1.2.5.1.3. II.C. Schlage's other theory debunked

1.2.5.2. III. The appeals court cannot adjudicate whether or not there was actual or threatened misappropriation

1.2.5.2.1. Evidence is neatly divided between both parties, supporting their respective positions

1.2.5.2.2. Appeals court cannot and need not resolve conflicts in the evidence or reweigh it

1.2.5.2.3. Accordingly, facts must be interpreted favorably toward the order denying preliminary injunction

1.2.5.3. IV. Inevitable Disclosure Doctrine is Rejected in California

1.2.5.3.1. Court agrees that there are strikingly similar parallels to PepsiCo case.

1.2.5.3.2. No published California decision has accepted or rejected doctrine of inevitable disclosure

1.2.5.3.3. Chief ill though by the doctrine is its' after-the-fact nature

1.2.6. Decision

1.2.6.1. Rejects Doctrine of Inevitable Disclosure under Ca. State Law

1.2.6.1.1. Contrary to California law and policy because it creates after-the-fact covenant not to compete = restricts employee mobility!

1.2.6.2. Trial court order is affirmed

1.2.6.2.1. Schlage's preliminary injunction is denied

1.2.6.2.2. Whyte's motion to dissolve TRO is affirmed

2. Legislation

2.1. UTSA

2.1.1. http://www.uniformlaws.org/shared/docs/trade%20secrets/utsa_final_85.pdf

2.2. CFAA

3. Blog post structure

3.1. Summary of assigned readings

3.2. Recent cases

3.2.1. Chinese Hackers

3.2.1.1. http://tsi.brooklaw.edu/cases/united-states-america-v-wang-dong-sun-kailiang-wen-xinyu-huang-zhenyu-gu-chunhui

3.2.1.2. http://techcrunch.com/2014/05/19/us-gov-alleges-chinese-hackers-compromised-american-companies-to-steal-trade-secrets/

3.2.2. Lyft v. Vanderzanden

3.2.2.1. CGC-14-542554

3.2.2.2. http://www.law360.com/articles/593959/lyft-accuses-ex-coo-of-taking-secret-docs-to-rival-uber

3.2.2.3. http://webaccess.sftc.org/Scripts/Magic94/mgrqispi94.dll?APPNAME=WEB&PRGNAME=ValidateCaseNumber&ARGUMENTS=-ACGC14542554

3.2.3. Drivers vs. Lyft/Uber

3.2.3.1. http://www.forbes.com/sites/ellenhuet/2015/03/11/lyft-uber-employee-jury-trial-ruling/

3.2.4. Uber/Lyft Driver Info as Trade Secrets

3.2.4.1. http://www.jhtl.org/blog/uber-and-lyft-licenses-deemed-trade-secrets/

3.3. Related topics

3.3.1. http://en.wikipedia.org/wiki/High-Tech_Employee_Antitrust_Litigation

3.4. Google Doc for editing:

3.4.1. https://docs.google.com/document/d/1qFSDu8WY_4AkLgGZ2qTVM6I-PtKbfB7SW_5W1pUU24M/edit?usp=sharing