LEB FINAL EXAM REVIEW CHAPTER 9 – INTELECTUAL PROPERTY I. TRADE SECRECTS – Information that is valuable because it is not generally known, giving a company a competitive advantage. Access to info is on a need to know basis only and this info acquires value from its secrecy. Examples: recipes, methods, marketing techniques. a. Integrated Cash Management Services v. Digital Transactions i. Having a winning combination of components each of which by itself is generally known when the combination is generally not known, is considered to be giving a company a competitive advantage and a trade secret. b. Theft of a trade secret: misappropriation claim (three elements) 1. Secrecy 2. Reasonable security measures, AND 3. Wrongful acquisition, use, or disclosure c. Element One: Secrecy i. Six factors court considers: 1. Extent to which info is known outside P’s business 2. Extent to which info is known by P’s employees and others (*need to know basis*) 3. Extent to which measures are taken to guard secrecy of info 4. Ease of difficulty with which info can be properly developed, acquired, or duplicated by others (is the info readily available through legal means) 5. Value of business 6. Amount of time and money spend to develop info (negative know- how means knowledge of what does not work can also be a trade secret) ii. Numed v. McNut a. D quit working for P and started his own business using P’s contact and customer info. D claimed the info is legally obtainable by hospitals if you ask. Customer names and pricing structure is not a trade secret in this case. iii. Smith v. Snap-On Tooles Corp. a. Smith disclosed a ratchet invention to Snap-On and they sold the device without paying him. Smith lost because he did not make them sign anything or discuss a licensing agreement beforehand. When he disclosed, it no longer was a secret. iv. Hook v. Purdue Farms a. Hook gave a confidentiality agreement to Pizza Hut to develop his new chicken device. Pizza Hut asked Purdue Farms about the feasibility of the project (PF also signed
document). PF said it was a bad idea, PH backs off, and PF then sells the device on their own. Hook won b/c PF willingly and maliciously breached the agreement. This counts as a trade secret b/c Hook took measures to maintain secrecy. v. Element Two: Reasonable Security Measures 1. You can lose misappropriation claim by: a. Publically displaying information b. Including info in advertising materials c. Providing open access info vi. Du Point v. Christopher a. D took aerial photos of factory to reveal DP’s process. D argued that DP failed to take reasonable security measures. To expect DP to have anti-aircraft guns to preserve secrecy is beyond reasonable. DP recovers. vii. Schalk v. State a. (Criminal appeal) Computer scientist goes to a new company and transfers files form old. An employee’s duty to preserve a former employer’s trade secrets exists as a mater of law even if a confidentiality agreement is not signed. Company took adequate measures to maintain secrecy. Schalk loses.
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- Spring '08