Trade Secret Law Research Articles

The problem of using trade secrets in economic relations

Problem setting. In a market economy and increased competition between enterprises become increasingly important concepts such as business information, trade secrets, know-how, confidential information, the information with restricted access. Given the fact that only one patent protection is unable to meet the needs of researchers, in addition to formal public protection and secured legal means we would like to pay attention at private legal measures, particular, the mode of trade secrets.Recent research and publications analysis. Different aspects of the protection of trade secrets were investigated by specialists such as G. Androschuk, J. Berzhye, I. Davydov, O. Davydyuk, D. Zadyhaylo, P. Kraynov, G. Nikiforov, S. Nikiforov, V. Rubanov, E. Solovyov, L. Hoffman, V. Chaplygin, A. Cherniavsky and others. However, at present there is a lack of comprehensive research of this legal phenomenon, equally useful for innovators and businesses that actively protect corporate security.Paper objective. This article is planned to determine the legal characteristics, structural elements and mechanisms by which the use of trade secrets in business have a positive impact on innovation development and corporate security entities.Paper main body. On the basis of requirements of Art. 505 Civil Code of Ukraine and art. 39 of the TRIPS Agreement we formulated commercial information signs under which it receives legal protection as an object of intellectual property: (1) privacy (real or potential) in the sense that it is as a whole or in a precise combination of aggregate and its components are not generally known or available to persons in the circles that normally deal with such information; (2) commercial value (not purely industrial or industrial), due to its secrecy; this information is unknown to others, which is a commercial interest; (3) the lawful holder of the information provides active special measures (technical, organizational, legal) to preserve secrecy. The objects of trade secrets, depending on the fields may be the following types of information: (1) scientific and technical; (2) management; (3) commercial; (4) financial.At this stage, there is a growing role of know-how, compared with patents, because as their special advantages and drop interest in patenting innovations as an independent factor, as well as economic and legal efficiency mode of trade secrets. Under the know-how necessary to understand the technical, manufacturing, engineering knowledge, experience and skills related to the design, development, manufacture, sale, operation, maintenance, repair, improve technology and other innovative objects which have the status of trade secrets, and a factor of competitiveness entity.Given the fact that the administrative and jurisdictional mechanisms for the protection of trade secrets are more or less clear, we focused on internal corporate events. First, this is consolidation in the basic documents of the entity (statute, founding and collective agreements, work rules on trade secret law) such provision as law on ownership and protection of trade secrets. Second, the order of the head of the entity to approve the list of information to be protected as a trade secret. Third, develop and adopt regulations on trade secrets. Fourth, to approve the regulations on the organization of the documents containing trade secrets. Fifth, to include in a labor agreement (contract) the condition of non-disclosure of trade secrets or employee expected signing of enhancing privacy protection.Conclusions of the research. In order to stimulate innovation growth and protection of corporate security entities we should propose changes to the legislation: (1) secure the definition of the concept of «know-how (secret production)» indicating that the exclusive right to the secret of acting as long as the relation of production secrets operating mode of trade secrets; (2) add Tax Code of Ukraine following types of tax benefits: (a) exemption of small businesses from paying value added goods produced using in-house production know-how (secrets), sold small businesses within the term of exclusive rights to these intellectual activities, but not more than 5 years; (B) exemption of small businesses from paying income tax amounts in the form of sales of products derived from the use of know-how (secrets) in-house production from the beginning of their use, within the term of the exclusive rights to these intellectual activities, but not more than 5 years; (3) adopt by the Cabinet of Ministers exemplary (typical) provision of trade secrets in business organizations, which determine the general procedure for the use of legal, organizational and technical means to ensure the confidentiality of trade secrets.

Which Types of Bioinformatics Inventions Are Eligible for Patent Protection?

The field of bioinformatics is flourishing, and strong growth is only projected to continue. Like any cutting edge technology, bioinformatics requires an integrated IP strategy involving patent, trade secret, and copyright laws. The patent system in particular can be a powerful protection for commercializing bioinformatics inventions as long as a corresponding patent application meets certain patent law standards. Recently, the most rapidly evolving of these patent law standards—patent eligibility—came to a crescendo last year when the Supreme Court in Alice v. CLS Bank introduced a two-step test for determining whether computer-implemented inventions are patent-eligible. Since then, other courts and the USPTO have applied the test on inventions implemented on a computer and/or using the Internet with fact-dependent results. Here, we discuss how these decisions relate to bioinformatics inventions. We then analyze bioinformatics patents that have recently issued post-Alice. While the law remains relatively underdeveloped, it becomes clear that relying on a general purpose computer to perform routine or conventional steps in a claim will not infuse patent-eligibility into a claim. However, bioinformatics inventions remain patentable, especially when the patent prosecution team properly and persuasively presents the technical improvements and commercial embodiments.

The Optimal Scope of Trade Secrets Law

The paper investigates the optimal scope of trade secrets law. In the model, one innovative firm invests resources first to produce knowledge, and then to protect it from unwanted disclosure. A rival firm invests to ferret out this knowledge. Trade secrets law affects this secrecy contest by reducing the probability of unwanted disclosure given the efforts of the parties. We show how optimal trade secrets policy depends on structural market features and cost parameters. In the final section, we consider the limit case in which the innovation lies on the face of the product, and derive the optimal scope of legal provisions preventing copycat imitation of products (unfair competition, passing off).

Trade Secret Law in the U.S.A. and Israel in Comparative Perspective

The paper is devoted to a comparison of trade secret law in the United States and the State of Israel from the perspective of the continental legal tradition. The aim of this paper is to describe the general system of trade secret law in the respect to the identification of items that fall under the protection of the trade secret and actions which are considered a trade secret misappropriation. The comparison of key aspects is based on defining of these basic parameters with evaluation of more effective legislation and recommendations for changes to equalize the law. The comparison is then evaluated from the perspective of the trade secret law in the European Union.

The New Cognitive Property: Human Capital Law and the Reach of Intellectual Property

Contemporary law has become grounded in the conviction that not only the outputs of innovation – artistic expressions, scientific methods, and technological advances – but also the inputs of innovation – skills, experience, know-how, professional relationships, creativity and entrepreneurial energies – are subject to control and propertization. In other words, we now face a reality of not only the expansion of intellectual property but also cognitive property. The new cognitive property has emerged under the radar, commodifying intellectual intangibles which have traditionally been kept outside of the scope of intellectual property law. Regulatory and contractual controls on human capital – post-employment restrictions including non-competition contracts, non-solicitation, non-poaching, and anti-dealing agreements; collusive do-not-hire talent cartels; pre-invention assignment agreements of patents, copyright, as well as non-patentable and non-copyrightable ideas; and non-disclosure agreements, expansion of trade secret laws, and economic espionage prosecution against former insiders – are among the fastest growing frontiers of market battles. This article introduces the growing field of human capital law, at the intersections of IP, contract and employment law, and antitrust law, and cautions against the devastating effects of the growing enclosure of cognitive capacities in contemporary markets.

The Choice of Legal Protection Mode of Computer Software

Computer software is an information product [2]. Since the rising of the computer software industry during the 1960’s, the dispute into the best way to protect computer software has never stopped. Human society has already entered the information age, the development of the computer software industry is happening more rapidly than ever before. The application of using legal means to effectively protect computer software, is not only crucial to the development of the computer software industry, but also for national science and technology, the development of the economy is of great significance. This paper summarizes the present situation of international protection of computer software, based on the analysis of the quality of copyright law, patent law, and trade secret law to protect computer software and the analysis of the protected mode all over the world, put forward the author’s suggestions for the legal protection model.

Legal Foundation of Silicon Valley: Lessons for Asian Hi-Tech Districts

Policy planners in Asia readily covet high technology districts and regional systems of innovation such as Silicon Valley. We examine the law's role, by way of covenants not to compete (競業禁止條項) in the development of Silicon Valley by reviewing the literature from 1999 through 2013. The research suggests that in certain high-tech districts such as Silicon Valley, there are greater gains in the innovation of a region by prohibiting CNCs. While we emphasize CNC law as the main legal determinant to Silicon Valley's success, the application of trade secret law and the inevitable disclosure doctrine are also factors that can aid or restrict the mobility and knowledge spillover of a region. Even with much explored, perspectives are lacking from a regional innovation systems analysis, and more so in the context of Asian nations. To tackle these gaps, three analytical frameworks are presented that entails labor law, law and economics, and law and innovation. And from within the law and innovation framework, research is introduced in the hope that future discussions on Asian regional innovation systems consider the legal foundation of Silicon Valley.

Balancing Private Rights and Public Policies: Reconceptualizing Property in Databases

This Article presents a new paradigm for thinking about intangible property rights in response to recent criticism that information products such as databases should not be over-propertized. Analyzing the inherent problems with existing approaches, the Article concludes that creating private property rights in these intangible assets will not inevitably lead to commercial and social problems. On the contrary, legislatures can create private property rights that when accompanied by appropriate oversight and monitoring will preserve commercial markets and the public domain of information. Indeed, a new database law can use the concept of property as an organizing tool to properly balance private rights and public policies. In developing this new approach to database protection, this Article examines the international debate on the creation of private property rights in databases. Furthermore, unlike previous models for sui generis database protection law based on copyright or trade secret law, the model in this Article draws on the principles underlying trademark and patent law in reaching a new solution.

Protecting trade secrets in China: history and context

The development of laws concerning the protection of trade secrets in China is a reflection of the ongoing needs and demands of the great changes in the Chinese economy. This paper offers a historical overview of the development of trade secret protection laws in China and examines how the changes in the concept of property ownership in China at different stages, the Chinese Law Against Unfair Competition and the influence of foreign sources, especially the TRIPS Agreement and the US trade secrets law, shaped the development of trade secrets protection in China. The paper proffers some observations upon the uncertain distinction between secrets seen as state property and the recognition of private civil commercial trade secrets.

Legal Issues Facing Election Officials in an Electronic-Voting World

Recent publicity concerning the reliability and security of various electronic voting systems has increased public scrutiny of the machines themselves as well as the election process as a whole. The election officials who are responsible for electing, maintaining, and operating electronic voting systems face not only public inquiry but also a thicket of state and federal legal issues. We provide in this paper a general analysis of typical legal issues that elections officials face (or should consider). This paper analyzes legal issues that surround three broad categories of activities that elections officials undertake, or might wish to undertake: Security testing, public disclosure and auditing, and assembling systems from separate components. Finally, we discuss how state election codes and contract law, as well as copyright and trade secret law, might affect elections officials who wish to combine components from different manufacturers into a single electronic voting system.

The Sustainable Knowledge Enterprise: Encouraging Employee Collaboration While Maintaining Corporate Confidentiality with the Strategic Use of Trade Secret Law

Three forces set the stage for substantial change in the U.S. economy: (1) a better-educated workforce, (2) expansion of information and communication technologies (3) changing organizational structures that empower teams and clusters of talented and motivated employees. At the nexus of these forces is a firm that is bustling with ideas, solutions, and innovation: a knowledge enterprise. In this new frontier, the emerging knowledge enterprise must decide whether and to what extent it will embrace and foster these changes. The firm’s ability to create and capture value from this new dynamic will affect that decision, and given the intangible character of knowledge assets, the decision necessarily involves an analysis of the legal tools available to protect those assets.This paper argues that trade secret law is uniquely positioned to address a knowledge enterprise’s coming challenges because trade secret law can protect what traditional IP does not. However, trade secret protection can be a double-edged sword. A knowledge enterprise equipped with a deep understanding of the core distinction between trade secret protection and traditional IP can tailor its reliance on trade secret protection and balance it with an organizational approach that encourages employees to collaborate within the firm and to continue producing ideas and solutions. The resulting discussion involves issues at the intersection of intellectual property and employment law or “employment-based intellectual property” (“EIP”) and requires approaching those issues from diverse perspectives: incorporating economic analysis and business considerations.

The Death of Discretion in the Digital Age

Can a generation that documents and shares more information than ever before truly keep anything secret? Did the advent of Facebook, Dropbox, and Google Docs come at the expense of the last shreds of discretion left in the fingertips of Generation Y? Has the overarching idea of what is “discreet” shifted with the Digital Age and new social norms? And if so, should trade secrecy, a doctrine already shrouded in the constantly changing tides of equity, reflect a new concept of what is reasonable?In the wake of scandalous reports regarding the many indiscretions of spy chief David Patraeus, these seemingly rhetorical questions are more relevant and demanding of answers than ever. Patraeus’ affair with Paula Broadwell surfaced during an FBI investigation of “jealous” e-mails allegedly sent by Broadwell to a woman named Jill Kelley. The New York Times posed the question, “If David H. Patraeus couldn’t keep his affair from prying eyes as director of the Central Intelligence Agency, then how is the average American to keep a secret?” Experts on privacy say people grossly underestimate how transparent their digital communications are, regardless of whether the Federal Bureau of Investigation is looking into their personal lives.Transparency of communication is undoubtedly an issue for businesses as well. “Many IT professionals recognize the benefits cloud computing offers in terms of increased storage, flexibility and cost reduction” said Songnian Zhou, chief executive officer of Platform Computer. The phenomenon of easy information sharing is automatically in tension with the perpetual need for businesses to keep their proprietary information secret. “Considerations such as secrecy, data privacy, network performance, and economics are likely to lead to a mix of cloud computing centers both within the company firewall and outside of it,” said Julian Freidman, a specialist in emerging technologies. Juxtapose that notion with that of New York Times reporter Nicole Pelroth, who wrote, “Face it: no matter what you are trying to hide in your e-mail in-box or text message folder — be it an extramarital affair or company trade secrets — it is possible that someone will find out,” and it is clear that businesses must find some happy medium between the accessibility of their information and how to also keep proprietary information away from prying eyes and inboxes.With the tension between accessibility and secrecy in mind, I will lay out the basic trade secret prima facie cause of action, and then analyze the doctrine through the lens of social media and cloud computing, focusing on whether information shared through social media, or stored on the cloud is reasonably protected. I will argue that the reasonableness standard should be flexibly applied to work with changes in the accessibility of data, and that the flexibility should be reflected in trade secret law. Alternatively, I will explore the ramifications of not applying a flexible reasonableness standard to trade secrecy, and how that could diminish the utility of the doctrine as a whole over time.

Legally Speaking -- "A Wink is as good as a Nod:" The Law of Trade Secrets

Legally Speaking -- "A Wink is as good as a Nod:" The Law of Trade Secrets

Laws of creation: property rights in the world of ideas

While innovative ideas and creative works increasingly drive economic success, the historic approach to encouraging innovation and creativity by granting property rights has come under attack by a growing number of legal theorists and technologists. In Laws of Creation, Ronald Cass and Keith Hylton take on these critics with a vigorous defense of intellectual property law. The authors look closely at the IP doctrines that have been developed over many years in patent, copyright, trademark, and trade secret law. In each area, legislatures and courts have weighed the benefits that come from preserving incentives to innovate against the costs of granting innovators a degree of control over specific markets. Over time, the authors show, a set of rules has emerged that supports wealth-creating innovation while generally avoiding overly expansive, growth-retarding licensing regimes. These rules are now under pressure from detractors who claim that changing technology undermines the case for intellectual property rights. But Cass and Hylton explain how technological advances only strengthen that case. In their view, the easier it becomes to copy innovations, the harder to detect copies and to stop copying, the greater the disincentive to invest time and money in inventions and creative works. The authors argue convincingly that intellectual property laws help create a society that is wealthier and inspires more innovation than those of alternative legal systems. Ignoring the social value of intellectual property rights and making what others create and nurture free would be a costly mistake indeed.

Legislating in Pari Materia: Protecting Trade Secret Law and Reining in the CFAA

When used for its intended purpose the CFAA can be an effective statute. If Congress replaces the unclear “unauthorized access” standard with a “circumvention” standard, the CFAA will once again be limited to its intended function of preventing and prosecuting computer hacking. Plaintiffs will no longer be able to use the CFAA to get state trade secret law claims into federal court, or seek recovery for the theft of information that states have deemed unworthy of trade secret protection. Additionally, if Congress replaces the CFAA’s criminal penalties with the criminal penalties that currently exist in the Stored Communications Act, prosecutors and judges will be better able to render consequences in proportion to the severity of a violation. These changes will force courts to apply the CFAA in the way Congress originally intended, which will reduce the uncertainty and controversy surrounding the law.

Abuse of the Journalist's Shield: A State-by-State Survey of Blogger Liability for Trade Secret Misappropriation and Texas's Shield Statutes as a Model for Federal Preemption

This Comment addresses the tension between the maintenance of trade secrets and the potential liability issues that arise when a reporter/blogger disseminates those trade secrets. Specifically, this Comment focuses on whether third party bloggers should be subject to criminal sanctions under the Economic Espionage Act of 1996.For the proposal and solution sections, this Comment focuses on three dynamics that currently make trade secret law difficult to enforce. First, unlike all other forms of intellectual property, trade secrets are civilly enforced under state laws and do not benefit from a uniform, federal system of laws like copyrights, trademarks, and patents. With the advent of the Internet and modern commerce, business is no longer carried out only on a local scale. It is carried out in a national and international marketplace and should be afforded the standardized federal court jurisdiction that all other intellectual property rights are given. Second, courts today have placed too onerous of a burden on a corporation to establish whether that corporation has adequately guarded the secret. Only sufficiently guarded secrets are afforded trade secret status and protection. Third, The use of the Economic Espionage Act has been almost nonexistent since its enactment in 1996. Under the Economic Espionage Act, some trade secret infringement claims are actionable as a criminal offense. In certain bad faith infringement claims, use of the Economic Espionage Act may be the only deterrent to preventing misappropriation of an owner’s trade secret.The background section of this Comment begins with a historical look at trade secret protection, analyzes the depths and application of modern trade secret jurisprudence, closely uses the framework of a 2012 trade secret case as a framework for an in-depth analysis of the Economic Espionage Act. Next, the background section closely examines state reporter’s shield laws, and compares them with state trade secret laws. This Comment includes a detailed survey of all trade secret laws and reporter’s shield statutes for all fifty states and the District of Columbia and proposes Texas's journalist's shield statutes as a model for if or when federal court jurisdiction is provided for trade secret claims.

Trade secrets for beginners

‘A book may be good for nothing; or there may be only one thing in it worth knowing; are we to read it all through?’ (Samuel Johnson) This section is dedicated to the review of ideas, articles, books, films and other media. It will include replies (and rejoinders) to articles, the evaluation of new ideas or proposals, and reviews of books and articles both directly and indirectly related to intellectual property law. From military data to candy bar recipes, from process of production of a pharmaceutical to sales margins used by the company, to the list of customers of a manufacturer, trade secrets are all around and intertwine into nearly every aspect of our lives, and most certainly into the lives of companies. The growing pace of development characterizing any knowledge-based economy makes information a particularly valuable commodity. Another priceless component of the modern market is still the human being: a skilled employee, an external expert, a service provider, a business partner. Taking into account the intangible and ubiquitous character of data and the accessibility of modern copying techniques, the control over access and use of the secret information proves a difficult task, which may decide on the success or failure of a company. This makes the area of trade secret law particularly relevant to everyone—not only to government security experts or lawyers litigating trade secret disputes—as almost everyone is constantly being exposed to information which may qualify as his or her employer's or business partner's trade secret.

Social Network Analysis of Trade Secrets and Patents as Social Relations

This paper employs the empirical tools of social network analysis to examine the “property as social relations” approach to intellectual property. Social network analysis seeks to describe and model society and culture based on the connections between agents in a network. A “property as social relations” perspective suggests that property rights emerge out of, and help construct, social relationships. But things become murky when this perspective is applied to basic intellectual property problems. One such problem is the relationship between trade secrets and patents. In trade secret law, the social aspects of information have long been recognized. This intuition is confirmed by social network analysis. In fact, a notion of “social rivalry” permeates trade secret law. In patent law, in contrast, information continues to be viewed almost exclusively as a non-rivalrous economic commodity. Social network analysis demonstrates that the “social” qualities of an innovation are largely stripped away when the innovation moves from the trade secret to the patent domain. It is unclear, however, whether a “property as social relations” approach to patents would achieve the sorts of results its advocates hope would obtain.

Trade Secrets Laws and Inventory Efficiency: Empirical Evidence from U.S. Manufacturing

Here, we investigate the impact of differences over time and across states in the law of trade secrets on the efficiency of production in manufacturing, as represented by inventories. We find that stronger trade secrets protection was associated with lower inventories: a one standard deviation increase in the index of trade secrets law was associated with inventories being 1.6% lower. Consistent with economies of scale in inventories, the effect of trade secrets protection was increasing in company size, as measured by sales.

Trade Secrets, Non-Competes, and Inventor Mobility: Empirical Evidence

As they change jobs, scientists and engineers carry knowledge from one employer to another. Spillovers of knowledge, and so, innovation and economic growth, depend on institutions that influence professional mobility. Here, I investigate the impact of U.S. state-level trade secrets law on the movement of inventors among employers within states. Using patent assignments to track inventor moves, I find that mobility was negatively associated with the stock of trade secrets cases, but not the enactment of a trade secrets statute or the stock of cases on covenants not to compete. Specifically, a 1% larger stock of trade secrets cases was associated with 0.3% (+/-0.1%) lower inventor mobility. The empirical findings were robust to differences in the rate of depreciation of legal cases and the measure of change of employer, and various falsification tests.