Source: http://swift.law.pro/about_trade_secrets.htm
Timestamp: 2019-04-24 12:21:30+00:00

Document:
Trade secrets include formulas, practices, processes, designs, instruments, patterns, or compilations of information, which are not generally known and cannot be easily found out, by which a business can obtain an economic advantage over competitors. In some countries, trade secrets are called "confidential information". Trade secrets, like patents, trademarks and copyrights, are a form of "intellectual property".
In the United States, trade secrets are not protected by federal law to the same extent as patents, trademarks or copyrights. Patents, trademarks and copyrights are protected under federal statutes, the Patent Act, Trademark (or Lanham) Act and the Copyright Act. But trade secrets are protected primarily under state laws, and most states have enacted the Uniform Trade Secrets Act (UTSA), except for Massachusetts, New York, and North Carolina. An important difference between trade secrets and the other forms of intellectual property is that trade secrets are protected only when they are not disclosed to the public.
To acquire a patent, full information about the method or product has to be supplied to the U.S. Patent & Trademark Office (or a similar agency in another country) and upon publication or issuance, will then be available to all. When the patent expires, it is legal for competitors to copy the method or product. The temporary monopoly on the subject matter of the patent is the benefit gained in exchange for disclosing the information to the public.
Trade secret protection of some details about an invention is not always incompatible with patent protection of other aspects of the invention. When you apply for a patent you can no longer maintain a trade secret on what is disclosed about the invention in the patent application after it is issued or published.. In order to obtain a patent you must disclose enough about your invention so that a person of ordinary skill in the art (i.e., the area of technology to which the invention relates) will be able to both make and use the invention. (To obtain a patent in the United States, you also have to disclose the best mode of practicing your invention, but under the America Invents Act passed in 2011, failure to disclose the best mode is no longer grounds for holding the patent invalid.) The critical time for satisfying this disclosure requirement is at the time the application is filed. In many if not most situations, improvements will be made to an invention even after filing of the patent application, and additional information will be learned. None of this additional information must be disclosed and can instead be kept as a secret.
Patent licenses almost always include clauses that require the inventors to disclose any trade secrets they have. Often, it is information not disclosed in the patent that is the most commercially valuable. If you are attempting to sell or license your patent rights, you want to make sure that you take steps to continue to maintain your trade secrets as secrets, otherwise they will be lost. Before disclosing any secrets not already protected by an issued patent, you should use a non disclosure agreement.
(4) does not imply any disclosure of the invention to the public.
(3) a trade secret is more difficult to enforce than a patent.
These three aspects are incorporated in Article 39 of the Agreement on Trade Related Aspects of Intellectual Property Rights ("TRIPS") administered by the World Trade Organization.
Under U.S. law, a trade secret, as defined under 18 U.S.C. § 1839 (3) (A) and (B), has three parts: (1) information; (2) reasonable measures taken to protect the information; and (3) independent economic value from not being publicly known.
can be very difficult. A holder of a trade secret may also require similar agreements from other parties he deals with, such as vendors or licensees.
Companies can protect their confidential information through non compete and non disclosure contracts with their employees. (Such contracts must be within the constraints of employment law, including only restraint that is reasonable in geographic and time scope). The law of protection of confidential information effectively allows a perpetual monopoly in secret information it does not expire as would a patent. But the lack of formal protection means that a third party is not prevented from independently duplicating and using the secret information, once it is discovered.
Secret formulae are often protected by restricting the key information to a few trusted individuals. Famous examples of products protected by trade secrets are Chartreuse liqueur and Coca Cola. Protection of a trade secret can, in principle, extend indefinitely, and therefore may provide an advantage over patent protection, which lasts only for a specific period of time. The French government once attempted to take over the production of Chartreuse liqueur from the order of monks that made it, but as it did not have the secret formula that the monks used, the government-produced Chartreuse liqueur was not of similar quality, so no one would buy it, and the business was eventually returned to the monks.
Coca Cola has no patent for its present formula, but has been very effective in protecting it for many more years than the twenty years of protection that a patent would have provided. (Its original formula was patented in the nineteenth century, but no patent was obtained for the revised formula.) It is said that only two executives know the complete formula, and they never travel together. In fact, Coca Cola refused to reveal its trade secret under at least two judges' orders, and pulled out of the Indian subcontinent to avoid doing so. The disadvantage is that there is no protection once information protected as a trade secret is uncovered by others, such as through reverse engineering, whereas patent has a guaranteed time of protection in exchange for disclosing the information to the public. One suspects that Coca-Cola and Pepsi-Cola employ chemists who can analyze each others= products, and that they have long since "reverse engineered" their competitors' products, but it is good advertising to claim that they have a secret formula.
Although some scholars see precedents for legal protection of trade secrets in ancient Roman law, trade secret law as we know it today in Anglo-American law made its first appearance in England in 1817 in Newbery v. James, and in the United States in 1837 in Vickery v. Welch. While those cases involved the first known common law causes of action based on a modern concept of trade secret law, neither involved injunctive relief (i.e., a court order prohibiting infringement); rather, they involved damages (i.e., monetary compensation) only. In England, the first case involving injunctive relief came in 1820 in Yovatt v. Winyard, while in the United States, it took until the 1866 case Taylor v. Blanchard.
Trade secrets law continued to evolve throughout the United States as a hodgepodge of state laws. In 1939, the American Law Institute issued the Restatement of Torts, containing a summary of trade secret laws across states, which served as the primary resource until the latter part of the century. Presently, only four states, Massachusetts, New Jersey, New York, and Texas, still rely on the Restatement as their primary source of guidance (other than their body of state case law). Trade Secrets were omitted from the Second Restatement of Torts.
Although trade secret law evolved under state common law, prior to 1974, the question of whether patent law preempted state trade secret law had been unanswered. In 1974, the United States Supreme Court issued the landmark decision, Kewanee Oil Co. v. Bicron Corp., which resolved the question in favor of allowing the states to freely develop their own trade secret laws.
In 1979 the National Conference of Commissioners on Uniform State Laws promulgated the Uniform Trade Secrets Act (UTSA), and amended it in 1985. Forty-seven states have now adopted it as their basis for trade secret law. The USTA is fairly short as legislative enactments go, having only twelve sections.
Note that "uniform" laws are not passed by Congress; rather, they must be passed separately by each state's legislature. States often adopt non-uniform amendments to uniform laws. Furthermore, each state's uniform laws are interpreted separately be each state's judiciary, and those separate interpretations are followed in cases in the federal courts. It may be asked what is the point of having a federal system of government, if the state laws are uniform. I suppose that the answer is that state laws are not required to be uniform, so one state is able to experiment with a non-uniform law, at little or no risk to the rest of the United States. Such experiments are more likely in a federal system, than in a unitary national government. Other advantages of a federal system are that it makes possible more participatory democracy than in a unitary national government, that dispersion of power reduces the risk of dictatorship, and that laws may be adapted to local circumstances.
In British Commonwealth common law jurisdictions, confidentiality and trade secrets are regarded as an equitable right rather than a property right (with the exception of Hong Kong, where a judgment of the High Court indicates that confidential information may be a property right). The Court of Appeal of England and Wales, in the case of Saltman Engineering Co. Ltd. v. Campbell Engineering Ltd., held that the action for breach of confidence is based on a principle of preserving "good faith".
The "quality of confidence" highlights that trade secrets are a legal concept. With sufficient effort or through illegal acts (such as breaking and entering), competitors can usually obtain trade secrets. However, so long as the owner of the trade secret can prove that reasonable efforts have been made to keep the information confidential, the information remains a trade secret and generally remains legally protected. Conversely, trade secret owners who cannot evidence reasonable efforts at protecting confidential information, risk losing the trade secret, even if the information is obtained by competitors illegally. It is for this reason that trade secret owners shred documents and do not simply recycle them. A successful plaintiff is entitled to various forms of judicial relief, including an injunction, an account of profits or an award of damages; and a declaration.

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