View from one of the Congress's conference rooms overlooking Westminster Abbey

Having benefited from a beautiful opening weekend, it was only fitting that the rain came on Monday to give AIPPI Congress attendees a taste of "real life" in London.  During the afternoon, as rain speckled against the windows of the Queen Elizabeth II Conference, attendees spilled into top floor conference rooms to learn about the latest in trade secret protection. 

It arrived in the dead of night, cloaked in appropriate secrecy and ensconced in a black and gold gloss binding. Or at least, that's how I imagined The Law of Trade Secret Litigation Under the Uniform Trade Secrets Act (UTSA), by J. Patrick Huston, made its international way to my desk. The book “organizes, analyzes and synthesizes all of the 48 UTSA-adopting states’ published court opinions (state and federal).” It seeks to create a coherent and uniform construction of the UTSA, and serve as a guide for practitioners and a reference in teaching. It focuses on three aspects of trade secrets litigation: 1) whether the information constitutes a trade secret, 2) whether the defendant’s conduct constitutes misconduct and 3) the appropriate remedies. These are then broken down to focus on more granular topics such as reasonable efforts, injunctions, attorney fees and many more.

With a tome as large as this, reading the section on how the book is organised is a good start. [Difficult for Merpel, as she likes to start without reading the instructions first.] The opinions and analyses are organised by 1) the issues addressed in opinions, 2) the type of information covered by the trade secret and 3) the type of industry. Sections 1-4 cover the four elements of proof, Section 5 addresses misappropriation, and Section 6 tackles remedies. Detailed synopses, citations and narration facilitate the use of the book as an important reference. Additional text, such as the history of the UTSA and state-level trade secret statutes, provide a comprehensive view of trade secrets. The main book covers court opinions from 1980 through 2010, and the supplement extends that coverage to 2011 to 2014 (with additional supplements to be made available.) Clearly a significant amount of time and effort has been devoted to its development.

I was naturally drawn to the section on the economic value derived from trade secrecy – the third element of proof in trade secrets - where I learned some interesting points. For example, evidence of independent economic value often relies on expert testimony and can include time, effort and expense in developing or duplicating information; the defendant's conduct (e.g. if it was worth copying, it was worth something); negative information (my favourite, it helps competitors understand what doesn't work) and a host of others points as considerations. Following this categorisation, Huston then details synopses of relevant cases by type of information and industry.

In Part 4 on remedies, a section of actual damages discusses the actual loss caused by misappropriation, and unjust enrichment. I was curious as to the justification for including unjust enrichment as actual damages, which the text answers and explains the fairly broad interpretation of 'actual' includes things such as future damages. Huston also explains the limits; for example, costs incurred in investigating potential misappropriation (in one case, actions by a former employee) are not considered actual damages. The authors points to nuances and cases in determining what constitutes actual damages.

Mmm, ice cream Lotta v. ice-cream by Niklas Pivic (Flickr)

This is the first time I have reviewed both the electronic and physical copies of a book. As this Kat does not have feline night vision, she tends to prefer hard copies. But, as this Kat also lacks feline spinal mobility, the lightweight electronic copy has its benefits. Readers will likely have their own preferences.

The electronic copy of The Law of Trade Secret Litigation has a distinct advantage over the hard copy – the extensive and quick ability to search.   I started off, as every cool kat does, by searching self-indulgent terms. Whereas “chocolate” turned up blank,  “ice cream” got me to the Dippin’Dots case (In Re Dippin'Dots Patent Litigation).  Nothing says “flash frozen novelty ice cream” like a lack of making reasonable secrecy efforts. (In that case, the company let the cat out of the bag by disclosing the process to potential dealers and in contracts, and then later attempting to impose a confidentiality clause.)  The search also led me to a case on Ice Cream Sandwich Wafers (Interbake Foods vs. Tomaseillo), where the court found reasonable efforts, but with only a wafer thin margin. (I scream, you scream, we all scream for reasonable efforts!) While “ice cream” was a fun sojourn into the book, it demonstrates the power of searching – it was very fast to find two cases based on frozen treats. In addition, all entries have cross-references to related topics (but, alas, not toppings.)

I cannot imagine a more complete book on the UTSA. In 4,000 pages, Hutson pokes and prods 630 UTSA cases and constructs a comprehensive, detailed analysis. I enjoyed the narrative style of the writing as quotes from judgements and key texts are pieced together smoothly with commentary from the author.  I imagine that this treatise will be useful for legal practitioners and trade secrets scholars. I, for one, will be delving into the case synopses related to damages to inform my research.

The Law of Trade Secret Litigation Under the Uniform Trade Secrets Act, by J. Patrick Huston (2016), Juris Publishing, ISBN: 978-1-57823-250-5 is available here for USD $595 in hard copy or PDF. Rupture factor: high, 4,000 pages (but spread over three bindings.)

James Pooley

Last Sunday this Kat posted a piece, "Whatever the Report Says: Can Trade Secrets Really Be That Important?", here, which has already generated quite a bit of reaction (the 11 comments posted at its foot testify to that).  This post has also generated a comment from James Pooley, World Intellectual Property Organization (WIPO) Deputy Director General for Innovation and Technology. The IPKat thinks that it is worthwhile these thoughts and thanks James for his willingness to let him host them here.

For the record, James emphasizes that the comments below are his personal opinion only and do not in any way represent any official position of WIPO.

"I think the major reason for your surprise about the preeminence of secrecy over patenting as a form of IP protection is that, as you observe, most IP lawyers do not deal with trade secrets very often. The IP profession tends to focus its attention on what we are most often called to do, and the three obvious categories -- patents, trademarks and copyrights -- are registration systems, which to varying degrees typically require legal talent in order to perfect one's rights. But these same attributes that make secrecy a lesser-known form of IP protection among lawyers are exactly what make it so popular with business. You don't have to file any paperwork with the government or negotiate for the boundaries of your right -- you just have it by virtue of possessing undisclosed information that you don't want the competition to know. Secrecy is ubiquitous, and it is cheap. Most of the time, you don't need to have lawyers involved unless you get into litigation. So why should we wonder at its popularity? 

Indeed, the NSF survey is not the first to come to this conclusion. The most frequently cited reference on the same point is a 2000 study by Prof. Wesley Cohen of Duke University, et al., "Protecting Their Intellectual Assets: Appropriability Conditions and Why U.S. Manufacturing Firms Patent (or Not)", Nat’l Bureau of Econ. Research, Working Paper No. 7552 (2000). I am not familiar with the OECD paper you refer to. 

At least in the U.S., trade secret law receives a fair amount of attention from practitioners (at least some of us), and increasingly from academics. My own treatise on Trade Secrets (from Law Journal Press, here) has been published and updated since 1997. Earlier treatises similarly dedicated to the law and practice of trade secrets were authored by Roger Milgrim and by Mel Jager. For an excellent review of recent scholarship in the field of trade secret law, see The Law and Theory of Trade Secrecy: A Handbook of Contemporary Research (Rochelle C. Dreyfuss & Katherine J. Strandburg eds., 2011, here). And there are in fact courses specifically and exclusively about trade secrets being given at U.S. law schools. I taught such a course as early as 1985 at Santa Clara, and did so continuously at Berkeley from 1999 to 2009. 

The IPKat and Merpel have their own secret recipe for titanium dioxide. Here you see them watching to make sure the latest batch doesn't boil over ...

There are good reasons for businesses to choose secrecy over patenting; the most common category is process technology, which is difficult (or impossible) to reverse engineer from a finished product, and which would be difficult (or impossible) to detect as patent infringement. An example is DuPont's method of producing titanium dioxide, developed in the 1930s and maintained since then as an extremely valuable trade secret, responsible for millions in profits. Source code is almost always protected by secrecy. And beyond technical information, an enormous amount of business data, such as strategies, financial information, customer lists and unreleased product plans, are covered exclusively by trade secret law. Consider Apple, which generates a lot of buzz while pundits guess about the features of the next iPad -- all of that speculation creates more market demand, and the legal basis for generating it is: trade secret law.

Frankly, in the global information economy, protection of secrets is more important than ever. This is mainly because of the increasing use of collaboration in the development of technology. The term "open innovation" has become popular to describe how companies turn to resources outside of their own laboratories to create new products. In the increasingly connected world, this leads to "networked innovation", in which problems are solved by teams opportunistically assembled among qualified participants wherever they are located around the globe. But in order for those networks to function, they need to share information on a trusted basis, and that in turn depends on robust (or at least adequate) trade secret laws. in the relevant jurisdictions".

Thanks, James, for this incisive and insightful comment.

Katnote: IPKat team member Jeremy is very excited to see James's reference to The Law and Theory of Trade Secrecy: A Handbook of Contemporary Research, since he is the editor of the series of Edward Elgar Research Handbooks of Intellectual Property, of which Rochelle and Katherine's book forms a valued part. He adds, watch out for Gurry on Breach of Confidence: the Protection of Confidential Information (second Edition, not quite published), which is now written by a talented trio of Australians, Tanya Aplin, Lionel Bently and Simon Malynicz. The book's web page is here and the Gurry in question is this one.

Merpel moans, since James was speaking in his personal capacity, I thought it would be a good idea to contact WIPO and ask what its official line on trade secrets was, but they wouldn't tell me: they said it was a secret ...

Above: never mind microwaves -- they don't even make adverts like they used to ...

LATE PLUG: this seminar, which is free and takes place this coming Monday, already has over 90 participants signed up -- but it's still possible to squeeze in some more. Contact Sarah Turner at the link below if you'd like to attend. There will be some delicious mince pies and some first-rate networking.