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For other uses, see Trade Secrets (disambiguatio n). Globe icon. The examples and perspective in this article deal primarily with the United Stat es and do not represent a worldwide view of the subject. Please improve this art icle and discuss the issue on the talk page. (August 2011) Intellectual property law Primary rights Copyright Patent Trademark Trade secret Authors' rights Related rights Moral rig hts Utility model Geographical indication Sui generis rights Database right Indigenous intellectual property Industrial design right Mask wor k Plant breeders' rights Supplementary protection certificate Related topics Bioprospecting Societal views Orphan works Public domain Traditional safety valv es Outline of intellectual property v t e A trade secret is a formula, practice, process, design, instrument, pattern, or compilation of information which is not generally known or reasonably ascertaina ble, by which a business can obtain an economic advantage over competitors or cu stomers.[1] In some jurisdictions, such secrets are referred to as "confidential information", but are generally not referred to as "classified information" in the United States, since that refers to government secrets protected by a differ ent set of laws and practices. It has been theorized that the doctrine of trade secrets should protect competit ively valuable, personal information of company executives, in a concept known a s executive trade secrets .[1] Contents [hide] 1 Definition 2 Protection 3 Misappropriation 4 History 4.1 Roman law 4.2 19th century 4.3 Current regulation 4.3.1 United States 4.3.2 Commonwealth jurisdictions 5 Comparison to other types of intellectual property law 5.1 Comparison with trademarks 5.2 Comparison with patents 6 Cases 7 See also 8 Notes 9 Further reading 10 External links Definition[edit] The precise language by which a trade secret is defined varies by jurisdiction ( as do the particular types of information that are subject to trade secret prote ction). However, there are three factors that, although subject to differing int erpretations, are common to all such definitions: a trade secret is information that: Is not generally known to the public; Confers some sort of economic benefit on its holder (where this benefit must der ive specifically from its not being publicly known, not just from the value of t

he information itself); Is the subject of reasonable efforts to maintain its secrecy. These three aspects are also incorporated in the TRIPS Agreement in Article 39.[ 3] By comparison, under U.S. law, "A trade secret, as defined under 18 U.S.C. 1839( 3) (A), (B) (1996), has three parts: (1) information; (2) reasonable measures ta ken to protect the information; and (3) which derives independent economic value from not being publicly known".[2] Protection[edit] Trade secrets are by definition not disclosed to the world at large. Instead, ow ners of trade secrets seek to protect trade secret information from competitors by instituting special procedures for handling it, as well as technological and legal security measures.[3] Legal protections include non-disclosure agreements (NDA) and non-compete clauses. In exchange for an opportunity to be employed by the holder of secrets, an employee may sign an agreement not to reveal his or he r prospective employer's proprietary information. An employee may also surrender or assign to his employer the right to his own intellectual work produced durin g the course (or as a condition) of employment. Violation of the agreement gener ally carries the possibility of heavy financial penalties. These penalties opera te as a disincentive to reveal trade secrets. However, proving a breach of an ND A against a former employee who is legally working for a competitor can be very difficult.[4] A holder of a trade secret may also require similar agreements fro m other parties he deals with, such as vendors or licensees. A company can protect its confidential information through non-compete and non-d isclosure contracts with its employees (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 mo nopoly in secret information - it does not expire as would a patent. The lack of formal protection, however, means that a third party is not prevented from inde pendently duplicating and using the secret information once it is discovered.

Green Chartreuse liqueur protected by confidential information of the ingredient s 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.[5] Protection of 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. Coca-Cola, for example, has no patent for its formula and has b een very effective in protecting it for many more years than the twenty years of protection that a patent would have provided. In fact, Coca-Cola refused to rev eal its trade secret under at least two judges' orders.[6] The disadvantage is t hat there is no protection once information protected as trade secret is uncover ed by others through reverse engineering, for example, whereas patent has a guar anteed time of protection in exchange for disclosing the information to the publ ic. Misappropriation[edit] Companies often try to discover one another's trade secrets through lawful metho ds of reverse engineering or employee poaching on one hand, and potentially unla wful methods including industrial espionage on the other. Acts of industrial esp ionage are generally illegal in their own right under the relevant governing law s. The importance of that illegality to trade secret law is as follows: If a tra de secret is acquired by improper means (a somewhat wider concept than "illegal

means" but inclusive of such means), the secret is generally deemed to have been misappropriated. Thus if a trade secret has been acquired via industrial espion age, its acquirer will probably be subject to legal liability for acquiring it i mproperly. (The holder of the trade secret is nevertheless obliged to protect ag ainst such espionage to some degree in order to safeguard the secret. As noted a bove, under most trade secret regimes, a trade secret is not deemed to exist unl ess its purported holder takes reasonable steps to maintain its secrecy.) History[edit] Roman law[edit] Commentators starting with A. Arthur Schiller assert that trades secrets were pr otected under Roman law by a claim known as, "actio servi corrupti", interpreted as an "action for making a slave worse" (or an action for corrupting a servant) . The Roman law is described as follows: [T]he Roman owner of a mark or firm name was legally protected against unfair us age by a competitor through the actio servi corrupti ... which the Roman jurists used to grant commercial relief under the guise of private law actions. "If, as the writer believes [writes Schiller], various private cases of action were ava ilable in satisfying commercial needs, the state was acting in exactly the same fashion as it does at the present day."[7] The suggestion that trade secret law has its roots in Roman law was introduced i n 1929 in a Columbia Law Review article called "Trade Secrets and the Roman Law: The Actio Servi Corrupti", which has been reproduced in Schiller's, An American Experience in Roman Law 1 (1971). See Trade Secrets and Roman Law: The Myth Exp loded, at 19. However, the University of Georgia Law School professor Alan Watso n argued in Trade Secrets and Roman Law: The Myth Exploded that the actio servi corrupti was not used to protect trade secrets p. 19. Rather, he explained: Schiller is sadly mistaken as to what was going on. ... The actio servi corrupti presumably or possibly could be used to protect trade secrets and other similar commercial interests. That was not its purpose and was, at most, an incidental spin-off. But there is not the slightest evidence that the action was ever so us ed. In this regard the actio servi corrupti is not unique. Exactly the same can be said of many private law actions including those for theft, damage to propert y, deposit, and production of property. All of these could, I suppose, be used t o protect trade secrets, etc., but there is no evidence they were. It is bizarre to see any degree the Roman actio servi corrupti as the counterpart of modern l aw for the protection of trade secrets and other such commercial interests.[7] 19th century[edit] Trade secret law as we know it today made its first appearance in England in 181 7 in Newbery v James,[8] and in the United States in 1837 in Vickery v. Welch.[9 ][10] While those cases involved the first known common law causes of action bas ed on a modern concept of trade secret laws, neither involved injunctive relief; rather, they involved damages only.[10] In England, the first case involving in junctive relief came in 1820 in Yovatt v Winyard,[11] while in the United States , it took until the 1866 case Taylor v. Blanchard.[12][13] Trade secrets law continued to evolve throughout the United States as a hodgepod ge 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. As of 2013, however, only four states Massachusetts, New Jersey, New York, and Texas still rely on the Re statement as their primary source of guidance (other than their body of state ca se law).[citation needed] Current regulation[edit] Globe icon.

The examples and perspective in this article may not represent a worldwide view of the subject. Please improve this article and discuss the issue on the talk pa ge. (May 2013) United States[edit] Although trade secrets law evolved under state common law, prior to 1974, the qu estion of whether patent law preempted state trade secrets law had been unanswer ed. In 1974, the United States Supreme Court issued the landmark decision, Kewan ee Oil Co. v. Bicron Corp., which resolved the question in favor of allowing the states to freely develop their own trade secret laws.[14] In 1979 several U.S. states adopted the Uniform Trade Secrets Act (UTSA), which was further amended in 1985, with approximately 47 states having adopted it as t he basis for trade secret law. Another significant development is the Economic E spionage Act of 1996 (18 U.S.C. 1831 1839), which makes the theft or misappropriati on of a trade secret a federal crime. This law contains two provisions criminali zing two sorts of activity. The first, 18 U.S.C. 1831(a), criminalizes the theft of trade secrets to benefit foreign powers.The second, 18 U.S.C. 1832, criminal izes their theft for commercial or economic purposes. (The statutory penalties a re different for the two offenses.) Commonwealth jurisdictions[edit] In 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 info rmation may be a property right). The Court of Appeal of England and Wales in th e case of Saltman Engineering Co Ltd v. Campbell Engineering Ltd[15] held that t he action for breach of confidence is based on a principle of preserving "good f aith". The test for a cause of action for breach of confidence in the common law world is set out in the case of Coco v. A.N. Clark (Engineers) Ltd:[16] The information itself must have the necessary quality of confidence about it; That information must have been imparted in circumstances imparting an obligatio n of confidence; There must be an unauthorized use of that information to the detriment of the pa rty communicating it. The "quality of confidence" highlights that trade secrets are a legal concept. W ith sufficient effort or through illegal acts (such as break and enter), competi tors can usually obtain trade secrets. However, so long as the owner of the trad e secret can prove that reasonable efforts have been made to keep the informatio n confidential, the information remains a trade secret and generally remains leg ally protected. Conversely, trade secret owners who cannot evidence reasonable e fforts at protecting confidential information, risk losing the trade secret, eve n 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.[citati on needed] A successful plaintiff is entitled to various forms of judicial relief, includin g: An injunction An account of profits or an award of damages A declaration Comparison to other types of intellectual property law[edit] In the United States, trade secrets are not protected by law in the same manner as trademarks or patents.[1] Specifically, both trademarks and patents are prote cted under federal statutes, the Lanham Act and Patent Act, respectively. Instea d, trade secrets are protected under state laws, and most states have enacted th e Uniform Trade Secrets Act (UTSA), except for Massachusetts, New York, and Nort

h Carolina. One of the differences between patents and trademarks, on the one ha nd, and trade secrets, on the other, is that trade secret is protected only when the secret is not disclosed. Comparison with trademarks[edit] To acquire rights in a trademark under U.S. law, one must simply use the mark "i n commerce".[17] It is possible to register a trademark in the United States, bo th at the federal and state levels. (Registration of trademarks confers some adv antages, including stronger protection in certain respects, but it is not requir ed in order to get protection.)[17] Registration may be required in order to fil e a lawsuit for trademark infringement. Other nations have different trademark p olicies and this information may not apply to them. Assuming the mark in questio n meets certain other standards of protectibility, it is protected from infringe ment on the grounds that other uses might confuse consumers as to the origin or nature of the goods once the mark has been associated with a particular supplier . (Similar considerations apply to service marks and trade dress.) By definition , a trademark enjoys no protection (qua trademark) until and unless it is "discl osed" to consumers, for only then are consumers able to associate it with a supp lier or source in the requisite manner. (That a company plans to use a certain t rademark might itself be protectible as a trade secret, however, until the mark is actually made public.) Comparison with patents[edit] To acquire a patent, full information about the method or product has to be supp lied to the patent office and upon publication or issuance, will then be availab le to all. After expiration of the patent, competitors can copy the method or pr oduct legally. The temporary monopoly on the subject matter of the patent is reg arded as a tradeoff for thus disclosing the information to the public. One popular misconception held by many is that trade secret protection is incomp atible with patent protection. It is typically said that if you apply for a pate nt you can no longer maintain a trade secret on the invention, but this is an ov ersimplification.[18] It is true that in order to obtain a patent you must discl ose your invention so that others will be able to both make and use the inventio n, and, to obtain a patent in the United States, if you have any preferences you must likewise disclose your preferences.[19] What is typically not appreciated though is that the critical time for satisfying this disclosure requirement is a t the time the application is filed. In many if not most situations, improvement s 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.[20] Virtually all patent lice nses include clauses that require the inventor to disclose any trade secrets the y have. Frequently it is this information not disclosed in the patent that is th e most commercially viable. Thus, 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. Accordingly, before disclosing any secrets not already protected by an issued patent you should use a non-disclosure agreement. Compared to patents, the advantages of trade secrets are that a trade secret is not limited in time (it "continues indefinitely as long as the secret is not rev ealed to the public", whereas a patent is only in force for a specified time, af ter which others may freely copy the invention), a trade secret does not imply a ny registration costs,[21] has an immediate effect, does not require compliance with any formalities, and does not imply any disclosure of the invention to the public.[21] The disadvantages of trade secrets include that "others may be able to legally discover the secret and be thereafter entitled to use it", "others ma y obtain patent protection for legally discovered secrets", and a trade secret i s more difficult to enforce than a patent.[22]

Cases[edit] Data General Corp. v. Digital Computer Controls, Inc., 297 A.2d 433 (Del. Ch. 19 71): protection and disclosure of design documents. Rivendell Forest Prods. v. Georgia-Pacific Corp., 28 F.3d 1042: trade secrets an d software systems. IBM v. Papermaster (No. 08-9078, 2008 U.S. Dist): Mark Papermaster moving from I BM to Apple computer in 2008. Du Pont de Nemours and Company v. Kolon Industries Incorporated, Nos. 10-1103, 1 0-1275. U.S. Court of Appeals for the Fourth Circuit. Argued Oct. 26, 2010 March 1 1, 2011.[23] trade secrets case involving Kevlar fiber, resulting in award to Du Pont of ~US$920 million.[24][25][26] Silvaco Data Systems v. Intel Corp. addressed the question of whether possession of software object code can result in misappropriation of trade secrets Christou v. Beatport, LLC constituted that MySpace profiles could be held as tra de secrets. See also[edit] Trade secrets in Canada Data General Corp. v. Digital Computer Controls, Inc. addressing secrecy given w idespread disclosure Glossary of legal terms in technology Biswamohan Pani, charged in 2008 with stealing $1 billion worth of trade secrets from Intel Notes[edit] ^ Jump up to: a b c Lin, Tom C. W., Executive Trade Secrets (April 28, 2012). 87 Notre Dame Law Review 911 (2012). Available at SSRN: http://ssrn.com/abstract=2 047462 Jump up ^ Common Issues and Challenges in Prosecuting Trade Secret and Economic Espionage Act Cases, U.S. Attorneys' Bulletin, at 7 (Nov. 2009).[1] Jump up ^ Elbaum, Dan (2011). "Human factors in information-age trade secret pro tection". Cornell HR Review. Retrieved 2011-07-18. Jump up ^ "Customer Lists as Trade Secrets". The National Law Review. Dykema Gos sett PLLC. 2009-12-30. Retrieved 2012-04-19. Jump up ^ Leon Stafford for The Atlanta Journal-Constitution Dec. 8, 2011 Coke h ides its secret formula in plain sight in World of Coca-Cola move Jump up ^ For God, Country & Coca-Cola, by Mark Pendergrast, 2nd Ed., Basic Book s 2000, p. 456 ^ Jump up to: a b Alan Watson, Trade Secrets and Roman Law: The Myth Exploded, 1 1 Tul. Eur. & Civ. L.F. 19, 19 (1996). Jump up ^ Newbery v. James, (1817) 2 Mer. 446, 35 Eng. Rep. 1011, 1013 (Ct. Ch. 1817) Jump up ^ Vickery v. Welch, 36 Mass. (19 Pick.) 523, 527 (1837) ^ Jump up to: a b See The Surprising Virtues of Treating Trade Secrets as IP Rig hts, 61 Stan. L. Rev. at 315 & n.6. Jump up ^ Yovatt v. Winyard, (1820) 37 Eng. Rep. 425, 426 (Ch.) Jump up ^ Taylor v. Blanchard, 95 Mass. (13 Allen) 370 (1866) Jump up ^ See The Surprising Virtues of Treating Trade Secrets as IP Rights, 61 Stan. L. Rev. at 315 & n.7; but see Kewanee Oil Co. v. Bicron Corp., 416 U.S. 47 0, 493 n.23, 94 S.Ct. 1879, 1892 n.23, 40 L.Ed.2d 315 (1974) (trade secret law i mported into the United States from England in 1868 in Peabody v. Norfolk, 98 Ma ss. 452 (1868)) Jump up ^ Kewanee Oil Co. v. Bicron Corp., 416 U.S. 470, 94 S.Ct. 1879, 40 L.Ed. 2d 315 (1974) Jump up ^ Saltman Engineering Co Ltd v. Campbell Engineering Ltd, (1948) 65 P.R. C. 203 Jump up ^ Coco v. A.N. Clark (Engineers) Ltd, (1969) R.P.C. 41 at 47 ^ Jump up to: a b United States Patent and Trademark Office, General Questions Jump up ^ Jorda on Trade Secrets by Karl Jorda Jump up ^ "35 U.S.C. 112". Uspto.gov. Retrieved 2012-01-02. Jump up ^ Considerations Relevant to Best Mode MPEP 2165.01 ^ Jump up to: a b Klinkert, Friedrich (April 2012). "The Misappropriation of Tra

de Secrets in Germany and U.S. Discovery Aid". MIPLC Lecture Series. p. 6. Retri eved May 6, 2012. Jump up ^ Klinkert, Friedrich (April 2012). "The Misappropriation of Trade Secre ts in Germany and U.S. Discovery Aid". MIPLC Lecture Series. p. 7. Retrieved May 6, 2012. Jump up ^ "Nos. 10-1103, 10-1275. - DU PONT DE NEMOURS AND COMPANY v. KOLON INDU STRIES INCORPORATED - US 4th Circuit". Caselaw.findlaw.com. Retrieved 2012-01-02 . Jump up ^ "DuPont Wins Trade Secret Case Against Kolon Industries - WILMINGTON, Del., Sept. 14, 2011 /PRNewswire/". Delaware: Prnewswire.com. Retrieved 2012-0102. Jump up ^ "USDOJ: Antitrust Division : E.I. du Pont de Nemours and Co. v. Kolon Indus., Inc". Justice.gov. 2010-05-04. Retrieved 2012-02-12. Jump up ^ [2][dead link] Further reading[edit] Eiichiro Kubota: Protection of Trade Secrets in Japan. A.I.P.P.I. (Journal of In ternational Association for the Protection of Intellectual Property of Japan) 36 (5), 231 - 238 (2011), ISSN 0385-8863 Economic Espionage and Trade Secrets, U.S. Attorneys' Bulletin (2009). International Aspects of Trade Secrets Law by Karen A. Magri.[dead link] "Chapter 15: Trade Secrets and Confidential Relations". The Law of Unfair Busine ss Competition. Baker, Voorhis. 1909. Protecting trade secrets under the Uniform Trade Secrets Act. Greenwood Publishi ng Group. 1996. ISBN 978-1-56720-016-4. Rockman, Howard B. (2004). "25.3: Nature of a Trade Secret". Intellectual proper ty law for engineers and scientists. Wiley-IEEE. ISBN 978-0-471-44998-0. Becker, Susan J. (2005). "Chapter 13: Trade Secrets and Confidential Commercial Information". Discovery from Current and Former Employees. American Bar Associat ion. ISBN 978-1-59031-485-2. Epstein on intellectual property. Aspen Publishers Online. 2004. ISBN 978-0-7355 -0319-9. "Trade Secrets". International guide to privacy. American Bar Association. 2004. ISBN 978-1-59031-333-6. Snider, Jerome G.; Ellins, Howard A. (2006). "Chapter 8: Trade Secrets and Busin ess Strategy". Corporate Privileges and Confidential Information. Law Journal Pr ess. ISBN 978-1-58852-087-6. "Chapter 7: Misappropriation of Trade Secrets". Business torts & unfair competit ion. American Bar Association. 1996. ISBN 978-1-57073-294-2. "Chapter 4: Misappropriation of Trade Secrets (Massachusetts focused)". Intellec tual Property Practice. MCLE, Inc. (chapter by Russell Beck). 2004-11. ISBN 1-57 589-291-X. External links[edit] Teaching industry how to protect trade secrets and national security, FBI Categories: Intellectual property lawSecrecyTrade secrets Navigation menu Create accountLog inArticleTalkReadEditView history Main page Contents Featured content Current events Random article Donate to Wikipedia Wikimedia Shop Interaction Help About Wikipedia Community portal Recent changes Contact page

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