Protecting Trade Secrets in the United States
2007 US / China Legal Exchange(Xian, Beijing, Shanghai)
Rex Hockaday, Caterpillar (China) Investment Co., Ltd.
2007 US/China Legal Exchange (Oct 22-26, 2007)
Protecting Trade Secrets in the US
• US Trade Secret Law
• Enforcing Trade Secret Rights
• Trade Secrets as Part of Your Business
2007 US/China Legal Exchange (Oct 22-26, 2007)
Protecting Trade Secrets in the US
• US Trade Secret Law
• Enforcing Trade Secret Rights
• Trade Secrets as Part of Your Business
2007 US/China Legal Exchange (Oct 22-26, 2007)
Protecting Trade Secrets in the US
• US Trade Secret Law– State Law– Common Law– Federal Law
2007 US/China Legal Exchange (Oct 22-26, 2007)
Protecting Trade Secrets in the US
• US Trade Secret Law– State Law. Uniform Trade Secrets Act (UTSA)
– What is a Trade Secret (TS)
– Misappropriation of Trade Secrets
2007 US/China Legal Exchange (Oct 22-26, 2007)
Protecting Trade Secrets in the US
• US Trade Secret Law– State Law. Uniform Trade Secrets Act (UTSA)
– What is a Trade Secret– Information …
– Independent economic value
– Not generally known or readily ascertainable
– Reasonable efforts to maintain secrecy
2007 US/China Legal Exchange (Oct 22-26, 2007)
Protecting Trade Secrets in the US
• US Trade Secret Law– State Law. Uniform Trade Secrets Act (UTSA)
• What is a Trade Secret– Information …
– Independent economic value
– Not generally known or readily ascertainable
– Reasonable efforts to maintain secrecy
2007 US/China Legal Exchange (Oct 22-26, 2007)
• technical & non-technical• physical & electronic• combinations
Protecting Trade Secrets in the US
• US Trade Secret Law– State Law. Uniform Trade Secrets Act (UTSA)
• What is a Trade Secret– Information …
– Independent economic value
– Not generally known or readily ascertainable
– Reasonable efforts to maintain secrecy
2007 US/China Legal Exchange (Oct 22-26, 2007)
• actual or potential• to owner and others
Protecting Trade Secrets in the US
• US Trade Secret Law– State Law. Uniform Trade Secrets Act (UTSA)
• What is a Trade Secret– Information …
– Independent economic value
– Not generally known or readily ascertainable
– Reasonable efforts to maintain secrecy
2007 US/China Legal Exchange (Oct 22-26, 2007)
• secret• not “absolutely” secret
Protecting Trade Secrets in the US
• US Trade Secret Law– State Law. Uniform Trade Secrets Act (UTSA)
• What is a Trade Secret– Information …
– Independent economic value
– Not generally known or readily ascertainable
– Reasonable efforts to maintain secrecy
2007 US/China Legal Exchange (Oct 22-26, 2007)
• internal & external secrecy• nature & value of information
Protecting Trade Secrets in the US
• US Trade Secret Law– State Law. Uniform Trade Secrets Act (UTSA)
• Misappropriation of Trade Secrets (TS)– Acquisition of TS and know or have reason to know it was
acquired by improper means, or
2007 US/China Legal Exchange (Oct 22-26, 2007)
Protecting Trade Secrets in the US
• US Trade Secret Law– State Law. Uniform Trade Secrets Act (UTSA)
• Misappropriation of Trade Secrets (TS)– Use or disclosure of a TS by person who
» used improper means to acquire knowledge of TS, or» knew or had reason to know TS was:
° derived by improper means, ° derived from/through person with duty to protect, or ° acquired in manner creating a duty to protect, or
» before a material change in position, knew/reason to know it was a TS acquired by accident or mistake
2007 US/China Legal Exchange (Oct 22-26, 2007)
Protecting Trade Secrets in the US
• US Trade Secret Law– Common Law. §757, Restatement of Torts (1939); and
§§ 39-45, Restatement (Third) of Unfair Competition (1995)
– What is a Trade Secret (TS)
– Misappropriation of Trade Secrets
2007 US/China Legal Exchange (Oct 22-26, 2007)
Protecting Trade Secrets in the US
• US Trade Secret Law– Common Law. §757, Restatement of Torts (1939); and
§§ 39-45, Restatement (Third) of Unfair Competition (1995)
– What is a Trade Secret– Information …
– Sufficiently valuable
– Sufficiently secret
– Provides economic advantage
2007 US/China Legal Exchange (Oct 22-26, 2007)
Intended to be consistent with the definition of trade secrets in the UTSA.
Protecting Trade Secrets in the US
• US Trade Secret Law– Common Law. §757, Restatement of Torts (1939); and §§
39-45, Restatement (Third) of Unfair Competition (1995)
• Misappropriation of Trade Secrets (TS)– Acquisition, use or disclosure of a trade secret
– Wrongfulness (misappropriation)
2007 US/China Legal Exchange (Oct 22-26, 2007)
Consistent with the UTSA.
Protecting Trade Secrets in the US
• US Trade Secret Law– Federal Law
• The Trade Secrets Act
• The Computer Fraud and Abuse Act
• The Economic Espionage Act of 1996
• The National Stolen Property Act
• Mail Fraud, Wire Fraud, etc.
2007 US/China Legal Exchange (Oct 22-26, 2007)
Protecting Trade Secrets in the US
• US Trade Secret Law
• Enforcing Trade Secret Rights
• Trade Secrets as Part of Your Business
2007 US/China Legal Exchange (Oct 22-26, 2007)
Protecting Trade Secrets in the US
• Enforcing Trade Secret Rights– Enforcement Authorities– Protecting Trade Secrets in Litigation– Case Studies
2007 US/China Legal Exchange (Oct 22-26, 2007)
Protecting Trade Secrets in the US
• Enforcing Trade Secret Rights– Enforcement Authorities
• State Courts (TS Statute, common law, breach of contract)– Legal Relief
» temporary & permanent injunctions» court-ordered affirmative actions
– Equitable Relief» royalties» compensatory damages» punitive damages
• Federal Courts (Statute, breach of contract)
2007 US/China Legal Exchange (Oct 22-26, 2007)
Protecting Trade Secrets in the US
• Enforcing Trade Secret Rights– Protecting Trade Secrets in Litigation
• Request protective order during discovery
• Request in-camera proceedings
• Courts may seal records
• Courts may order a person not to disclose alleged trade secrets without court approval
• Always at risk—hard to “un-ring the bell”
2007 US/China Legal Exchange (Oct 22-26, 2007)
Protecting Trade Secrets in the US
• Enforcing Trade Secret Rights– Case Studies
2007 US/China Legal Exchange (Oct 22-26, 2007)
Protecting Trade Secrets in the US
2007 US/China Legal Exchange (Oct 22-26, 2007)
QUESTIONS / COMMENTS ?
Protecting Trade Secrets in the US
• US Trade Secret Law
• Enforcing Trade Secret Rights
• Trade Secrets as Part of Your Business
2007 US/China Legal Exchange (Oct 22-26, 2007)
Protecting Trade Secrets in the US
• Trade Secrets as Part of Your Business– Importance of Protecting Trade Secrets– General Business Practices to Protect Trade
Secrets
2007 US/China Legal Exchange (Oct 22-26, 2007)
Protecting Trade Secrets in the US
• Trade Secrets as Part of Your Business– Importance of Protecting Trade Secrets
• Broadly defined, potentially everywhere
• Define & differentiate your business
• You can only protect what you know & understand
2007 US/China Legal Exchange (Oct 22-26, 2007)
Protecting Trade Secrets in the US
• Trade Secrets as Part of Your Business– General Business Practices to Protect TS’s
• Identify & understand your [key] trade secrets
• Protection linked to secrecy
• Practical Protection Measures
• Who is responsible for protection?
• How do you protect responsibly?
2007 US/China Legal Exchange (Oct 22-26, 2007)
Protecting Trade Secrets in the US
• Trade Secrets as Part of Your Business– General Business Practices to Protect TS’s
• Identify & understand your [key] trade secrets– What are your trade secrets?
– Where are your trade secrets?
– Why they are valuable?
– Who knows about them?
– How are you protecting them?
2007 US/China Legal Exchange (Oct 22-26, 2007)
Protecting Trade Secrets in the US
• Trade Secrets as Part of Your Business– General Business Practices to Protect TS’s
• Identify & understand your [key] trade secrets– What are your trade secrets?
– Where are your trade secrets?
– Why they are valuable?
– Who knows about them?
– How are you protecting them?
2007 US/China Legal Exchange (Oct 22-26, 2007)
• what differentiates your products• what differentiates your business• what is “secret”
Protecting Trade Secrets in the US
• Trade Secrets as Part of Your Business– General Business Practices to Protect TS’s
• Identify & understand your [key] trade secrets– What are your trade secrets?
– Where are your trade secrets?
– Why they are valuable?
– Who knows about them?
– How are you protecting them?
2007 US/China Legal Exchange (Oct 22-26, 2007)
• manufacturing/R&D facilities• business centers• computer systems!
Protecting Trade Secrets in the US
• Trade Secrets as Part of Your Business– General Business Practices to Protect TS’s
• Identify & understand your [key] trade secrets– What are your trade secrets?
– Where are your trade secrets?
– Why they are valuable?
– Who knows about them?
– How are you protecting them?
2007 US/China Legal Exchange (Oct 22-26, 2007)
• how much competitive advantage• how easy/expensive to protect • what is the life span
Protecting Trade Secrets in the US
• Trade Secrets as Part of Your Business– General Business Practices to Protect TS’s
• Identify & understand your [key] trade secrets– What are your trade secrets?
– Where are your trade secrets?
– Why they are valuable?
– Who knows about them?
– How are you protecting them?
2007 US/China Legal Exchange (Oct 22-26, 2007)
• how many people “need to know”• internally & externally• who should “own” them
Protecting Trade Secrets in the US
• Trade Secrets as Part of Your Business– General Business Practices to Protect TS’s
• Identify & understand your [key] trade secrets– What are your trade secrets?
– Where are your trade secrets?
– Why they are valuable?
– Who knows about them?
– How are you protecting them?
2007 US/China Legal Exchange (Oct 22-26, 2007)
• responsible parties• processes & contracts• auditing
Protecting Trade Secrets in the US
• Trade Secrets as Part of Your Business– General Business Practices to Protect TS’s
• Protection linked to secrecy– How secret (extent TS is known inside/outside the company)
– Value of TS to company
– Extent of protection measures
– Cost to develop TS
– Ease of acquisition/duplication
2007 US/China Legal Exchange (Oct 22-26, 2007)
Protecting Trade Secrets in the US
• Trade Secrets as Part of Your Business– General Business Practices to Protect TS’s
• Practical Protection Measures– “Reasonable under the circumstances”– Processes, documentation & contracts
» Employees» Third parties» Business
– Security (physical & systems)– Hide your secrets
2007 US/China Legal Exchange (Oct 22-26, 2007)
Protecting Trade Secrets in the US
• Trade Secrets as Part of Your Business– General Business Practices to Protect TS’s
• Who is responsible for protection?– Everyone is responsible to protect trade secrets
– Executive leadership should take ultimate responsibility– Experienced managers should have direct responsibility
– Everyone must feel responsible to protect trade secrets
2007 US/China Legal Exchange (Oct 22-26, 2007)
Protecting Trade Secrets in the US
• Trade Secrets as Part of Your Business– General Business Practices to Protect TS’s
• How do you protect responsibly?– Review: “trade secrets” are very broadly defined– How many trade secrets can you afford to protect– Understand costs:
» good business practices» incremental protection
– Sell the value to the company and the relevant partners
2007 US/China Legal Exchange (Oct 22-26, 2007)
Protecting Trade Secrets in the US
2007 US/China Legal Exchange (Oct 22-26, 2007)
QUESTIONS / COMMENTS ?
Protecting Trade Secrets in the US
Rex HockadaySenior Corporate CounselManager, Asia Pacific IP OfficeCaterpillar (China) Investment Co., Ltd.Room 1701 China Life TowerNo. 16 Chaoyangmenwai AvenueBeijing 100020, P.R. China
Phone: +86 (10) 5921 0595Mobile: +86 139 1117 2352Fax: +86 (10) 5921 0099Email:
2007 US/China Legal Exchange (Oct 22-26, 2007)
Protecting Trade Secrets in the United States
2007 US / China Legal Exchange(Xian, Beijing, Shanghai)
Rex Hockaday, Caterpillar (China) Investment Co., Ltd.
2007 US/China Legal Exchange (Oct 22-26, 2007)
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