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Question: What can be kept as a trade secret?
Answer: A trade secret is information that provides a business with a competitive advantage. The following section provides examples of circumstances where trade secret protection was approved or denied. Courts have provided trade secret protection to formulas, patterns, plans, designs, physical devices, processes, software, and ?know-how.? Examples of these trade secret categories are provided below. Please keep in mind that different courts may reach contrary conclusions concerning trade secret status with respect to what may appear to be identical matters. You may wish to consult a lawyer in your local area to obtain information on your state?s laws.
FORMULA:
A formula (i.e., a recipe that allows one to create a product) can be a trade secret. One of the most familiar examples of a trade secret formula is the Coca-Cola formula. This formula gives the Coca-Cola Company a significant business advantage in the soda market, as there is no other soda that tastes the same. The Coca-Cola Company has put numerous security measures in place to keep its formula a secret. In fact, the Coca Cola Company ensures that no one knows every step of the formula!
Other common formulas found to be trade secrets in the food, drug, and cosmetics industry include formulas for butter flavoring, cheese, breakfast cereal, seasoning for fried chicken, special diet rations for dogs, mixed alcoholic beverages, lipstick, and hair conditioner. On the other hand, formulas for a lemon-flavored soft drink, recipes and cooking procedures for common dishes such as BBQ chicken and bakery goods were all denied trade secret protection.
PATTERNS, PLANS, & DESIGNS:
A pattern, plan or design can be a trade secret. For example, courts have found the following to be trade secrets: circuitry for an advanced minicomputer, color TV circuitry, schematics for an analog circuit, plans and specifications for gears and rollers of a photo-processing machine, plans for drilling equipment, plans and designs for a veneer dryer, molds for the manufacture of street markers, and a design for a grating.
PHYSICAL DEVICE:
A physical device used in manufacturing can be a trade secret. Examples of these devices found to be trade secrets include: a device for manufacturing radio parts, machinery and equipment used to manufacture polyethylene, machinery and equipment used to manufacture saw grade diamonds, a computer tool used to service microprocessor-based elevators, a tool for making a pressure-sensing mechanism, a machine for inking carbon paper and ribbons, and an adhesive-tape machine.
PROCESS:
A process, method or technique used to make the final end product can also be a trade secret. The following is an example of using a process as a trade secret: Suppose you work at a hair salon and when a customer wants you to dye his or her hair, you use a hair dye formula that is pre-bottled. However, you have also developed your own unique process in applying the formula to hair so that the hair color stays longer. Because your process gives you a competitive business advantage, you may obtain trade secret protection of your dye process.
Other examples of processes found to be trade secrets include: a process to manufacture foam crash pads, a process to treat metal, a process to manufacture fiberglass, a method and procedure to manufacture epoxy resin rods, a process to manufacture potassium sulfate, and a process for an environmentally sound method to manufacture coated paper.
Keep in mind that processes and methods incident with a patent may still constitute a trade secret. See below for more information on patents and trade secrets.
?KNOW-HOW?:
"Know-how" can be a trade secret. A method or technique in some cases might fall into the ?process? category, but many methods and techniques can be better described as ?know-how" (i.e., information and experiential expertise related to using formulas or processes.) When asserting methods and techniques in this category, however, one must be very specific in describing the method or technique. Examples of trade secrets in this area include: know-how pertaining to the construction of plant chemicals, methods for testing procedures to assure the quality of raw material, know-how to ascertain whether CAT scanning equipment and components are operating according to specifications and to identify malfunctions, and methods to manufacture typewriters.
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Question: What do courts consider in determining if a trade secret exists?
Answer: Courts usually consider the following three factors in determining whether you have a trade secret: (1) Is the information deemed to be a "trade secret" valuable to the business?
Only secret information can be protected by trade secret law. Secrecy is typically determined by evaluating whether or not the information is "generally known" or "readily ascertainable." If the information is secret, you must consider whether the secret information is valuable to your business. How would you rank its value? Courts tend to find that the information is a trade secret if the information is so valuable as to significantly impact the operations of a business.
(2) What steps have been taken to keep the information secret?
Trade secret laws require that you have taken some action to keep your information a secret. The security procedure taken to protect the information is often the most important evidence that the information constitutes a trade secret. For example, courts have often found that restricting access (on a "need to know" basis) to any sensitive information is a factor that helps to meet this requirement. Courts have also found that physical security, such as keeping written trade secret information in a locked drawer and granting very limited access to it, can meet this requirement. Generally, holders of trade secrets develop a formal system for safeguarding their trade secret information. Such a system can include, for example, reviewing information to be sure that the secret information is not included in documents sent to customers and competitors. In addition, proprietary notices can be placed on all documents containing information related to trade secrets and strict confidentiality provisions can be written into all consulting, manufacturing, employment, and/or non-disclosure agreements.
(3) To what extent do employees and others involved in the business know about the information? What about people outside the business?
The extent that those in your business and those outside the business have access to the information can affect a court's decision as to whether you have a legal trade secret. Generally, courts have found the information to be public knowledge and not a trade secret if people who do not have a need to know the information have access to it. This is especially true if many people outside the company are familiar with the information.
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Question: What does ?misappropriating? a trade secret mean?
Answer: One has ??misappropriated? a trade secret if he or she has acquired, disclosed, or used the trade secret information without the permission of the holder, where such activities were done through improper means (e.g., the trade secret information was stolen from the holder) or in breach of an obligation of confidentiality or non-use. If you have received a letter stating that you have ?misappropriated? a trade secret (see SAMPLE LETTERS; also see TRADE SECRET LAWS), you should consult with an attorney.
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Question: What rights are protected by copyright law?
Answer: The purpose of copyright law is to encourage creative work by granting a temporary monopoly in an author's original creations. This monopoly takes the form of six rights in areas where the author retains exclusive control. These rights are: (1) the right of reproduction (i.e., copying),
(2) the right to create derivative works,
(3) the right to distribution,
(4) the right to performance,
(5) the right to display, and
(6) the digital transmission performance right. The law of copyright protects the first two rights in both private and public contexts, whereas an author can only restrict the last four rights in the public sphere. Claims of infringement must show that the defendant exercised one of these rights. For example, if I create unauthorized videotape copies of Star Trek II: The Wrath of Khan and distribute them to strangers on the street, then I have infringed both the copyright holder's rights of reproduction and distribution. If I merely re-enact The Wrath of Khan for my family in my home, then I have not infringed on the copyright. Names, ideas and facts are not protected by copyright. Trademark law, in contrast, is designed to protect consumers from confusion as to the source of goods (as well as to protect the trademark owner's market). To this end, the law gives the owner of a registered trademark the right to use the mark in commerce without confusion. If someone introduces a trademark into the market that is likely to cause confusion, then the newer mark infringes on the older one. The laws of trademark infringement and dilution protect against this likelihood of confusion. Trademark protects names, images and short phrases. Infringement protects against confusion about the origin of goods. The plaintiff in an infringement suit must show that defendant's use of the mark is likely to cause such a confusion. For instance, if I were an unscrupulous manufacturer, I might attempt to capitalize on the fame of Star Trek by creating a line of 'Spock Activewear.' If consumers could reasonably believe that my activewear was produced or endorsed by the owners of the Spock trademark, then I would be liable for infringement. The law of trademark dilution protects against confusion concerning the character of a registered trademark. Suppose I created a semi-automatic assault rifle and marketed it as 'The Lt. Uhura 5000.' Even if consumers could not reasonably believe that the Star Trek trademark holders produced this firearm, the trademark holders could claim that my use of their mark harmed the family-oriented character of their mark. I would be liable for dilution.
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Question: What kinds of things are copyrightable?
Answer: In order for material to be copyrightable, it must be original and must be in a fixed medium. Only material that originated with the author can support a copyright. Items from the public domain which appear in a work, as well as work borrowed from others, cannot be the subject of an infringement claim. Also, certain stock material might not be copyrightable, such as footage that indicates a location like the standard shots of San Francisco in Star Trek IV: The Voyage Home. Also exempted are stock characters like the noisy punk rocker who gets the Vulcan death grip in Star Trek IV. The requirement that works be in a fixed medium leaves out certain forms of expression, most notably choreography and oral performances such as speeches. For instance, if I perform a Klingon death wail in a local park, my performance is not copyrightable. However, if I film the performance, then the film is copyrightable. Single words and short phrases are generally not protected by copyright, even when the name has been "coined" or newly-created by the mark owner. Logos that include original design elements can be protected under copyright or under trademark. Otherwise, words, phrases and titles may be protected only by trademark, however.
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Question: What defenses are there to copyright infringement?
Answer:
The primary defense to copyright infringement is "fair use." 17
U.S.C. ?107. The fair use doctrine allows the reproduction and
use of work, notwithstanding the rightsof the author (17
U.S.C. ?? 106 and 106A),
for limited purposes such as criticism, comment, news reporting, teaching,
scholarship, and research. Fair use may be described as the privilege to
use the copyrighted material in a reasonable manner without the owner's
consent. In deciding whether a copier's actions were fair, judges will consider
1. the purpose and character of the copying (certain types of educational
copying is allowed)
2. the nature of the original (originals made for commercial reasons are
less protected from copying than their purely artistic counterparts)
3. the amount and substantiality of the portion copied (one may not copy
the "heart" of a work without the author's permission); and
4. the effect that such copying may have on the market for the original
(copying may be permitted if it is unlikely to cause economic harm the original
author).
Examples of activities that may be excused as fair use include: distributing
copies of a section of an article in class for educational purposes; providing
a quotation in a book review; and imitating a work for the purpose of parody
or social commentary.
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Question: Does copyright protect facts?
Answer: No. Copyright protects only original expression, not discovered facts. Creative selection and arrangement of facts is protected, but you can take the basic facts and rearrange them without infringing copyright. Thus the publishers of a telephone book cannot sue an online phone book publisher for copyright infringement, even if it took the first publishers considerable effort to collect the listings.
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Question: Do I need permission from the copyright holder to make fair use?
Answer: No. If your use is fair, it is not an infringement of copyright -- even if it is without the authorization of the copyright holder. Indeed, fair use is especially important to protect uses a copyright holder would not approve, such as criticism or parodies. See Campbell v. Acuff-Rose Music, 510 US 569 (1994).
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