Does a company still own a technology or device if it fails to or choses not to patent it? That is, if company B is using technology developed at company A, is there some legal claim - besides patent infringement - A could use to stop B? Or is a non-patented invention essentially free game?
There are other proprietary interests besides patents that may show up where a new technology is concerned. For example, the company would own the copyright on all the plans, schematics, and documentation. If it involves custom software or silicon, they would own the copyright on the source code and art work as well.
Trade secrets do have some protection under the law as well, though the primary protection is your ability to keep it secret.
How did B determine the know-how and methods in use by A? If they “misappropriated a trade secret of A,” like Andy mentioned above, B can be in serious trouble. Many if not most ‘inventions’ used in industry, are protected via trade secret, not patent. Patents require that the innovation be disclosed, and they’re for a limited period. Trade secrets, like the formula for Coca-Cola, do not require disclosure for protection—rather the opposite—and have in theory infinite duration.
That’s a very brief explanation of the differences between two ways of legally protecting an ‘invention.’
Just adding on a bit, trade secrets are often the route of choice in chemical processes, such as flavour chemistry.
For an organic (in the chemistry sense) molecule of sufficient complexity, there are many routes to get to the same product. The patent protects only the one you use, but exposes your finished work to the public, making it a trivial matter for a rival chemist to select a different route and come up with the same molecule and crib your flavour, at a fraction of the R&D cost.
Hence “ownership without a patent” is the method of choice in the flavour industry, if not other chemical fields.
Isn’t trade secret law just an application of contract law? You take all of the people who know how to make your thing, and you make them all sign a contract agreeing not to tell, and then if they do tell, you’ve got them for breach of contract. But your competitor never signed that contract, so if they get ahold of the information, the horse is out of the barn. And if they reverse-engineer it, you have no recourse at all.
Of course, in a lot of cases, a “trade secret” is mostly just marketing BS. Pepsi’s chemists could surely, if they wanted, produce a soft drink with a flavor perfectly indistinguishable from Coca-Cola. But what would they do with it if they did? There’s no market for a soft drink that tastes like Coca-Cola. What there is is a market for a soft drink that calls itself Coca-Cola, and which brags about using the same century+ old recipe. But that’s protected by trademark law, not by the trade secret.
WIlliam Poundstone claims to have learned the reverse-engineered recipe for Coke years ago. Your point makes sense. The cost of a bottle of Coke is mostly advertising and the bottle.
I think we’re going to head off into IMHO territory rather quickly, if we discuss the legal boundaries of what is a trade secret, and how does one misappropriate one.
Misappropriation of trade secrets can still happen despite a lack of contractual relationship between the secret holder and the alleged misappropriator. In DuPont v. Christopher, 431 F.2d 1012 (5th Cir. 1970), the civil defendant Christopher operated an aerial photography service. They took aerial pictures of a DuPont chemical plant under construction, which DuPont alleged, showed details of a confidential process DuPont was using to make methanol. DuPont had taken other significant measures to safeguard the process from disclosure. IIRC, they had a berm around the plant, refused access to the area without a signed NDA, and so on.
The Fifth Circuit Court of Appeals, following the Restatement of Torts, found that aerial photography in this instance constituted “an improper means” of discovering the trade secret. (Disclosure of the secret via a breach of confidence was another way of improperly obtaining another’s trade secret.) And so remanded to the lower court, no doubt where the defendants would be enjoined from disclosing the trade secret.
Later, the Uniform Trade Secrets Act would be drafted, and again IIRC, some version of it enacted into law in 48 states. Text of act here. Breach of contract is one way to misappropriate a trade secret, but it’s not exclusive.
But are there any ways to misappropriate trade secrets that are not already illegal? I suspect if you did something like Stuxnet except just have it send you files on computers it infects, that that runs afoul of some laws other than those that might protect trade secrets in the information you are exfiltrating. Contract law gives you a way to sue for someone doing something that is not illegal per se, just contrary to the contract they entered into. If there’s anyway to get access to a trade secret that’s entirely legal and available to someone not under contract, wouldn’t it simply be a case of a company failing to safeguard their trade secret?
It depends. First, I’m not a lawyer, but I’d call discussions like this as being close to or actually legal advice. So don’t rely on this for anything.
That said, the UTSA I cited mentioned misappropriation being acquiring the secret through “improper means.” What are “improper means?” From the text of the act,
“Improper means” includes theft, bribery, misrepresentation, breach or inducement of a breach of a duty to maintain secrecy, or espionage through electronic or other means;
It includes these, but it isn’t exclusive. In the Christensen case I cited upthread, the Christensens didn’t do anything illegal by photographing the plant. It’s an old case, and I’ve no idea if it’s been distinguished or overruled, but the court found that Christensen’s methods were nonetheless improper. Call it espionage if you want, albeit not criminal espionage.
A trade secret holder, to get trade secret protection, has to make efforts to keep the secret confidential. But those efforts have limits. The court in Christensen thought it unreasonable to force DuPont to cover the work site with a giant roof during construction. The process apparatus would be covered by a roof after construction was complete though. I don’t know if the court would have found aerial photography unreasonable or improper if the process was such that a roof couldn’t be used for an operating plant.
The UTSA does list examples of “proper means” of discovering the trade secret, in the Comments section following the text of the Act.
No market? What about Pepsi itself? Or RC Cola, or Wal-Mart Cola, or a hundred store-brand colas?
And the Coca-Cola century= old recipe – that’s changed at least 3 times that I know of, probably more that haven’t ben disclosed.
(1. back a century ago, when they removed the cocaine that gives it it’s name.
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when they changed from cane sugar to corn syrup.
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when they introduced “New Coke” (and soon changed back).)
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No, trade secrets law is a separate type of intellectual property protection. It makes use of contracts, but almost every state and the federal government provides for statutory protection of trades secrets separately from contract law.
To protect a trade secret, generally, you must show that you are in possession of
- Some kind of knowledge
- Not generally known or easily ascertained
- That confers a commercial advantage
- That you have taken reasonable steps to protect (this is where non disclosure contracts plays a role)
Yes, someone can reverse engineer your trade secret, but a lot if trade secrets aren’t easily ascertained.
The most common type of trade secrets is simple business information—customer records, supplier information, contact lists, etc.
That’s interesting. I had never thought of things like customer information as a trade secret, but it makes sense. I guess that means that hacking someone’s customer database is not just a criminal issue. You could go after the perpetrator for civil damages irrespective of the criminal aspects.
What if I download it off a dark web site? Can trade secrets become invalidated by the criminal actions of a third party that makes them well known? Or does the law consider that adequate steps were still being taken and that the knowledge is still protected? I guess that goes to court to decide.
I think 3 was a plan for 2. I remember when it came back the Coke classic didn’t taste like old Coke and that’s when they switched sweeteners to save money.
This is a myth. They had switched to high fructose corn syrup already by the time New Coke came out.
New Coke was purely an effort to make Coke taste more like Pepsi because Pepsi was gaining ground in popularity and was winning taste tests. There was no underlying devious scheme.
If I recall correctly, things like IBM PC BIOS were treated as trade secrets, which meant that if you played around with a PC and figured out how it responded to any inputs, and gave another engineer who never touched a PC that specification, he could build a device that did exactly the same thing without any legal issues.
I think that was a copyright issue. The trick was to create a new version of the software with a clean implementation, with no access to the existing code, and thus no chain of copying of the text of the code. If there had been some other secret in the code, it would be hard to argue that there had been any measures taken to stop them becoming known.
Modern systems probably do manage some trade secret protections. Things like FPGAs have a fusible no-read function, so that once programmed, they will no longer respond to requests to read the internal configuration. Nothing is perfect, but the protection measures taken might be considered adequate. Some systems will encrypt code and only decrypt it at run time using an internally inaccessible key. The DMCA was specifically crafted to ensure that encryption afforded IP protection. Indeed with more teeth than just trade secrets or patents.
Perhaps the poster child for such things and the implications is Bunnie’s breaking of the X-Box.
Yeah, you’re right - one set of engineers read the copyrighted IBM BIOS documents and wrote a specification that matched its requirements, and a different engineer who never saw the IBM documents wrote code to match the specification.
Probably 80-90 percent of trade secrets cases I’ve read about involve an employee taking a job with a competitor and taking customer lists (contact information, order history, requirements, etc.) with em.
I think that that situation wouldn’t turn on the question of whether the company had taken reasonable steps to protect the information–the trade secrets owner isn’t responsible for things outside its control.
But rather the questions would be (1) whether your downloading off a dark web site constituted an improper manner of accessing secret information and (2) whether the information was still secret. It may be that only the person who actually took the information and posted it to the dark web would be liable.
Those are all products that taste similar to but not the same as Coca-Cola. But when whoever it was came up with the formula for Pepsi, they weren’t trying to make something exactly like Coca-Cola; they were trying to make something that tasted good. So if they could get something that (in their opinion) tasted better than Coke, they would, even though that would necessarily mean a deviation in the formula from the Coke formula.