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KEEPING YOUR SECRETS

Phil Petti

Chief Intellectual Property Counsel

This Presentation Reflects Solely The Personal Views Of The Author

and Should Not In Any Way Be Attributed To USG Corporation

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USG Corporation Worldwide Leader In Wall and Floor Panels, Ceilings, Surface Products, and Building Material Distribution

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Industry Leading Brands

• SHEETROCK® Brand Wallboard and Joint Treatments

• DUROCK® Cement Board

• SECUROCK™ Glass-Mat Panels

• Mars™ Ceiling Tile

• DONN® Ceiling Grid

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USG Corporation Products Used In The World’s Tallest Buildings

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USG And IP Challenges

• Market and R&D leader in industry

• Manufacturing in 32 states and provinces in the North America

• Largest specialty construction materials distributer in the U.S.

• Joint Venture, USG Boral -- Manufacturing and Market Leader Throughout Asia, Australasia and the Middle East

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USG Boral JV - Leader In Its Markets Asia, Australasia, Middle East

CHINA

THAILAND

VIETNAM

MALAYSIA

INDONESIA

SOUTH KOREA

AUSTRALIA

NEW

ZEALAND

INDIA

SAUDI ARABIA

OMAN

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USG Experience With Trade Secret Loss

• Trade Secret Litigation With Major Competitor

7+ Trusted, Former Employees Left USG

Over 17,000 Pages of USG Sensitive Confidential

Documents Taken

Over 14 Billion Square Feet of Wallboard in U.S. Made

Using USG Trade Secrets

• USG Received a Settlement of $105 Million

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Stacks Of USG Documents Produced By Competitor (Approx. 17,000 Pages)

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Understanding The Dynamics

• The Ability to Detect Theft is Limited – the Opportunities are Widespread

Computer Information is Exceptionally Portable

Instantaneous Electronic Communication – a Bane to

Protection

Networking Makes More Available to All – Can Hide

Information too

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Understand The Dynamics

• Most Trade Secret Cases are Caused by a Violation

Of Trust:

Key Employees, Managers, Even Officers

Favored Vendors, Contractors, Trusted Others

• Governmental and Organized Crime Threats Also

Changing the Dynamics

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Understanding The Dynamics

• Mostly You are on Your Own – Third Parties of Limited Assistance

• Law Enforcement can Help, but Presents Other Issues

• The Sensitivity of the Situation can be a Factor

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Preparation Critical

• Paranoia is Tedious but Necessary

• The Steps to Protect Are a Critical Deterrent – and a

Critical Element of a Claim for Loss

Perfection Not Required – Commercially

Reasonable Measures is the Standard

• But, Once Trade Secrets Gone….

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Protection Challenges

• No Matter the Size, a Company’s Trade Secrets:

Can Encompass a Considerable Range of Information

Commercial, Technical – Documents, Electronic, Physical

Can be Difficult to Identify with Precision

• Those Close to the Trade Secrets May Underestimate Their Value and Significance

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Example Protection Focus Points

• Governance

• Physical Plant and Facility IP Security Measures

• IT And Data Security Tools and Systems

• Employee & Outside Party Protections

• Training & Accountability

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Mo

re P

rote

cti

on

Higher Sensitivity, Greater Commercial Value

Highly

Sensitive

Confidential

Restricted

Access

Public

One Approach - Classification Driven

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The Decision To Take Legal Action

• Taking Legal Action Normally is a Public Action

Alerting Customers and Competitors to Potentially Sensitive Issues

“Leakage” of the Trade Secrets in Court, Even with Protective Orders

• International Enforcement – Standards, FCPA, Other Concerns

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Legal Action - Remedies

• Focus on the Remedy – What Can You Expect?

TRO and Preliminary Injunctions – Enough?

Damages Meaningful?

Other Remedies Available – contract, unfair

competition?

• What can one afford to lose – are some losses

inevitable?

• Understand the cost – its not just legal fees

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Defending Trade Secrets Act Of 2016 – S. 1890

• Pending Bill to Provide Federal Trade Secret Remedy

• Amends 18 USC §1836 for Criminal Trade Secret Remedy

• Parallel To State Law Trade Secret Law

• Strong Bipartisan Support, Ready For Floor Debate

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Defending Trade Secrets Act Of 2016

• Uses Uniform Trade Secret Act definitions for Trade Secrets

• Injunctive Relief, Damages, Unjust Enrichment

• Also Ex Party Seizures

Extraordinary Risk of Irreparable Injury and Harm

Only Where Actual Possession of Trade Secrets

By Federal and State Law Enforcement, Court Holds Seized Materials

Provisions to protect defendant and confidentiality of information

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Defending Trade Secrets Act Of 2016

• Double Damages, Attorneys Fees (Bad Faith by Either Side)

• 3 Year Statute Of Limitations

• Protection of Trade Secrets in Court Proceedings

• Protection for Threat of Loss, but Not “Inevitable Disclosure”

• Protection of Whistleblowers and Their Counsel

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QUESTIONS?

Philip Petti

USG Corporation

ppetti@usg.com

2016 © Philip T. Petti