nuts & bolts of trade secrets

© 2016 DailyDAC, LLC d/b/a/ Financial Poise™ 1

NUTS & BOLTS OF TRADE SECRETSIntellectual Property -101 2016 SERIES

Premier date: May 27, 2016

Premier Date: MAY 27, 2016

NUTS & BOLTS OF TRADE SECRETS

IP -101 2016 SERIES

2© 2016 DailyDAC, LLC d/b/a/ Financial Poise™

WE WOULD LIKE TO TAKE THIS OPPORTUNITY TO THANK OUR SPONSORS



meet the facultyPANELISTS

Chris Coulson Kenyon & KenyonOlivia Luk Niro, Haller & NiroRobert Margolis Robinson Curley & Clayton P.C.Jim Medek Jump Trading

MODERATOR William C. Spence SpencePC


Practical and entertaining education for business owners and executives, accredited

investors, and their legal and financial advisors. For more information, visit

www.financialpoise.comDISCLAIMER: THE MATERIAL IN THIS PRESENTATION IS FOR INFORMATIONAL PURPOSES ONLY. IT SHOULD

NOT BE CONSIDERED LEGAL ADVICE. YOU SHOULD CONSULT WITH AN ATTORNEY TO DETERMINE WHAT MAY BE BEST FOR YOUR INDIVIDUAL NEEDS.

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about this webinarAfter developing new ideas, individuals and businesses are faced with a critical question: should they protect those ideas by keeping them secret or should they seek patent protection, which requires publishing the ideas to others. Trade secrets provide protections to those who take adequate steps to protect the secrecy of information. This webinar discusses the nuts and bolt of trade secret protection, including what constitutes trade secret, how to maintain trade secrets, and what to do when/if your trade secrets are stolen.

about this seriesThe United States’ intellectual property (IP) laws have undergone fundamental changes over the past several years, but more changes may be on the way. Clearly, IP rights foster human ingenuity, innovation, and creativity. But some complain that IP rights also enable certain individuals and companies to prosper financially more than they should. So, what exactly are IP rights? And how might the affect you or your company. Join some of the leading attorneys in the World, as they discuss—in plain English for the non-expert—the basics of U.S. IP laws.

As with all Financial Poise webinars, each episode in the series is designed to be viewed independently of the other episodes, and listeners will enhance their knowledge of this area whether they attend one, some, or all of the programs. 7© 2016 DailyDAC, LLC d/b/a/ Financial Poise™

episodes in this series

EPISODE #1 IP- What Every Lawyer & Client Must Understand

1/28/2016

EPISODE #2 Nuts & Bolts of Patents 2/22/2016

EPISODE #3 Nuts & Bolts of Copyrights

3/17/2016

EPISODE #4 Nuts & Bolts of Trademarks 4/21/2016

EPISODE #5 Nuts & Bolts of Trade Secrets 5/26/2016Dates above are premier dates All webinars also available On Demand through West LegalEd Center and Vimeo



What is a Trade Secret? Generally, a trade secret is any information, such as a formula, pattern, physical device, idea, process, which is not generally known or reasonably ascertainable, by which a business can obtain an economic advantage over competitors or customers.• In almost all circumstances, whether by state

statute, federal act, or common law, a “trade secret” is defined broadly as “any information” that has certain characteristics and not categorically like patentable or copyrightable subject matter.


Trade Secret Requirements

Three related requirements for information to be considered a trade secret:

• Secrecy;• Commercial value because it’s a secret; and• Reasonable steps to keep it secret.


Defining “Trade Secret” Under the recently passed Defend Trade Secrets Act (“DTSA”), the term “trade secret” means “all forms and types of financial, business, scientific, technical, economic, or engineering information, including patterns, plans, compilations, program devices, formulas, designs, prototypes, methods, techniques, processes, procedures, programs, or codes, whether tangible or intangible, and whether or how stored, compiled, or memorialized physically, electronically, graphically, photographically, or in writing if—(A) the owner thereof has taken reasonable measures to keep such information secret; and (B) the information derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable through proper means by, the another person who can obtain economic value from the disclosure or use of the information.”


Defining “Trade Secret”Under the Illinois Trade Secret Act, a “trade secret” means “information, including but not limited to, technical or non-technical data, a formula, pattern, compilation, program, device, method, technique, drawing, process, financial data, or list of actual or potential customers or suppliers, that: (1) is sufficiently secret to derive economic value, actual or potential, from not being generally known to other persons who can obtain economic value from its disclosure or use; and (2) is the subject of efforts that are reasonable under the circumstances to maintain its secrecy or confidentiality.


Examples of Trade Secrets

• Formula for a sport soft drink, such as Coca Cola;• Recipes;• Marketing and business strategies;• Manufacturing processes and techniques;• Computer algorithms;• A new invention for which a patent application

has not been filed.


Maintaining A Trade Secret?

Secrecy:

• Anything that is general knowledge or public knowledge cannot be a trade secret;• Anything that is completely disclosed cannot be

a trade secret.


Maintaining A Trade Secret?

Limit access by reasonable efforts:• Restrict to the information (e.g., encryption and

password protection);• Limit the number of people who know the

information;• Have employees, consultants, and contractors

sign non-disclosure agreements;• Maintain all documents relating to the trade

secret confidential.


Maintaining A Trade Secret?Accurate record keeping• Mark documents and maintain a uniform document

management system.

Commercial value.• Must confer some economic benefit on the holder;

• This benefit must derive specifically from the fact that it is not generally known (not just from the value of the information itself).


Advantages of Trade Secret Protection

• Unlimited duration (potentially longer than patent or copyright protection);

• Broad, worldwide protection;• No costs related to application or

registration; • Effective immediately.


Who owns the Trade Secret? • Generally, without any agreements in

place, whoever knows the information may be considered an owner of the trade secret.

• Employers should enter into written agreements regarding ownership of trade secrets.

• Issues of ownership may arise where there is a contractor or consulting relationship.


Trade Secret Misappropriation• In general, misappropriation of a trade secret

occurs when a person or entity steals the trade secret.

• Under the recently passed Defend Trade Secrets Act,”[a]n owner of a trade secret that is misappropriated may bring a civil action under this subsection if the trade secret is related to a product or service used in, or intended for use in, interstate or foreign commerce.”


Statutory Definition of Misappropriation

• Under the Defend Trade Secrets Act, the term “misappropriation” means, in short, “(A) acquisition of a trade secret of another by a person who knows or has reason to know that the trade secret was acquired by improper means; or (B) disclosure or use of a trade secret of another without express or implied consent . . . .”


Lawful acquisition of a Trade Secret

• Independent creation – discovery of the secret by fair and honest means (without violating the law or using illegal means);

• Reverse engineering by studying a competitors’ product.


How does Trade Secret Misappropriation occur?

• Contractors, or consultant that have access to trade secrets;

• Organized crime (e.g., cyber hacks);• Disloyal or negligent employees;• Improper licensing;• Ignorance;• Theft.


RemediesMonetary damages• Actual damages caused;• Unjust enrichment;• Reasonably royalty for use.Seizure • Comparable to a temporary retraining order;Reasonable Injunctive relief


WhistleblowersUnder the Defend Trade Secrets Act, an employer or independent contract is immunized from trade secret misappropriation if the disclosure: "(A) is made (i) in confidence to a Federal, State, or local government official, either directly or indirectly, or to an attorney; and (ii) solely for the purpose of reporting or investigating a suspected violation of law; or (B) is made in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal.”


Trade Secrets Versus Patents

Trade Secrets:• No registration or

application;• No maintenance

fees;• No public disclosure;• Unlimited duration.

Patents:• Application and

prosecution;• Maintenance fees;• Public disclosure• ~20 years from filing.


Trade Secrets Versus Patents

Trade Secrets:• Broad subject

matter;• Only protection

against improper acquisition/use;

• Can be difficult to enforce.

Patents:• Subject matter

limited;• Invalidity,

obviousness, enablement concerns;

• Easier to assert and enforce;

• Exclusive rights granted by government.

More About The Faculty: D

WILLIAM [email protected]

William Spence assists individual and business clients to obtain their best possible outcome in contentious legal matters. He has extensive experience in litigation, arbitration, and mediation involving all areas of intellectual property law. A registered patent attorney, Mr. Spence serves clients by providing advocacy and advice in the areas of: patent infringement; trade secret misappropriation; unfair competition (including conspiracy, tortious interference, and related antitrust claims); breach of contract; post-grant patent proceedings (e.g., inter partes review) ; trademark infringement; and copyright infringement.

He has litigated claims in both state and federal courts throughout the United States. Additionally, Mr. Spence has extensive experience with patent monetization strategies and complex, international patent infringement litigation involving multiple parties and jurisdictions, most notably including Japan. He is a published author and frequent speaker on patent monetization and other intellectual property issues, and has been repeatedly recognized as an “Illinois Rising Star” and “Illinois Star,” in the area of intellectual property.

Mr. Spence is a graduate of the University of Notre Dame, where he obtained separate Bachelor of Science Degrees in Chemical Engineering and Biophysics (“Physics in Medicine”). As a student he received the distinction of Notre Dame Scholar and also earned the Monogram Award. Upon graduation from Notre Dame, Mr. Spence received his commission as a Second Lieutenant in the United States Air Force, Medical Service Corps. After completing his military service, he worked for several years in the chemical industry before pursuing his legal education at the University of Houston Law Center.

Prior to forming SpencePC, Mr. Spence spent twelve years practicing law with Kirkland & Ellis LLP in Chicago, IL and Tokyo, Japan.




CHRIS [email protected]

Chris Coulson is an attorney with Kenyon & Kenyon LLP.

Chris focuses his practice on complex commercial and patent litigation and licensing in a variety of technical fields, including the semiconductor, specialty chemical, and pharmaceutical areas. Mr. Coulson also has a broad litigation background in both federal and state litigation, and U.S. Patent and Trademark Office practice, including inter partes review trials.

Mr. Coulson devotes a portion of his time to pro bono matters. Mr. Coulson first-chaired an appeal before the U.S. Court of Appeals for the Seventh Circuit, which resulted in reversal of the district court, and a grant of a new trial for the pro bono client, on Sixth Amendment grounds.



OLIVIA [email protected]

Olivia T. Luk received a Chemistry degree from the Georgia Institute in Technology in 2000. She received her law degree from the Washington College of Law in 2005.

From 2000-2005, Olivia was a patent examiner for the United States Patent and Trademark Office in the area of semiconductor processing for Tech Center 2800. She practiced patent prosecution at a law firm in the Washington, DC area before moving to Chicago.

In the area of professional service, Olivia co-founded the Richard Linn American Inn of Court in Chicago and is Past-President. She is also active in the Federal Circuit Bar Association (George Hutchinson Writing Competition Judge; regular contributor to the FCBA Case Digest; past Chair of PTO Committee, Membership Committee, Law Clerks and Students Committee), IPLAC (Saul Lefkowitz Moot Court Competition Committee; past Vice-Chair of Judicial Appointments Committee), and Chicago Bar Association (Judicial Evaluations Committee).



ROBERT [email protected]

Robert Margolis is a Partner at Robinson Curley & Clayton P.C.

Rob concentrates his practice on commercial litigation in a broad range of subject areas, as well as intellectual property counseling and litigation. Rob has a particular wealth of experience litigating disputes arising from corporate insolvencies, including investigating claims for receivers and representing them in the assertion of fraud, RICO, and professional liability claims. In addition, he has successfully represented clients in cases involving the Illinois Consumer Fraud Act, Title VII, breaches of contract, negligence, fraud, and intellectual property disputes. In his intellectual property and entertainment law practice, Rob has secured, protected, and enforced the intellectual property rights, and drafted and negotiated agreements, for software developers, advertising firms, clothing designers, manufacturers, artists, musicians, libraries, and entertainment concerns.Before joining RCC, Rob worked in New York at the entertainment law and intellectual property litigation boutique Gold Farrell & Marks, where he represented entertainers and other media clients. Prior to that, he was an associate at Proskauer Rose Goetz & Mendelsohn, where he worked on significant intellectual property, sports, and entertainment litigation matters.



JIM [email protected]

Jim is an attorney at Jump Trading. He focuses on intellectual property and technology law at Jump, providing counsel on a broad range of issues including IP and software licensing, trade secret protection, patent strategy, and negotiation of service agreements. Due to Jump's focus on research and development, he gets to work with a variety of technology areas such as high-performance computing, software development, telecommunications, and data analysis.

Prior to joining Jump, Jim was a partner at Kirkland & Ellis, focusing on intellectual property and technology litigation and transactional matters involving a wide range of technologies. As a litigator, he was involved in both jury and bench trials in federal court, and have extensive experience in arguing motions, managing associate teams, taking and defending depositions of fact, corporate, and expert witnesses, and coordinating all other aspects of discovery and e-Discovery. He also advised on various technology transactions relating to software and digital devices, including software and technology service agreements, licensing agreements, and mergers and acquisitions.

Visit www.eisneramper.comEisnerAmper. Let's Get Down to Business®

EisnerAmper LLP is a leading full-service advisory and accounting firm, and is among the largest in the United States. We provide audit, accounting, and tax services, as well as corporate finance, internal audit and risk management, litigation services, consulting, private business services, employee

benefit plan audits, forensic accounting, and other professional advisory services to a broad range of clients across many industries. We work with high net worth individuals, family offices, closely held businesses, start-ups, middle market and Fortune 500 companies. EisnerAmper is PCAOB-registered and provides services to more than 200 public companies and to thousands of entities spanning the hedge, private equity, brokerage and insurance

space in the financial services marketplace. As companies grow we help them reach their goals every step of the way. With offices in New York (NY), New Jersey (NJ), Pennsylvania (PA), California (CA), and the Cayman Islands, and as an independent member of Allinial

Global, EisnerAmper serves clients worldwide.

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Important Notes

• THE MATERIAL IN THIS PRESENTATION IS FOR GENERAL EDUCATIONAL PURPOSES ONLY.

• IT SHOULD NOT BE CONSIDERED LEGAL, INVESTMENT, FINANCIAL, OR ANY OTHER TYPE OF ADVICE ON WHICH YOU SHOULD RELY.

• YOU SHOULD CONSULT WITH AN APPROPRIATE PROFESSIONAL ADVISOR TO DETERMINE WHAT MAY BE BEST FOR YOUR INDIVIDUAL NEEDS.