IP class 2

midterm - 1/3 of final you can do at home with more time to do than in-class.
will have word limit.

trade secret.
statutory law, managed by state.
and GATT TRIPS compels countries to recognize trade secret rights.

a trade secret is any information, including a formula, pattern, compilation, program, device, method, technique or process that:
i. derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by, other persons who can obtain economic value from its disclosure or use, and
ii. is the subject of efforts that are reasonable under the circumstances to maintain secrecy. 

in a trade secret claim, you have to prove:
1. the secret is protectable subject matter (under current UTSA, any valuable information not generally known is protectable).
2. under some legal regimes you must show that not only is it protectable
    subject matter, but also that you've taken reasonable precautions to keep it secret.
3. you must show misappropriation.
    (a) the defendant must have acquired the secret in an improper way. use and disclosure is not wrong, but theft and deception as the means to obtain use and disclosure is wrong.
    (b) the secret was taken via breach of relationship (that has an implied duty?) or contract that should
          have prevented the theft.

how does this system of claims tie into the theories discussed last week?
- protecting against theft of proprietary information encourages investment in such information. 

does this look like a property law claim?
- ruckelhaus v. monsanto co.(1984), SCOTUS found that a federal law requiring disclosure of a trade secret was a taking
- "trade secrets have many of the characteristics of more tangible forms of property: assignability, basis of res of a trust, passes to a trustee in bankruptcy, the owner is vested with an interest (beyond those given in patent law)"

the theory of trade secret protection is tort and property-like:
- in property law we don't care whether the violation was improper or not.
  but in IP misappropriation counts. we don't want for people to be
enriched for breaching their duties to maintain commercial morality.
- contracts aren't required to determine whether property rights are
  infringed on or not. but in IP there are often contractual relationships,
and many trade secrets arise from a duty explicitly stated in a
contract, such as a technology license or an employment agreement.

IP is more like an intersection of tort, contract and property.
Review the theories of IP law discussed in class 1.



slugworth wants to reduce the differential that the everlasting gobstopper
will create from wonka's innovation. he bribes the kids who are given the
invitee status as guests to the wonka factory to get the gobstopper and
thereby reverse engineer it, and discover the secret formula.


if slugworth gets a gobstopper from the market,
once it's available for purchase, that's cool. he can reverse engineer,
and perhaps create something even better. we don't mind that.

but slugworth bribing children to get a gobstopper is not cool.


can an everlasting gobstopper be a trade secret?

restatement of torts s. 757, cmt (b):
a trade secret may consist of (1) any formula, pattern, device or compilation
of information (2) which is used in one's business, (3) and which gives him an
opportunity to obtain an advantage over competitors who do not know or
use it.

uniform trade secrets act s. 14:
TS means information, including a formula, patterns, compilation,
program, device, method, technique, or process, that... derives 
independent value, actual or potential, from not being generally
known to, and not being readily ascertainable by proper means by,
other persons who can obtain economic value from its disclosure
or use, and is the subject of efforts... to maintain its secrecy.

what's the difference between the two definitions?
advantage over competitors

the formula of an everlasting gobstopper would be a trade secret.
but the gobstopper itself wouldn't be.

why not, and why the distinction?

the physical gobstopper enters the marketplace thereby, as a physical
thing in the physical world in the physical market,


under the UTSA, its only a trade secret if you're making efforts to
keep it a secret.

the subject matter of trade secrets.

how do we determine whether information qualifies as a trade secret?

metallurgical v. fourtek
misappropriation is the issue. met's position was that their process is a trade secret in the carbide biz.
court concluded that met's particular modification efforts an be as yet nknonw industry wide. 

1. subject matter:  the fact that scientfic principles involved in a process are generally known does not necessarily refult a TS claim of a process. 

(a) value to met is evidenced by the competitive advantage of the zinc recovery process.

(b) value is also shown through cost involved in developing the device: much work and ingenuity have bee applied to the development of a practical and successful device"

2. protection: the evidence shows that met made efforts to keep its process modifications secret. subjective belief of a TS is suggestive of TS if supported by objective factors in determining if TS exists. met had a non-disclosure agreement. had security measures onsite. these measures constitute evidence probative of a TS. secrecy does not have to be absolute -- you can communicate the secret to others to limited extent w/o destroying status as TS.

3. policy: a commercial advantage can vanish once the competition learns of it, therefore the law should protect the bixman's efforts to keep his achievements secret

notes

4. courts have made it clear that strict novelty is not req for TS protection. but if its not generally known or readily ascertainable to the competitiors in an industry, it may still qualify for TS protection. TS must 'possess at least that modicum of originality which will separate it from everyday knowledge.'

test for whether or not a TS (rest of torts s. 757 cmt (b)) and see also CB p. 45
1. the extent to which the info is known outside of P's business;
2. the extent to which is known by EE and others involved in P's biz
3. the extent of measures taken by P's to guard the secrecy of info;
4. the value of info to P and to P's competitors;
5. the amount of effor or $ expended by P in developing info;
6. the ease or difficulty with which the info could be properly acquired
   or duplicated by others.


7. TS are not misappropriated unless info is taken by improper means or from confidentail relationship

broad scope to TS law, because it allows a plaintiff to protect info that could have been acquired properly but in fact was not.

info is not a TS if its generally known or readly ascertainable by proper means

once a secret is readily available through public sources, it loses all TS protection.

if info is generally known to the public or even within a special industry it doesn't quality TS protection.

rest. s.39: many diffiernt companies can possess the same info and each protect it as a secret.

at the heart of trade secret is the bargain between us and the innovator....

ultimately the argument of the trade secret and IP realm is, "if i'd known
my ideas weren't protected, i wouldn't have come up with them!"

factors we look at when determining if info is a trade secret:
1. must be protected secret
2. circumstances of disclosure - who did the P disclose to? to people on
need-to-know basis? to people who signed confidentiality agreements?
3. must be a valuable secret (and often the value must derive from the fact
    that it's a secret for business)
4.

reasonable efforts to maintain secrecy.
why require efforts to maintain secrecy?
rockwell v. DEV

theoretical issues:
evidentiary issues:
remedial issues:

what types of efforts will be "reasonable"?

misappropriation
the defendant got this info by improper means
E.I duPont v. rolfe:
who's to say that espionage isn't moral or commercially innovative?
things that are unanticipated or unexpected -- in the future, do we
want for companies like duPont to have to guard against this level
of competitive activity or not?
cost and benefit: it would be unreasonable (reasonableness of protective efforts)
and anything that takes advantage of not putting up the roof is going to be
improper

are there any proper means for a competitor to acquire a trade secret?
- reverse engineering
-

n.b. - a patent is different from a trade secret, predominantly in that the patent
expires.

misappropriation.
in breach of a "confidential relationship"
smith v. dravo
rest. 3d of unfair competition s. 41:
"a person to whom a trade secret has been disclosed owes a duty of confidence to the owner of the trade secret ... if:
(a) the person made an express promise of confidentiality prior to the disclosure of the trade secret;
(b) the trade secret was disclosed to the person under circumstances in which the relatinship between
     the parties to the disclosure or the other facts surrounding the disclosure justify the conclusions that,a tthe time of the disclosure,
(1) the person knew or had reason to know that the disclosure was intended to be in confidence, and
(2) the other party to the disclosure was reasonable in inferring that the person consented to an
     obligation of confidentiality.



let's say veruka gave slugworth the gobstopper. what recourse would wonka have?

usually, trade secret information has to do with ER/EE relationships of
competition. there are issues that come up, between the EE's right to make
a living and the ER's right to protect its trade information.

courts have come up with various ways of striking a balance, where sometimes
they distinguish between general know-how and specific techniques and
information.

SI handling v. heisley

wexler v. greenberg

reed roberts assoc. v. straumarr

a client list is a protectable trade secret.

UTSA s.1(2)(B)
(I) derived from or through a person who had utilized improper means to acquire it;
(II) acquired under circ giving rise to a duty to maintain its secrey or limit its use; or
(III) derived under or through a person who owed a tudy to the person seeking relief to maintian seccy or limit use;
(4)(i) derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainiable by proper means by

three essential elements:
1. subject matter involved must qualify for trade secret protection, be the type of knowledge or info that TS law was meant to protect and not generally knonw by all, and of econ value to the P ("gives him an opportunity to obtain an advnatgage over competitors who do not know how or do not use")
2. P took reasonable precautions under the circ to prevent disclosure
3. TSP also must prove that D acquired the info wrongly: misappropriated. use or disclose is wrong in the eyes of TSL, when the info is acquired through decption, skudggery or theft. a D's use is wrongful because of preexisting oblig to P to not disclose. duty can be explicit or implicit.

two theories of TSL
1. utilitiarian: proetct againt the theft of propierty info encourages investment in the info.
2. deterrence: deter wrongful acts to punish and prevent illicit behavior that interrupts commerce/market


notes.

5. test for wehtehr info constitutes a TS under restatement:
* extent info is known beyond claimant's
* extent it is known by others in the biz
* value of the info to the biz and competitors
* amount of money expended to develop info
* ease or difficulty with which info could be accquired and dupicated.

ADR class 2

time - waiting for the appellate process is not always feasible.

expedited resolution is not always appropriate for both parties.
identify the interests of the person who is reluctant to quick resolution.

when people spend more time fighting, they become more adversarial.
ephemeral reactions to the motions, discovery, etc makes parties get
even angrier at each other. there's name-calling and accusations, etc.
and then that's coupled with increasing legal fees, which makes people
feel even more upset and strapped.

what does it cost the litigant to go to court?
- cost of attorney time and fees
- cost of training junior associates
- high fees for partner's time
- time for discovery
- may be too expensive for middle class to litigate effectively
- how do you tell a client that they may be correct, but that the
cost to litigate will exceed the value of the injury?
- option: go to the AG or consumer affairs, if its some kind of consumer fraud
- option: "if this can't be resolved, we have to find a way to manage this"
- have to focus on the client's ability to pay!!

uncertainty of the result: many times people will invest in a litigation
and will think that at the end of the litigation, they will prevail --
but what if that doesn't happen? what if the person is not restored to their
original position? if they had realized they might lose, they might have
made different choices. additionally, many contracts have a
"prevailing party" clause, which means

example:
stiverson v. manhattan -- state housing agency interpreted statute in a certain way,
such that a rent-stabilized building can be handled as luxury-decontrolled, and
rented at fair market rate. no tenant had challenged the interpretation over 17 years.
court of appeals have dissented that the interpretation is contrary to the
plain meaning of the statute, even though there's 17 years of reliance on the wrong
interpretation. the devaluation is approx 4 bill. and investors in this building
include pension funds


conflicts of interests is a growing industry problem.

adversarial approach can have unintended ramifications.
good faith relationships can be poorly affected by adversarial process,
like relationships to your kids, employer/employee relationships,
business relationships like with suppliers,

"best attorney wins" -- perception management that getting the most
expensive/ best known lawyer will give a big advantage

expertise of the judge: should that influence arbitration or not?

adr allows you to hand-pick the judge, which allows you to build into
the arbitration agreement that there's a specific person that you want to
arbitrate the agreement. this is particularly used in labor agreements.
but you can be creative and put provisions for things like
- minimum connections
- expertise of both customer and management side
- knowledge of the current work environment
- agreement to stay late, work at certain hours
- ability to put people into a more comfortable frame of mind
** lack of confidentiality in the courts **
the only limit is what you can get the other side to agree to.

commercial arbitration class 2

federal arbitration statute (see appendix 2)

if there's a written agreement, the court can only refuse to enforce
if it's on the same grounds that render any contract invalid.

courts decide whether the language falls within the scope of the arbitration --

arbitability means 2 things:
1. whether a dispute falls within the description of disputes covered
    by the arbitration clause
2.

NYCPL s. 7501 see appendix 1
the court isn't supposed to consider the meritability of the dispute.
meaning, even stupid claims are supposed to be handled by the arbitrators
not the court.

what if a party is recalcitrant about an arbitration?
a party to the contract can file a court action, but the other says that it
should go to arbitration.

"where a party is aggrieved by failure to arbitrate, the party seeking
arbitration can get the court to stay a court action and enter an order that
the case has to go to arbitration."  -- without this kind of provision,
treating a contractual arbitration agreement wouldn't have much sway....

if you have an award, it's not worth anything if it's not voluntarily
complied with or its turned into a judgment. both state and fed
have confirmation procedures:

see section 9 - 11 of federal arb stat, which deal with how to grant the
award or to deny the award under stat basis (award conferred by
corruption, fraud, misconduct, unfair hearing, excess of arbitrator's powers)

but again, there's nothing to suggest that errors of fundamental law or fact
create a basis to deny an award. there are limited public policy reasons to
refuse to confirm that we will explore later (for example sending a heroin
addict back to work at a power plant), and amicus disregard.

but part of the ouster concept and reluctance to arbitration was the idea that
people going to arbitration wouldn't have the protection of the appellate level.
but if parties are submitting to arbitration, either by honoring the clause or
by agreeing to arbitrate post-dispute, once the award was entered, it was
good and courts would rarely interfere with the award. the only time courts
would revoke would be times where parties would complain. parties can also
always settle a dispute, and courts do not get into the fairness of settlements or
consideration. history of these policies is pretty choppy.

these statutes were created to deal with merchantile arbitration. but whether the terms
of the enactments of 1925 were sound or not, congress was not thinking of arbitrating
securities or civil rights.

additionally, the statute talks about interstate commerce -- in 1925, congress
meant boats, trains, and shipments from state to state. nowadays, you don't
have to intend interstate commerce or for activity to take place in multiple
jurisdictions. this clause has huge impact, because you can arbitrate ginormous
claims!

when you go to arbitration you give up right to trial by jury. juries have
always been waivable by both parties. but some people argue that it is a
knowing act to waive the right to jury, and the common place use of
arbitration clauses creates a question of what does "knowing waiver" means?
why should we expect that people understand what arbitration is?

under choice of law principles, why not arbitrability? in a law suit involving
people from all over and a court different from where the court sits, why doesn't
that change to have the court invariably turn to its own rules to govern procedure?

procedure is at least somewhat linked with remedies -- therefore, what remedies
are available to a wronged party? early thinkers talked about arbitration
as a remedy (keeping in mind, one for which there was no jury).
because of this, arbitration didn't run into constitutional obstacles
because state constitutions would set up types of jurisdictions, and if arbitration
had been seen as a type of court, then it would have been difficult for the legislature
to establish it by statute.

are arbitrators required to apply the law?

proRo class 2

n.b. -- "fluff" will be tested.

durkheim -- occupations like law must have a collective sense of ethics

what does it mean to call the law a profession?
- specialized training
- higher standardization of competence
- trust and reliability. because of this, the professional self-interests
     must be balanced with the client's interests (self-interests must
     be less than the client's or this level of trust doesn't work)
- self-regulatory quality to professionalism

tocqueville. 
an invisible break on democracy.
american democracy had successfully made democracy "safe for use"
     US was comparatively wealthy and no bloddy continuing warfare
shortage of guarantees against tyranny -- when a person suffers in US,
     can't turn to public opinion, legis., executive branch, police power,
     jury, even judges.... tocqueville finds problems with the iniquitous
     nature which is present in the US legal system which is the check
     against iniquity.

tocqueville writes (p. 2, 3):

"Men who have made a special study of the laws derive from this occupation certain habits of order, a taste for formalities, and a kind of instinctive regard for the regular connection of ideas, which naturally render them very hostile to the revolutionary spirit and the unreflecting passions of the multitude....

"Some of the tastes and the habits of the aristocracy may consequently be discovered in the characters of lawyers. They participate in the same instinctive love of order and formalities; and they entertain the same repugnance to the actions of the multitude, and the same secret contempt of the government of the people. I do not mean to say that the natural propensities of lawyers are sufficiently strong to sway them irresistibly; for they, like most other} men, are governed by their private interests, and especially by the interests of the moment."


disputes by judiciary: this is a naturally anti-democratic way of proceeding, no? the courts are given deference and their word is bond.

going back to footnote 4, though -- we see that this is a measure of checks and balances

biz org class 2

types of business organizations
- sole proprietorship
risky because you are liable personally beyond your investment
in the business for the torts and contracts

- General Partnership
 formed anytime 2+ people come together to share profit and control.
that's all that's needed.
the partners are personally liable for the torts and contracts of the partnership.
each partner has the full power to bind the other partners.

- Limited Partnership
has two classes of partners -- limited partners and general partners.
limited partnerships allow some investors to enjoy limited liability
     as limited partners.
must file a charter in every state in which the partnership plans to operate.
general partners manage the business and affairs of the partnership
     (and therefore it makes sense that they have the imposition of higher liability).
     partners are generally limited in selling their interests.

- LLC (end of the semester)
n.b: S-corps have been primarily usurped with LLCs
     so we're not going to discuss them much.
the formation is similar to a corp.
LLC will only exist after the sec of state files.
stakeholders are called "members"
     and each member has the right to participate in the management
     but enjoy limited liability.

- corporations (where we'll spend most of our time)
large corps (500+ investors, $1mm+ assets)
small corps (less than the above)
public corps: the issuance and creation of shares in the corp
     which are sold to the public is what makes the company "public".
the interests are held by "the public" and so the company
     must be registered under the federal securities laws
private corps: often the shareholders of a closely held corp
     are also managers, partners, board, officers, etc

remember, corps can be defined by the structure of  
     officers, investors and shareholders.
     in large corps, this is often separate. in small corps, these rules can overlap.

50% of corps are inc'd in DE, and 63% of fortune 500 inc's are DE chartered.


how to incorporate.
must fill out the charter for a corporate form.
this registration allows the company to raise capital for the business
     easily because the shareholders can be offered freedom from liability.

the difference between LLC and Corps
- IRS ruled that business that have more than two of the following
     four corp attributes it will be taxed as a corp:
     1. limited liability (basically is a given cause you filed an LLC);
     2. free transferability of interest;
     3. continuity of life (death doesn't dissolve the company);
     4. cent. management (a board of managers)

reviewing "the corporation"
"corporations are required by law to put the interests
of shareholders before everything else - even the public good"
is this true?
which of the cases deal with this point? Dodge v. Ford
as a practical matter, can a company operate this way?
why did AP Smith win and Ford lose on the dividends issue?
     will be OK so long as the benefit to the corp is made clear
     can't be a pet charity
     must be a reasonable amount
were the instructions to Ford that he couldn't issue the special dividends 
     without the regular a holding by the court that the public good 
     isn't primary?
     the construction of the plant is consistent with Wrigley and AP Smith,
     but the dividends issue isn't consistent.

the dominant view of corp is to look at them as solely money-making,
     shareholder primacy machines. another way of seeing them though
     is to think of what's in the best long-term interest of both shareholders
     and public good as it relates to it (distinction between short and long
     term profitability). charitable donations can be good public relations.
     charitable donations to a private school influences future employees
     for the company.

why do we want corps to donate to charity?
a more stable and equalized society benefits the corp

the benefits to the corp can even be very tenuous,
    and that's usually arguments of AP Smith commentators.

when is it not a good idea for corps to not donate to charity?
     when its not an interest that shareholders support.
     like this target donation.

corporate governance.
Dodge v. Ford: ford doubled wages because he needed people
     to show up to the assembly line, which was monotonous
     and difficult work. this was in the best interest of shareholders.
     this is the seminal case to shareholder dividend maximization.
     courts usually defer to the corporate officer/decision makers for
     the expertise in the business of the shares.

shlensky v. wrigley - S relied on Dodge and said that the court
shouldn't consider the public good over the good of the company. but this didn't work because - even though wrigley didn't seem to care about the impact on the team - S didn't show how the conclusion would make the cubs company more profitable! here, S should have done more to prove the point

see p. 279 and then prob 1 on p. 280