Trade Secret

Question 1

Metallurgical Industries Inc. v. Fourtek, Inc. (1986)

Answer 1

• Metallurgical Industries processed existing cemented tungsten carbide to extract carbide for reuse.
  
  • It purchased furnaces from another company and used that company’s representative to modify the furnaces.
  • The employee was notified these modifications were a trade secret, he then left for another company and revealed them
• Held: Modifications to a widely known process may be protected as a trade secret even when each element of the process is already known publicly, so long as the other TS qualifications are met
  
  • the fact π told 2 other company’s of its modifications prior to the TS claim against ∆ does not preclude TS protection since the revelations were limited and in furtherance of π’s business interest.

Question 2

Rockwell Graphic Systems, Inc. v. DEV (1991)

Answer 2

• Rockwell manufactured printing presses and distributed “piece part drawings” to its business partners so they could repair/work on them. The drawings were kept in a vault at the company headquarters, with guards, but drawings dist. to business partners were not diligently collected. The president left Rockwell and was caught exiting the facility with drawings, he then went to work for a competitor.
• The court determined that there could have been a misappropriation of TS under 2 possible theories.
  
  • The first is deterrence and makes it more likely that the defendant obtained the information inappropriately.
  • The second theory provides evidence that the information had value, and indicates that a remedy is appropriate to the plaintiff
• Balancing of costs incurred through security and efforts exerted to protect valuable TS

Question 3

E.I. duPont de Nemours & Co. v. Christopher (1970)

Answer 3

• Aerial photographer taking pictures of plant for a client
• This is discovery through improper means, misappropriation of TS
  
  • “[A]n impenetrable fortress is an unreasonable requirement”

Question 4

Smith v. Dravo Corp. (1953)

Answer 4

• π created a system of interlocking shipping containers that would vastly improve the shipping industry.
  
  • his family attempted to sell the container system to ∆ and as part of the negotiations they shared the designs with ∆
  • ∆ did not purchase the rights but instead subsequently created a modified version that would put π out of business
• Although there was no confidentiality agreement there was an implied duty to maintain confidentiality which ∆ presumably consented to as part of the negotiation process, thus the use of the designs in creating a subsequent competing system was improper

Question 5

Kadant, Inc. v. Seeley Machine, Inc. (2003)

Answer 5

• Reverse engineering case
• π spent considerable time developing a new product and one of its employees left the company for a competitor, ∆, who claims they reverse engineered the product after only a short period of time on the market
  
  • Reverse engineering a product to determine its design specifications is permissible so long as the means used to get the information necessary to reverse engineer the product is in the public domain.
    *

Question 6

Warner-Lambert Pharma Co v. John J. Reynolds, Inc. (S.D.N.Y. 1959)

Answer 6

• listereine case
• In agreements involving royalty payments in exchange for exclusive disclosure of a trade secret, a court will not imply a limitation on the terms of the payments based on the elimination of the trade secret.