CHAPTER 1 ACQUISITION AND CONTROL OF CONFIDENTIAL INFORMATION
| Jurisdiction | United States |
(May 1983)
ACQUISITION AND CONTROL OF CONFIDENTIAL INFORMATION
Atlantic Richfield Company
Plano, Texas
I. INTRODUCTION
A basic, and as far as I can tell, unwritten, premise upon which at least the industrialized Western civilizations operate is that an idea in a person's brain is not property as such. The premise goes further to the effect that the idea must be converted into some form of property rights before it can be protected against those who would appropriate the idea to their own benefit and use it with no reward to the person who generated the idea in the first place. Thus, if one communicates his or her idea or information to another person without first taking any protective steps, the recipient is free to exploit the idea or information for any benefit the recipient can reap as though the idea or information were the recipient's property.
At least in part because of this premise, there has developed in essentially all industrialized countries and most under-developed countries, a legal system which provides one or more legal devices for converting ideas into protectable property. The generic term for such property in this and a number of other countries is "intellectual property". In this country, there are principally four legal devices that can be employed to convert ideas or information into protectable property so that, for at least a limited time, the originator of the idea or information can keep all or part of the benefits to be derived from the exploitation of the idea or information by the originator and/or third parties. These devices are patents, copyrights, trademarks, and trade secrets.
II. INTELLECTUAL PROPERTY
Each intellectual property legal device provides a different means for protecting certain kinds of ideas, information, data, and the like. Some devices are based on Federal law while others rely principally on State law. The protection afforded by these devices overlaps in some cases; whereas, in other cases, a certain type of subject matter can be protected by only one device. A comparison of the various advantages and disadvantages and pros and cons for each type of legal device would be far too lengthy for this paper especially since the thrust of this presentation has already been directed toward trade secrets. However, it is important for a sound and proper understanding of where and how trade secrets fit into the overall scheme of things, to have a short, albeit overly brief, discussion of all these devices.
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III. PATENTS, COPYRIGHTS AND TRADEMARKS
The device best known to the public in general is the patent. The patent system is based on Article 1, Section 8 of the United States Constitution. The Federal patent law, 35 U. S. Code, Sections 1 through 293, preempts the States in this area. Thus, we have one Federal patent law which applies to all fifty states and various territories and insular possessions of the United States, Title 48 of the U. S. Code.
Copyrights are similarly constitutionally based and preemptive in effect.
Trademarks and trade secrets have no constitutional basis and find their origin in the common law, although most states have codified both their trademark and trade secret common laws.
With patents and copyrights, we have one set of laws which apply to all States equally, and the subject matter protected by these two devices does not overlap. In general, patents protect technical inventions (design and plant patents will not be discussed here), whereas copyrights protect, in oversimplification, the written or printed word, be it technical, literary, music, or otherwise. So, in the application of intellectual property law, although the public at times exhibits substantial confusion, there is not a big problem for the experienced practitioner in deciding what should be patented and what should be protected by copyright.
Similar confusion sometimes results from comparing the trademark law with the patent and copyright law. This is partly caused by there being not only a Federal trademark system, but also a separate trademark system for each State. For example, it is possible to obtain trademark registration in Texas and a separate Federal trademark registration for the same mark if interstate commerce is involved. Part of the reason why there is not more confusion among practitioners in the intellectual property area between trademarks on the one hand, and patents and copyrights on the other hand, is that trademarks (service marks will not be discussed here) are only used to identify a specific manufacturer's or merchant's goods and to distinguish those goods from other similar products manufactured or sold by others, Section 45 of the Trademark Act of 1946, as amended.
Briefly put then, trademarks concern commercial origin identification, whereas copyrights concern literary and artistic expressions and patents concern technical, design, and certain agricultural inventions.
An important point to know about patents is that they are not all encompassing. They basically cover only technical inventions. They do not cover all technical inventions though because the Federal patent law clearly defines what is and what is
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not patentable. Various types of information and data which are of keen commercial importance and advantage to the owner are not patentable. For example, computer software (an area in current dispute in the courts concerning their patentability), geologic maps, geophysical data, economic information, market forecasts, long range corporate plans, and on and on and on are not patentable.
Thus, there is a tremendous body of proprietary information out there that needs to be protected because it gives the owner a competitive advantage by having that information to the exclusion of all or at least most of his or her competitors. However, this information is not really protectable by any of the patent, trademark or copyright devices.
IV. TRADE SECRETS
A. History
The trade secret device admirably fills this gap, but in so doing, creates a certain amount of confusion to clients and lawyers alike because its scope of application covers anything that is patentable. There is even some overlap now with the copyright device thanks to the new Copyright Act of 1976, Title 17, U. S. Code.
In the trade secret area of the law, we have to deal with Federal law to some extent, both patent and trade secret. We also have to consider fifty different State laws, no two of which are identical, and which, in some cases, tend to conflict with one another. For example, even though a particular idea may be patentable, there is no law yet, to my knowledge, that makes patenting the idea mandatory. For various good and sufficient reasons, which time will not allow enumerating here, but which a good intellectual property lawyer will take into account, it may well be that the best protection for the client in a particular business situation, is to forego patent protection, an essentially irrevocable decision, and to rely instead on trade secret protection. Since trade secrets can cover patentable information, a client has to make a decision whether to go for patent protection or trade secret protection. A client can't have both for an indefinite period of time, even though patent applications are kept confidential by the Patent Office, because when the patent application issues as a patent, it is published for the...
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