Combination Trade Secrets and the Logic of Intellectual Property

By Graves, Tait; Macgillivray, Alexander | Santa Clara Computer & High Technology Law Journal, January 2004 | Go to article overview

Combination Trade Secrets and the Logic of Intellectual Property


Graves, Tait, Macgillivray, Alexander, Santa Clara Computer & High Technology Law Journal


I. ABSTRACT

There is a growing debate between the proponents of the public domain and supporters of private ownership of information. The contentious discussion on these issues has not yet focused on trade secret law, but it is time to subject trade secret law to the same questions of public policy now asked of copyright, patent, and trademark law. One theory of trade secret law that poses a direct threat to the public domain is the so-called combination trade secret, a concept that permits some combinations of publicly available information to be treated as intellectual property. Despite more than a century of case law on this theory, courts and commentators have never developed a set of tests to properly analyze whether an asserted combination trade secret should be recognized as such. We propose that such combination secrets must satisfy standards no less stringent than those applied for individual trade secrets in order to qualify for intellectual property protection. Specifically, combination trade secrets must not be obvious and must have functionally interrelated elements that provide economic value over combinations with publicly known alternatives. Furthermore, in order to have misappropriated a combination trade secret, a defendant must know about and intend to misappropriate the entire combination, and not have independently derived it. If applied, these tests would protect information in the public domain from overbroad or exaggerated combination claims, while ensuring that truly unique combinations receive intellectual property protection.

TABLE OF CONTENTS

I.   Abstract
II.  Introduction
III. History: The Development of the Combination Concept
IV.  The Dangers Associated with Combination Claims
  A. The spectrum of secrecy in claimed combinations
  B. Risks posed by overbroad application of the combination
     concept
V.   Reform
  A. Is there a functional interrelationship between the elements in
     the claimed combination secret?
  B. Does the combination create value above and beyond the sum
     total value of the individual items that it encompasses?
  C. Is the combination obvious?
  D. Did the defendant know of and intend to misappropriate the
     combination qua combination?
    The knowledge element
    The intentional use or disclosure element
  E. Did the defendant independently derive one or more elements of
     the claimed combination?
  F. Has the Plaintiff omitted necessary parts of its true combination
     in order to match its allegations to the defendant's use of public
     domain information?
VI.  Conclusion

II. INTRODUCTION

There is a growing movement to protect and enlarge the amount of information in the public domain against the countervailing drive towards expanding the boundaries of intellectual property and encroaching on what is publicly available. (1) This movement is important because the public domain commons is a rich source for innovation, whether in art and culture or science and technology. (2) At the same time, the value of information publicly available creates an incentive to assert sole dominion over ideas otherwise free for all to use. (3)

The debate between ownership and commons is being raised on every major intellectual property front: patent, trademark, copyright, and trade secret. Commentators have given prominent attention to the perils of patents governing common concepts, trademarks allowing the silencing of speech, copyrights lasting too long or covering too much, and the new para-copyrights destroying the delicate balance set by America's two hundred year history of copyright jurisprudence. (4) By contrast, scholars have largely ignored the battles over trade secret law. (5)

This silence is surprising for two reasons. First, how state law defines a trade secret directly affects innumerable employees and inventors, especially in high technology industries. The rights of hundreds of thousands of skilled employees are directly affected by state law trade secret decisions. …

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