Trade Secrets, the First Amendment, and Patent Law: A Collision on the Information Superhighway

By Park, Daniel W. | Stanford Journal of Law, Business & Finance, Autumn 2004 | Go to article overview
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Trade Secrets, the First Amendment, and Patent Law: A Collision on the Information Superhighway

Park, Daniel W., Stanford Journal of Law, Business & Finance

Trade secrets can be destroyed almost in the blink of an eye if published on the Internet. This Article examines recent case law that finds that even a misappropriated trade secret may be extinguished if it is published on the Internet. The Article concludes that this feature of trade secret law cannot be changed because of the First Amendment to the U.S. Constitution and federal patent law. Trade secret owners are counseled to be especially vigilant about the possibility that their proprietary information might slip into the public domain through the Internet.

In general, the law and the courts try to establish rules that allow businesses to do their work fairly and efficiently, but this is not always possible. The law of trade secrets has evolved to allow businesses to exploit information in the most efficient and profitable manner by rewarding innovators and allowing them to maximize the value of their innovations through commerce. Businesses like trade secrets. Trade secrets are easy. They do not require arcane regulatory filings. They do not require novelty, uniqueness, or originality.1 Mainly, trade secrets only require secrecy. Many businesses depend on this confidential information for the competitive advantage necessary to survive in the marketplace. Businesses also like the Internet. The Internet also is easy. It allows businesses to communicate with customers and partners worldwide virtually instantaneously. It is an inexpensive way to find and disseminate information. When the law of trade secrets meets the Internet, however, problems arise.

The essence of trade secrets is secrecy. The most visible part of the Internet is the World Wide Web, and its essence is immediate, worldwide transparency. The same features that make the Internet and the World Wide Web revolutionary communicative devices make them potentially deadly for a company's trade secrets. Over half the households in the United States are connected to the Internet,2 and that does not count the millions of Internet users worldwide.3 The Internet is possibly the most public and interactive medium of publication.

In contrast, rights in trade secrets can exist only if they maintain their secrecy. The Uniform Trade secrets Act, which has been widely adopted in the United States, defines a trade secret as information that has two indispensable features. First, the information must "derive!] independent economic value, actual or potential, from not being generally known to the public or to other persons who can obtain economic value from its disclosure or use."4 second, the information must be "the subject of efforts that are reasonable under the circumstances to maintain its secrecy."5 Unless both conditions are present, a protectible trade secret does not exist.

For the most part, courts have not required trade secret owners to work very hard to demonstrate that they have taken "reasonable" steps to maintain the secrecy of a trade secret. Efforts to maintain secrecy have been found to be reasonable where the company merely advised employees of the existence of a trade secret and limited access to the information on a "need to know basis."6 Sometimes, just keeping secret documents under lock and key has been enough.7

With the advent of the Internet, and in particular the World Wide Web, the possibility that confidential information may become available worldwide in the blink of an eye has become very real, and the requirement that trade secrets must not be "generally known" has taken on new significance. Unlike a patent, trade secret protections are not a blanket prohibition against others using the secret information. Rather, "[t]he owner of the trade secret is protected only against the appropriation of the secret by improper means and the subsequent use or disclosure of the improperly acquired secret."8 In other words, if a person learns a trade secret by legitimate means, the trade secret is fair game.

Thus, keeping the trade secret is synonymous with keeping the trade secret secret.

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Trade Secrets, the First Amendment, and Patent Law: A Collision on the Information Superhighway


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