By R. Mark Halligan
Nixon Peabody LLP
I recall the beginning of my trade secrets practice back in the 1980s. As a young lawyer in the litigation department, I was asked to help a patent attorney with a "tradesecrets" case. I did not know what a trade secret was but I was anxious to find out.
When I met with Dan Cherry (the patent attorney) in his office, Dan told me to read a book by Stanley H. Lieberstein, "Who Owns What Is in Your Head?"
I read the book in one day — I could not put it down. It was an awakening to discover that you could assert intellectual property rights from information carried in a person's head. When I returned to Dan's office, I told him, however, that I was still uncertain about the concept of a trade secret. Dan said, "Follow me."
We then walked down the hall to the law library and he asked me to read Section 757 of the Restatement of Torts (First). This took only several minutes and, once again, I told Dan that I was still not certain that I understood the concept of a trade secret. Dan responded: "Well, now you know everything I know about a trade secret."
This was the start of my career counseling on trade secret issues and litigating trade secret cases.
For many years, it was a very small niche practice. Most IP lawyers were focused on patents, copyrights and trademarks. However, I seized upon every opportunity to educate the general bar on trade secrets.
In the mid-1990s, I established the The Trade Secrets Home Page on the Internet, tradesecretshomepage.com. Later, I set up the The Trade Secrets Case Law Database on the Internet, asksam.com/halligan, posting summaries of trade secret cases.
Before the Internet, I spoke at bar association events and at various business forums, preaching that a "trade secret" means any information that provides a competitive advantage from not being known in the trade, if the trade secret owner takes reasonable measures to protect the secrecy of the information.
I educated audiences that a trade secret was the oldest IP right, having been traced back to Roman times. Finally, I emphasized that the birth of every patent starts out as a trade secret.
As time went on, I began to develop the procedures for effective trade secret audits, trade secret exit interviews for departing employees and internal procedures for the protection of trade secrets.
In 1992, I wrote an IICLE QuickGuide on the Identification and Protection of Trade Secrets for the Illinois bar. In 1995, I began teaching trade secrets law in the IP LLM program at The John Marshall Law School, taking over the reins from Mel Jager, who served as my mentor on trade secret issues for many years.
As each year has passed, trade secrets have grown in stature and importance. Today, trade secrets litigation has exploded.
Now, all the general law firms — not just the IP boutiques — have a "trade secrets practice" or a "trade secrets team" or a "trade secrets practice leader." It is no longer a small niche practice.
There are many reasons for this. This past summer I explained some of the reasons in an article that I wrote for the ABA' s Landslide magazine titled "Trade Secrets v. Patents: The New Calculus" (July/August 2010).
The traditional approach has always favored patent protection if the requirements of patentability are met: new, useful and nonobviousness. However, in recent years, decisions by the U.S. Supreme Court and other developments in the law have circumscribed the once-broad protection afforded to patent holders as well as remedies available to patent holders.
It is now time to consider trade secret protection as an alternative, because the protection of information assets as trade secrets may provide a better choice for your clients in today's environment.
From my perspective over the past 30 years, it is no surprise that there has been an exponential growth in trade secrets litigation because trade secrets protect "information" and we now live in the Information Age.
So what's next?
The answer is the enactment of a federal trade secrets statute.
We have federal statutes for patents, copyrights and trademarks, but the law of trade secrets continues to be a state statutory right under the Uniform Trade Secrets Act. However, the business landscape and the competitive marketplace has dramatically changed.
Companies now compete across state lines and across continents. What the United States brings to the international marketplace is its IP. To adequately protect trade secrets, we need a federal trade secrets statute. We have a federal criminal statute, the Economic Espionage Act (EEA) of 1996, but it lacks a civil cause of action.
It is now my next goal to work toward the enactment of amendments to the EEA to add a civil cause of action so we can utilize the federal courts for national service of process and extraterritorial jurisdiction to protect the trade secrets of U.S. companies around the world. I encourage the readers of this article to join me in this important effort.