Leveraging & Protecting Trade Secrets in the 21st Century (Series: INTELLECTUAL PROPERTY 2018 - 101)

Practical and entertaining education for
attorneys, accountants, business owners and
executives, and investors.
2

The material in this webinar is for informational purposes only. It should not be considered
legal, financial or other professional advice. You should consult with an attorney or other
appropriate professional to determine what may be best for your individual needs. While
Financial Poise™ takes reasonable steps to ensure that information it publishes is accurate,
Financial Poise™ makes no guaranty in this regard.
While Financial Poise is happy to make this PowerPoint freely available to all, the reader is
cautioned that it was created for use as part of a webinar that featured an extensive verbal
discussion of the topics addressed in the PowerPoint. It was not designed to be read by
itself. Financial Poise webinars can be purchased at www.financialpoise.com You may also
receive offers for free webinars by subscribing to Financial Poise's DACyak, a free weekly
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DISCLAIMER
3

MEET THE FACULTY
MODERATOR:
William C. Spence SpencePC
PANELISTS:
Eric Goldman Santa Clara University School of Law
Mark D. Simpson Saul Ewing Arnstein & Lehr LLP
David P. Swenson Larkin Hoffman
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ABOUT THIS WEBINAR
Trade secrets are a more important form of an intellectual property asset than ever. Congress recently passed
the Defend Trade Secrets Act of 2016, which created new federal laws that allow an owner of a trade secret to
sue in federal court when its trade secrets have been misappropriated. And as technology continues to
exponentially progress in the digital age of the 21st Century, the need for businesses to protect and limit access
to valuable and confidential trade secret information continues to rise. The progress in technology and
expansion of information also promotes means for monetizing and leveraging trade secrets.
How do you identify your trade secrets, protect them, and leverage them? These are the questions this cutting-
edge webinar discusses and seeks to answer.
This webinar is delivered in Plain English, understandable to you even if you do not have a background in the
subject. It brings you into an engaging, even sometimes humorous, conversation designed to entertain as it
teaches. And, it is specifically designed to be viewed as a stand-alone webinar, meaning that you do not have to
view the other webinars in the series to get a lot out of it.
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ABOUT THIS SERIES
Intellectual property (IP) laws in the US have undergone fundamental changes over the past several years. For example, in 2011, the
Leahy-Smith America Invents Act (AIA) overhauled the American patent system in a way that had not been accomplished since 1952.
Moreover, the Supreme Court decided several cases that, among other things, created a tougher environment for inventors/patent
applicants and expanded the scope of trademark protection to marks that were likely to be previously rejected. In 2016, The Defend
Trade Secrets Act created new federal laws that allow an owner of a trade secret to sue in federal court when its trade secrets have been
misappropriated. And new technologies, such as artificial intelligence, have scholars and legislators rethinking the scope of copyright
protection and debating additional reforms that have the potential for even more change.
In an increasingly competitive commercial environment, entrepreneurs and managers must understand how these changes to our patent,
trademark, trade secret, and copyright laws may potentially impact US businesses. This series of webinars seeks to both educate you on
current laws and prepare you to take full advantage of the changes that lie ahead. Please join some of the leading attorneys in the World,
as they discuss—in plain English for the non-expert—the basics of U.S. IP laws and the changing landscape as it affects US businesses.
As with every Financial Poise Webinar, each episode is delivered in Plain English understandable to investors, business owners, and
executives without much background in these areas, yet is also valuable to attorneys, accountants, and other seasoned professionals. And,
as with every Financial Poise Webinar, each episode brings you into engaging, sometimes humorous, conversations designed to entertain
as it teaches. Each episode in the series is designed to be viewed independently of the other episodes, so that participants will enhance
their knowledge of this area whether they attend one, some, or all episodes.
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Dates shown are premiere dates; all episodes will be available on demand after
their premiere date.
EPISODES IN THIS SERIES
Episode#1 What Every Lawyer & Every Client Must Understand 2/7/2018
Episode#2 Nuts & Bolts of Patents 3/14/2018
Episode#3 Nuts & Bolts of Copyrights 4/11/2018
Episode#4 Nuts & Bolts of Trademarks 5/16/2018
Episode#5 Leveraging & Protecting Trade Secrets in the 21st Century 6/13/2018
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Episode#5: Leveraging & Protecting Trade Secrets
in the 21st Century
© 2018 by DailyDAC, LLC d/b/a Financial Poise Webinars™ 8

WHAT IS A TRADE SECRET?
General Definition:
A trade secret is any information:
a. That derives economic value from not being readily ascertainable; and
b. Is the subject of reasonable efforts to maintain its confidentiality.

WHAT IS A TRADE SECRET? (con’t)
Illinois Trade Secret Act Definition:
A trade secret is defined as information, including but not limited to, technical or
non-technical data, a formula, pattern, compilation, program, device, method,
technique, drawing, process, financial data, or list of actual customers or
suppliers that:
1. Is sufficiently secret to derive economic value, actual or potential, from
not being generally known to other persons who can obtain economic
value from its disclosure or use; and
2. Is the subject of efforts that are reasonable under the circumstances to
maintain its secrecy or confidentiality.
765 ILCS 1065/2(d)

WHAT IS A TRADE SECRET? (con’t)
The Federal Defend Trade Secrets Act of 2016 (“DTSA”) Definition:
DTSA defines trade secrets as: "all forms and types of financial, business,
scientific, technical, economic, or engineering information, including patterns,
plans, compilations, program devices, formulas, designs, prototypes, methods,
techniques, processes, procedures, programs, or codes," where the trade
secrets owner "has taken reasonable measures to keep such information secret"
and where the information derives economic value from its secrecy. 18 U.S.C.
§ 1839(3).

SUMMARY OF TRADE SECRET REQUIREMENTS
AND LIMITATIONS
To receive trade secret protection, information must be.
a. A secret;
b. Protected by reasonable efforts; and
c. Valuable as a secret.
Limitations on trade secret protection include:
a. Prior use;
b. Independent discovery; and
c. Reverse engineering

FACTORS FOR MEASURING WHETHER A
TRADE SECRET EXISTS
The extent to which the information is known outside of a business;
1. The extent to which the information is known by employees and others
involved in the business;
2. The extent of measures taken by the business to guard the secrecy of
the information;
3. The value of the information to the business and its competitors;
4. The amount of time, effort, and money expended by the business in
developing the information; and
5. The ease or difficulty with which the information could be properly
acquired or duplicated by others.

TRADE SECRET MISAPPROPRIATION
Trade secret misappropriation occurs when there is a wrongful use, disclosure,
or acquisition of the trade secret by “improper means.”
Trade secret misappropriation typically occurs in the context of employer-
employee relationships, but may also occur when any person or thing is given
access to protectable information.
Trade secret misappropriation can also occur via espionage and hacking.

(con’t)
Under the DTSA, “misappropriation” is generally defined as “an unconsented
disclosure or use of a trade secret by one who (i) used improper means to
acquire the secret, or, (ii) at the time of disclosure, knew or had reason to know
that the trade secret was acquired through improper means, under
circumstances giving rise to a duty to maintain the secrecy of the trade secret,
or derived from or through a person who owed such a duty.”
18 U.S.C. § 1839(5)

(con’t)
Improper Means -
Misappropriation can manifest in different ways, but according to most
statutory definitions, the method of acquisition needs to be “improper”: “theft,
bribery, misrepresentation, breach or inducement of a breach of a duty to
maintain secrecy, or espionage through electronic or other means.” 18 U.S.C.
§ 1839(5).
The language of Illinois' trade secret statute differs slightly: "theft, bribery,
misrepresentation, breach or inducement of a breach of a confidential
relationship or other duty to maintain secrecy or limit use, or espionage
through electronic or other means." 765 ILCS 1065/2(a).

TRADE SECRET MISAPPROPRIATION (con’t)
Inevitable disclosure -
The "inevitable disclosure doctrine" allows a plaintiff to prove a claim of trade
secret misappropriation by demonstrating that defendant's new employment will
inevitably lead him to rely on the plaintiff's trade secrets.
Under the doctrine courts consider:
(1) the level of competition between the former employer and the new
employer;
(2) whether the employee's position with the new employer is comparable to the
position he held with the former employer; and
(3) the actions the new employer has taken to prevent the former employee
from using or disclosing trade secrets of the former employer.

REMEDIES
Seizure – Petition a court for an ex parte seizure of property necessary to
prevent the propagation or dissemination of trade secrets.
a. Temporary Restraining Order or Preliminary Injunction – Petition a court
to restrain a defendant from using or disseminating the trade secrets.

REMEDIES (con’t)
Monetary Damages
a. Lost Profits– calculated based upon the difference between the profits
which a party could reasonably be expected to make and the profits
which it did in fact earn.
b. Unjust Enrichment– the unfair benefit a person earned due to the
misappropriation.
c. Reasonable Royalty– hypothetical negotiation between a willing buyer
and willing seller.
d. Attorneys’ Fees and Costs and Exemplary Damages– often awarded for
willful or malicious misappropriation.

PROTECTING TRADE SECRETS
Understanding and Defining Your Valuable Information
a. Implement practices to identify specific valuable information.
b. Create policies and procedures to reduce access and prohibit disclosure
to the information.
c. Simply pointing to broad areas of technology and stating an area must
be secret is insufficient.

PROTECTING TRADE SECRETS (con’t)
Agreements to protect trade secrets -
a. Non-Disclosure Agreements– a non-disclosure agreement is a general
agreement between parties to refrain from disclosing specific
information shared between the parties as specified in the agreement.
b. Employment, Consulting, and Joint-Venture or Joint-Research
Agreements – consulting agreements may contain non-competition
provisions as well as provisions detailing the ownership of intellectual
property rights and the requirements to maintain confidentiality of
information shared or learned under the agreement.
c. Employee and Corporate Policies – may support an effort by an
employer to maintain the secrecy of information.

Agreements to protect trade secrets -
a. Restrictive Covenants
a. Non-compete agreements– an agreement not to compete in a
specific line of business with a party.
b. Non-solicitation agreements– an agreement not to solicit customers
in a specific line of business with a party.
c. No-hire agreements– an agreement not to hire employees or
contractors away from a prior employer.

Agreements to protect trade secrets-
a. Restrictive covenants are often highly scrutinized by courts and may be
rendered unenforceable if not carefully drafted.
b. Typically, courts consider the nature of the business and provision,
including the scope, time period, and geographic range of the provision.
c. A restrictive covenant should nevertheless be upheld if it contains a
reasonable restraint and the agreement is supported by consideration.

Preventing or Minimizing Access and Dissemination
a. Information Governance
a. Proactive policies and procedures to structure, control, and organize
a company’s information.
b. For examples:
a. Partition networks, hard-drives, etc.→ to limit access to drives,
folders, files, data, etc.
b. Require user credentials or two-factor authentication to access
information.
c. Keep certain valuable information in hard-copy or on un-
networked computers.

Preventing or Minimizing Access and Dissemination -
a. Data-encryption and Cryptography
a. File and data encryption methodologies may prevent information
from being compromised by malware, hackers, phishing
expeditions, etc.
b. Encryption allows information administrators to restrict access to
information on a need-to-know basis.
c. Use of cryptograph allows agents to share messages and information
such as trade secrets securely over a network.

Preventing or Minimizing Access and Dissemination -
a. Retain employees – protect, as best you can, against a disgruntled
employee situation;
b. Implement pre and post termination policies to ensure information
accessible by former employee is not compromised;
c. Monitor employee access to information;
d. Engage consulting services to identify and protect trade secret
information.

LEVERAGING TRADE SECRETS
Some of the ways to leverage trade secrets include:
a. Identifying and incorporating trade secrets in your company’s intellectual
property portfolio.
b. Making trade secrets a part of your company’s growth strategy.
c. Licensing trade secrets to customers, clients, or even competitors.
d. Selling or acquiring trade secret information.

LEVERAGING TRADE SECRETS (con’t)
Evaluate patent protection versus trade secret protection – improvements that are
patentable and may be easily copied are usually better protected by a patent (or
perhaps a copyright, if possible).
a. Patents – protection is limited by time (~20 years from filing).
b. Trade Secrets – no limitation on protection.
c. Patents – compliance with statutory requirements; filing of a disclosure of the
invention with the USPTO; several years to acquire.

LEVERAGING TRADE SECRETS (con’t)
d. Trade Secrets – no filing requirements; effective immediately.
e. Patents – exclude others in return for a disclosure to public.
f. Trade Secrets – once public, anyone may have access.
A trade secret may be patented by someone else (e.g., a competitor) who developed
the information by legitimate means.

ABOUT THE FACULTY
WILLIAM C. SPENCE
william.spence@spencepc.com
William Cory Spence assists individual and business clients to obtain their best possible outcome in contentious legal matters. He has
extensive experience in litigation, arbitration, and mediation involving all areas of intellectual property law. A registered patent attorney,
Mr. Spence serves clients by providing advocacy and advice in the areas of: patent infringement; trade secret misappropriation; unfair
competition (including conspiracy, tortious interference, and related antitrust claims); breach of contract; post-grant patent proceedings
(e.g., inter partes review) ; trademark infringement; and copyright infringement.
He has litigated claims in both state and federal courts throughout the United States. Additionally, Mr. Spence has extensive experience
with patent monetization strategies and complex, international patent infringement litigation involving multiple parties and jurisdictions,
most notably including Japan. He is a published author and frequent speaker on patent monetization and other intellectual property
issues, and has been repeatedly recognized as an “Illinois Rising Star” and “Illinois Star,” in the area of intellectual property.
Mr. Spence is a graduate of the University of Notre Dame, where he obtained separate Bachelor of Science Degrees in Chemical
Engineering and Biophysics (“Physics in Medicine”). As a student he received the distinction of Notre Dame Scholar and also earned the
Monogram Award. Upon graduation from Notre Dame, Mr. Spence received his commission as a Second Lieutenant in the United
States Air Force, Medical Service Corps. After completing his military service, he worked for several years in the chemical industry before
pursuing his legal education at the University of Houston Law Center. Prior to forming SpencePC, Mr. Spence spent twelve years
practicing law with Kirkland & Ellis LLP in Chicago, IL and Tokyo, Japan.
30© 2018 by DailyDAC, LLC d/b/a Financial Poise Webinars™

ABOUT THE FACULTY
ERIC GOLDMAN
egoldman@gmail.com
• Eric Goldman is a Professor of Law at Santa Clara University School of Law,
where he is also Director of the school’s High Tech Law Institute. His research
and teaching focuses on Internet law, intellectual property and marketing law.
• Before becoming a full-time law professor, Eric practiced law in the Silicon Valley
for 8 years, first as a technology transactions attorney at Cooley Godward LLP and
then as General Counsel of Epinions.com, an Internet start-up company. Prior to
Santa Clara, he was an Assistant Professor at Marquette University Law School in
Milwaukee, Wisconsin. He has also taught as an adjunct professor at UC Berkeley
Law School and the University of San Francisco Law School.
• He blogs on Internet law matters at the Technology & Marketing Law Blog.

ABOUT THE FACULTY
MARK D. SIMPSON
Mark.Simpson@saul.com
• Mark Simpson is an attorney at Saul Ewing Arnstein & Lehr, LLP
• Mark is a veteran IP attorney who in the course of his 20+ years as an IP attorney has counseled
clients in protecting and managing their IP assets via patent preparation and prosecution, IP
counseling and litigation, and IP due diligence and opinions. He represents U.S. and overseas-
based clients, with extensive representation of clients in European and Asian countries.
Technologically, his focus is in the electrical, electromechanical, computer software and hardware,
and business method arts, with an emphasis on the fields of computer systems, communications
and telephony systems (mobile and land-based), and Internet technologies.
• Mark is frequently asked to speak domestically and abroad on various aspects of US patent law,
particularly when changes occur in view of high level court cases. He is an elected Foreign Member
of the Chartered Institute of Patent Attorneys, a London-based organization serving patent attorneys
in the United Kingdom.

ABOUT THE FACULTY
DAVID P. SWENSON
dswenson@larkinhoffman.com
• David Swenson is an attorney at Larkin Hoffman
• He is an intellectual property litigator with extensive experience in trial
courts nationwide and before the U.S. Court of Appeals for the
Federal Circuit. He also advises clients on the valuation and
management of IP assets, plus related business strategies. David has
earned a reputation as an innovative trial lawyer and thoughtful
appellate advocate, defending technology companies, as well as their
patents and other IP, in venues including the PTAB, ITC, and FTC,
in addition to district courts, the Federal Circuit, and the Supreme
Court.

The material in this presentation is for general educational purposes only. It has been
prepared primarily for attorneys and accountants for use in the pursuit of their
continuing legal education and continuing professional education.
While Financial Poise is happy to make this PowerPoint freely available to all, the
reader is cautioned that it was created for use as part of a webinar that featured an
extensive verbal discussion of the topics addressed in the PowerPoint. It was not
designed to be read by itself. Financial Poise webinars can be purchased
at www.financialpoise.com. You may also receive offers for free webinars by
subscribing to Financial Poise's DACyak, a free weekly newsletter.
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