On Wednesday, January 23, Knobbe Martens Partners Jeff Van Hoosear, Susan Natland, Diane Reed and Lynda Zadra-Symes participated in the Association of Corporate Counsel (ACC) - Southern California In-House Counsel Conference. This all day CLE program was just for in-house counsel and panels included: Social Media & Privacy; New Developments in California Employment Law; Lawful Interception; Millennial Engagement in the Workplace; and Helping Sales & Marketing Avoid Defamation/Unfair Competition.

1. Swimming With Piranhas:
Hiring Competitor’s Top Talent & Being Fiercely
Competitive Without Exposing Your Company
Avoiding Trade Secret Misappropriation, False
Advertising & Unfair Competition Claims
January 23, 2013
Los Angeles, California
Moderator: Harrison Perla, Esq.
Panelists: Lynda Zadra-Symes, Jeff Van Hoosear,
Susan Natland and Diane Reed
@KnobbeMartens at Twitter
The recipient may only view this work. No other right or license is granted.
#IHCC12
#IHCC13 2013 ACC-SoCal In-House Counsel Conference

2. Via Federal Express
Dear President:
I am General Counsel for Fierce Competitor, LLC. (“FCL”).
It has come to my attention that your company has recently hired Pat O’Neil Riley, a former V.P. of
Sales and & Marketing at FCL. Given Pat’s position at FCL, Pat had access to a variety of confidential
and proprietary information. Whatever Pat knows clearly qualifies as a TRADE SECRET of FCL and
should not be used by your company …
We demand that you cease and desist from the use and disclosure of all information and data that Pat
obtained while a V.P. at FCL …
We further demand your immediate confirmation that your company will not use or disclose any
TRADE SECRETS or proprietary information of FCL …
Unless I have your immediate confirmation by the close of business yesterday, FCL will proceed to
enforce all legal remedies available to it, including, false advertising, unfair competition, trade libel,
as well as all other remedies that our outside counsel have not yet even thought of …
I expect to hear from you by yesterday. Have a nice day.
Sincerely, General Counsel
2013 ACC-SoCal In-House Counsel Conference #IHCC13
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3. What is your next step?
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4. Understanding Trade Secrets:
Protection and Misappropriation
Trade Secret Definition
Marking Confidential
NDAs
Avoiding Liability
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5. What is a Trade Secret?
“Trade secret” is a legal term for knowledge, or
information that is confidential or secret
Another term that you may sometimes hear is
“confidential” or “proprietary” information
These terms are more or less synonymous:
– Trade secrets
– Proprietary information
– Confidential information
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6. Laws governing the protection of
trade secrets
In the U.S., the protection of trade secrets is
governed by state law
Trade secret laws vary from state to state
There is no U.S. or federal system for recognizing
trade secrets
Some foreign countries have laws to protect trade
secrets, but those laws vary from country to
country (so governing law is important)
Some foreign countries do not even recognize
trade secrets as a form of IP
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7. What are the legal requirements to
protect trade secrets?
Generally, the law will recognize and protect a
trade secret if it constitutes information that:
– Is not generally known (i.e., it is secret or confidential)
– Has value to you or would have value to a competitor
– Is subject to reasonable efforts/procedures to preserve
its confidentiality
Conversely, if the information is publicly available
or otherwise falls into the public domain, it is not
protectable as a trade secret
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8. What kind of information can
be protected?
Almost anything!
Business information
– Financial data
– Sales data
– Customer or vendor data
– Operational information
– Branding information
– Advertising and marketing data
– Prospective products, services, or programs
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9. What kind of information can
be protected?
Technical, engineering, testing or scientific
information or data
Computer software and related documentation
Manufacturing processes or methodologies
Recipes, formulas or instructions
The law tends to favor technical information over
business information – so be especially careful with
protecting business information to preserve its trade
secret status
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10. Do you need to file or register
anything to protect a trade secret?
There is no legal system for registration of a trade
secret
Whether information qualifies as a trade secret is
based on a good faith belief that it meets the
requirements
There are important procedures for preserving a
trade secret as a protectable asset
It is fairly easy to lose trade secret status
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11. How do I protect a trade secret?
The most important things to do:
– TREAT THE INFORMATION IN A CONFIDENTIAL
MANNER
– Clearly label or designate the information as
“confidential” or “proprietary”
– Maintain the information in a locked or secure location
that cannot be accessed without appropriate
authorization
– Limit access to the information only to those within the
company who need to know it
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12. How do I protect a trade secret?
– Do not publish or distribute the information to the public
– Use appropriate agreements with confidentiality clauses
– Monitor or audit compliance on a regular basis to ensure
(and demonstrate, if necessary) that the procedures to
protect you trade secrets are in force and being followed
– Treat your trade secrets and your NDAs as your other IP
(status reports, etc.)
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13. What if I need to share the
information?
 Be sure to enter into an appropriate agreement requiring
the recipient of the information to maintain the
confidentiality of the information
 One type of common agreement is a Non-Disclosure
Agreement or “NDA”
 There are several types for different situations, so be sure to
consult legal counsel before signing an NDA or asking someone
else to sign one
 The NDA should limit the purpose and use of confidential
information
 The NDA should have a general IP assignment clause
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14. NDAs and Other Agreements
Any agreement can have a “confidentiality” clause
to preserve the trade secret status of information
exchanged pursuant to the agreement
A few examples are:
– Employee agreements
– Consulting agreements
– Development (R&D) agreements
– Software development agreements
– Manufacturing agreements
– Vendor agreements
– Supply agreements
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15. How long do trade secrets last?
Trade secret protection can last forever
Duration is unlimited as long as the
information is kept secret
– Coca-Cola (recipe)
– KFC (recipe)
– Google (algorithm)
– The New York Times Bestseller List (algorithm)
If the information is released to the public,
even illegally, the trade secret will be lost
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16. How can trade secret status be
lost?
Publishing articles or white papers containing the
trade secret information
Posting the information on a website or in social
media
Presenting the information at a trade show or
conference
Speaking to others outside the company about the
information
Selling, distributing or presenting a product or
sample that embodies the information (under certain
circumstances)
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17. What circumstances?
The sale or distribution of a product from which
the information can be discerned by reverse
engineering will cause the information to lose
trade secret status!
– Reverse engineering of competitor’s products is
often conducted as routine “competitive
intelligence” by many companies
– Several labs specialize in reverse engineering
products to determine product composition,
physical characteristics, and even how the product
was made
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18. Other ways to lose trade secret
status
Other ways to lose trade secret status:
– The information is developed independently by another
party
 The trade secret status may not be lost but you cannot enforce
your trade secret rights against that party
– The information is developed independently or
discovered by another party and made available to the
public
 The information falls into the public domain and trade secret
status is lost
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19. Still other ways to lose trade
secret status
Breach of an NDA or other confidentiality
agreement – legal action may be available but the
trade secret status is still lost
– Even though there is an NDA, it is not a guarantee that
the party receiving the trade secret will honor the
confidentiality obligations of the agreement
– Thus, disclosure of trade secrets under the protection
of an NDA must be carefully evaluated, including the
level of trust that is reposed in the receiving party
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20. Losing Trade Secret Protection
Publication Disclosure
Presentation Disclosure
Inadvertent Disclosure
Sale or Distribution
Independent Development
Breach of an NDA
Patent by a Third Party
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21. Because trade secret status can be
easily lost . . .
Serious consideration should be given at the
outset to whether the information should be
protected by trade secret, copyright, or patent (if
available)
Note that if you initially follow the trade secret
route, patent protection is likely not available,
copyright still possible
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22. General Principles
 An Employee Can Take His or Her General
Knowledge, Skill, Experience
 Cannot Take Anything Tangible Belonging to the
Employer
 Cannot Take Anything “confidential” or protected as
a trade secret
 Contractual Limitations
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23. Can I be at risk in violating the
trade secret rights of others?
Caution should be exercised in hiring employees
from competitors
– Be sure to consult legal counsel in sensitive situations
– Avoid risk of charges that you hired an employee to
gain access to the competitor’s trade secrets
– Avoid charges that you “interfered” with a competitor’s
contractual or customer relations
– Have provision in employment agreement which
confirms employee has no trade secrets or confidential
information of prior employers
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24. Can I be at risk in violating the
trade secret rights of others?
Even in NDA situations or other agreements, avoid
receiving the confidential information of another
party unless absolutely necessary to fulfill the
purposes of the arrangement
Have a clear policy and educate your team to
respect the IP rights (including trade secrets) of
others
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25. Avoiding Liability for
Misappropriation
 Hiring Sensitive Employees from Competitors
 Nothing Should be Taken from Prior Employer
 Do Not “Jump the Gun” (review hiring and start dates)
 Review Calendar/Schedule (track employee’s work
product)
 Document Independent Creation
 Conduct Independent Research to Find Customers,
Vendors, etc.
 Consider a “Clean Room” Procedure
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26. General Procedures and
Recommendations
Advertise for All Positions
Do Not Target a Particular Individual
Publish Policy Against Misappropriation
Similar Provision in Employee Agreement
Have a New Project Underway Before Hiring any
“Sensitive” Employees
Avoid Hiring a Number of Competitor’s Employees
at the Same Time or Within a Short Time Period
Review Insurance Policy
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27. Insert
Sponsor
Logo Panelists
here
 Moderator:
– Harrison Perla, Esq.
 Harrison Perla, Director of Worldwide Legal Affairs at CEVA, Inc.
 @HarrisonEsquire on Twitter
 Presenters:
– Susan M. Natland, Esq. – Diane M. Reed, Esq.
 Partner at Knobbe Martens  Partner at Knobbe Martens
 Susan.Natland@knobbe.com  Diane.Reed@knobbe.com
– Lynda Zadra-Symes, Esq. – Jeff Van Hoosear, Esq.
 Partner at Knobbe Martens  Partner at Knobbe Martens
 Lynda.Zadra-Symes@knobbe.com  Jeff.VanHoosear@knobbe.com
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28. 9th Annual In-House Counsel Conference
January 23, 2013 (Los Angeles, CA)
www.acc.com/chapters/socal/
#IHCC13
@KnobbeMartens
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