FALL 2008

Trade Secrets


Course No. 9200-704 (and 804)-801

ID No. 16545

MW 3:00 - 4:30 p.m.
Room L-134
Professor Jay Dratler, Jr.
Room 231D (IP Alcove)
(330) 972-7972
Copyright © 2000, 2002, 2003, 2006, 2008   Jay Dratler, Jr.   For permission, see CMI.

Questions and Notes on Chicago Lock Co. v. Fanberg and Du Pont v. Christopher

1.  These two cases explore the outer limits of reverse engineering.  Were both cases rightly decided?  Are they consistent?  Can you articulate a simple principle to explain the different results?

2.  Take the facts in Fanberg step by step, as does the court.  Does the owner of a lock built by Chicago Lock have the right to reverse engineer the lock to determine the key code, for example, if he loses the key?  What case—also involving a lock—could you cite for an affirmative answer?

If the owner of a single lock can reverse engineer it, what about an owner of many locks?  If Fanberg had bought 1000 locks at wholesale, reverse engineered them, and sold each at retail along with a book containing the codes for all 1000 locks, would he have had any liability under trade secret law for so doing?  If not, could he have any liability for collecting lock codes that others determned by reverse engineering their own locks?  Can other lock owners have any liability for providing their reverse engineered codes to him?  Don't negative answers to all these questions follow from the right of each lock owner to reverse engineer her own lock?

3. As a matter of logic and doctrine, doesn't the result in Fanberg follow from the general nature of legal rights and duties relating to trade secrets?  Wouldn't it be odd to say that a person who discovers another's trade secret legitimately by independently developing it or reverse engineering a product embodying it has "co-ownership" of the secret but nevertheless has a duty to the original owner to keep it secret?  Wouldn't such a result contradict the very notion of a right to develop secrets independently or reverse engineer products?

At the same time, are the economic consequences of the result in Fanberg satisfactory?  Who was better off as a result of the court's decision?  Fanberg apparently made some money by selling his code books, but was it very much?  Thieves also were better off, as they had a ready source for code books on these special locks, for a low price of $4.95.  But didn't Chicago Lock lose a valuable business of offering increased security, and weren't all users of these special locks less secure than they would have been absent Fanberg's code book and than they had expected to be when they paid presumably higher prices for these special locks than for others?  Was society as a whole economically better off as a result of this decision?  Can you analogize Chicago Lock's (and its customers') investment in security to the investment in research and development that trade secret law normally protects?  Are legal logic and economic benefit consistent in this case?

4.  Why did Du Pont win its case and Chicago Lock lose?  On what specific factual differences can you justify the difference in result?  Do the factual differences make sense as a matter of policy?

5.  What legal standard or policy justifies the result in Christopher?  Do the high-sounding phrases "improper means," "commercial morality," and "law of the jungle" have any real substance?  Can you use them to determine, on the facts in a given case, whether or not misappropriation has occurred?

Did the Christopher court come closer to a useful principle when it said, "To require DuPont to put a roof over the unfinished plant to guard its secret would impose an enormous expense to prevent nothing more than a school boy's trick"?  Does this quote suggest an important economic policy of trade-secret protection?  If there were no law preventing industrial espionage, what would be the economic consequences?  What would private business firms generally do to protect their secrets, and would the economic consequences be generally beneficial or detrimental?

6.  Consider variants on the facts of Christopher.  Suppose the Christopher brothers had discovered the structure of the unfinished chemical plant by: (1) planting microphones secretly in the offices of the architect and structural engineer; (2) carefully interviewing every person working on the construction project who had been fired, laid off, or quit; (3) photographing the unfinished plant through a telescope from neaby hill; or (4) analyzing impurities in methanol produced and sold by Du Pont and deducing the process by which it was made.  Do the law's high-sounding phrases help determine which of these tactics the law should permit and which it should not?  Does the economic standard relating to the "enormous expense . . . [of] a school boy's trick"?

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