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 Surgidev Corp.

1.  Both this case and American Paper and Packaging involved customer lists.  Yet in American Paper and Packaging the plaintiff lost, whereas here the plaintiff won.  Can you distinguish the two cases on their facts?  What specific facts about the list of "high-volume implanters" here justify ruling it a trade secret, whereas the list of manufacturers using packaging products in American Paper and Packaging was not?  Can you justify the distinction on the basis of social and economic policy?

2.  American Paper and Packaging can be viewed as upholding three defenses: (1) there was no trade secret; (2) even if there was, it was not misappropriated, and (3) even if there was and it was misappropriated, no remedy was proper.  This case can be viewed as rejecting all three of the same defenses.  Can you distinguish the two cases on all three grounds?

3.  The basic principle of compensatory remedies is to put the plaintiff in the so-called "rightful position," i.e., the position that the plaintiff would have occupied if the wrong had never occurred.  Here the courts try to estimate the time that the defendant would take to re-create the list of high-volume implanters by legitimate means and without misappropriation.  Does this remedy put the plaintiff in the rightful position?  Would any less give the defendant an undeserved competitive advantage?  Would any more give the plaintiff an unfair advantage?

4.  Injunctive relief is often the central remedial issue in intellectual property cases.  This is no less true in trade secret cases than in patent, copyright and trademark cases.  Why is injunctive relief important in this case?  What facts of this case give injunctive relief—and its duration—special importance to the parties?  Suppose the plaintiff made a claim for damages.  How would they be calculated?  Could they be determined with sufficient certainty to provide a reliable monetary remedy?  Why or why not?

5.  Trade secret cases often affect the interests of persons not before the court, such as suppliers and customers of the litigants.  Are there any such persons in this case?  Who are they?  Should a court take their interests into account in deciding (a) whether to grant any remedy at all and (b) the duration of any injunction?

6. This case is our first "third-party misappropriation" case.  The defendant (ETI) did not get the trade secret directly from the plaintiff (Surgidev), but indirectly from third parties, namely, Surgidev's former key employees.  The key employees had signed nondisclosure agreements, so they could be liable for breach of contract, as well as for misappropriation of trade secrets.  Is ETI's liability derivative of theirs, or does it stand on a separate footing?  If separate, what footing?  Insofar as the plaintiff is concerned, are there practical reasons for suing ETI, and not just the disloyal former employees?

7.  The Surgidev court makes a point of reminding the reader that an appeal is not the place to re-try the facts of the case.  We will see other courts make this same point many times during this course.

The point is particularly important for trade secret cases, which are generally fact intensive.  The deference that appellate courts are supposed to give trial courts on matters of fact and credibility make it difficult to overturn trial courts' decisions except on issues of pure law.  As a result, the trial judge is in many ways the court of last resort.  For this reason, it is especially important in trade secret cases for both lawyers and witnesses to maintain the confidence of the trial judge, inter alia, by avoiding extreme or unreasonable statements, arguments, and actions.  Trade secret cases often turn on a "smell test."   If one's case "smells bad" to the trial court, an appellate court is ill situated, and usually ill disposed, to deodorize it.

Back to Top