IP New Year’s Resolution

Its the start of a new year, and here are ten things that you should consider to enhance your intellectual property in 2019:

  1. Revisit your employee agreement to ensure that the Company’s IP is adequately protected.
  2. Update your invention disclosure form. Even though we are operating in a first to file system, record keeping is still important to be able to prove/disprove derivation. Make sure that your forms are up to date.
  3. Take secrecy serious. Trade secret protection depends upon whether steps, reasonable under the circumstances, have been taken to protect the secrecy of the subject matter,
  4. Track agreements more closely. Do you know when the confidentiality and license agreements you have entered expire? Do you a process to ensure performance of these agreements?
  5. Evaluate inventions disclosures more critically. Not all inventions need protection — for example inventions that solve problems unique to your product are unlikely to be infringed by third parties.
  6. Take copyright seriously. Copyright provides wide ranging protection for advertising, packaging, websites, and other works of authorship. These rights are enhanced by the application of proper copyright notice, and prompt registration of the works.
  7. Make employee education a priority. Your employees are critical to protecting your intellectual property, and avoiding the intellectual property of others.
  8. Create a brand guide. Establish clear rules for the proper presentation and use of your trademarks. Publish these rules so that everyone inside the company, and outside the company uses your marks correctly.
  9. Create a social media policy. There are a surprising number of ways things can go wrong on social media, and some simple rules can prevent this from happening.
  10. E-mail better. Make sure your emails don’t put you and your activities in an unfairly light if they are viewed by outsiders.

Employee Agreements Revisited

This is a great time of year to revisit your employee agreements and update them if necessary. Changes to employee agreements generally must be supported by consideration, and end of year bonuses, salary adjustments, and promotions provide consideration to allow the employer to amend the agreement with existing employees.

In reviewing your employee agreement, considering the following:


No disclosure or use of CONFIDENTIAL INFORMATION

Return of Company property and CONFIDENTIAL INFORMATION upon

Authorize contact with subsequent employers

Access to Company Computers Systems and Data


Prompt and full disclosure of (a) inventions and discoveries, (b) copyrightable works

Proper record keeping

Treatment of prior inventions

Agreement to assign coupled with current assignment

Authorization of company to file patent applications and execute documents if employee is unable or unwilling to do so.

Agreement to cooperate/assist

No challenge to Company IP

Proper record keeping

Treatment of prior inventions

Agreement to assign and current assignment

Agreement to cooperate/assist and execute additional documents

Authorization of company to file patent applications and execute documents if employee is unable or unwilling to do so.

No challenge to Company IP

Treatment of prior inventions

Employee Conduct

□ Non-solicitation



Representations and Warranties: (a) freedom to enter Agreement and fully perform; (b) no undisclosed conflicting obligations; (c) no breach of prior obligations; (d) no knowingly use third party IP

Standard Provisions

Not an employment agreement/employee at will

Not an employment agreement/employee at will



Breach by employer not a defense to or prerequisite to performance

Choice of laws

Choice of forum



Acknowledge read and understood agreement

Further acts and assurances

Successors and assigns


Consent to injunctive relief

Adequate consideration

Voluntary execution

Opportunity to consult counsel


The Marking Requirement is Alive and Well; Don’t Forget about Virtual Marking

The Federal Circuit recently faced a patent marking issue in Arctic Cat Inc. v. Bombardier Recreational Products Inc., [2017-1475] (December 8, 2017).  In that case, the patent owner Arctic Cat had previously licensed the patents in suit to Honda. The license agreement with Honda specifically stated that Honda “shall have no obligation or requirement to mark” its licensed products.  While this provision no doubt made sense to Arctic Cat at the time, it put at risk the damage award against accused infringer Bombardier for the period of time before Arctic Cat received actual notice of infringement.

The Federal Circuit held that an alleged infringer who challenges the patentee’s  compliance with § 287 bears an initial burden of production to articulate the products it believes are unmarked “patented articles” subject to § 287. Once the alleged infringer meets its burden of production, however, the patentee bears the burden to prove the products identified do not practice the patented invention.

Compliance with the patent marking statute can be difficult because the patent owner may have to change the molds or other equipment used in manufacture as the patent issues, and again as the patents expire or are invalidated (lest the patent owner be accused of false marking).  This obligation also extends to the patent owner’s licensees, but it is easy to understand why a licensee, such as Honda in this case, would not want to be bothered with marking.


However many patent owners appear to be unaware that the AIA made it easier for patent owners (and their licensees) to comply with the patent marking requirement.  While it could not have helped Arctic Cat and its licensee Honda in their pre-AIA license, amended §287(a) now allows the patentee to mark by “fixing thereon the word “patent” or the abbreviation “pat.” together with an address of a posting on the Internet, accessible to the public without charge for accessing the address, that associates the patented article with the number of the patent.”  Thus when patents issue or expire, a patent owner simply has to update a website – not change molds or printing plates.

A Report to Congress on virtual marking in 2014 concluded that “virtual marking has likely met its intended objectives of reducing manufacturing costs and facilitating public notice in certain situations.”  This assessment was probably correct, but virtual marking remains under-utilized.  Among virtual markers, some provide online lists:

TIVO: www.tivo.com/patents

Nanoleaf: http://nanoleaf.me/patents/

Densify: http://www.densify.com/company/virtual-patent-marking.htm

Arthrex: www.arthrex.com/corporate/virtual-patent-marking

Hill-Rom: http://www2.hill-rom.com/usa/PDF/Patent_20120609.pdf

 Actifio: https://www.actifio.com/patents/

some provide a downloadable list:

Bunn: www.bunn.com/patents

some provide lists for individual products:

Kimberly Clark www.kimberly-clark.com/patents

and some provide a searchable database:

St. Jude Medical: http://patent.sjmneuro.com/Public.

Virtual patent marking is one of the few benefits of the AIA, but inventors and their assignees do not appear to be taking advantage of it.


Dance Like No One is Watching; Email Like it’s Being Read Aloud at your Deposition

Dance like no one is watching; email like it’s being read aloud at your deposition — this sentiment was passed along this morning by a colleague.  It is good to be periodically reminded to be careful with your business and professional emails:

When [writing emails] creating exhibits for the inevitable law suit consider

  • Keep business email professional.
  • Write as if your mother were reading over your shoulder.
  • Consider the purpose of the communication.
  • Consider the audience/recipients of the information (including a judge and jury).
  • Be factual; where opinion is called for, identify it as opinion, and make sure that it is germane to the issues; do not give an opinion (e.g., legal) that you are not qualified to give.
  • Do not make mean or demeaning references to others.
  • Make your point, but avoid extreme emphasis!!!!
  • Keep business and personal messages separate.
  • Consider how your characterization of the Company and its activities would be perceived by an outsider.


One Year of the Defend Trade Secrets Act

May 16, 2017 marked the first anniversary of the Defend Trade Secret Act.  What has the year taught us about this new federal cause of action for trade secret misappropriation? Here are the top 13 lessons from the first year of DTSA litigation:

#1 The threat is from within.  Like the scary story punch line – the call is from inside the house.  Most of the DTSA cases in the first year have involved former employees.

#2 The tools of espionage are mundane.  No need for James Bond’s Q here, the implements of trade secret misappropriation are as simple as emailing[1] the secrets to a personal email account,[2] loading up a flash drive, using drop box,[3] logging on the company systems,[4] or keeping a company lap top.[5]

#3.  The DTSA applies to continuing use of a Trade Secret taken before the Effective date.    The most frequently litigated DTSA issue in the first year is the application of the DTSA to trade secrets taken before the May 16, 2016, effective date.  Although this will diminish in importance with time, the cases hold that the DTSA covers the continued use after the May 16, 2016, effective date, of trade secrets obtained before the effective date.[6]  The DTSA does not apply to misappropriations only occurring prior to enactment,[7] and the courts will dismiss a Complaint under the DTSA unless and until the plaintiff can allege an act after the effective date.[8] Conversely the courts will allow amendment to add a DTSA claim where plaintiff can allege post effective date use.[9]

#4 The Courts are willing to grant preliminary injunctions based upon the DTSA.[10]  The Courts apply the traditional four-factor test for the grant of a preliminary injunction.  In evaluating the balance of hardships the fact that the injunction does not require more than compliance with federal and state law weights in favor of a preliminary injunction.[11]

#5.  The DTSA seizure provisions are not the exclusive ex parte remedy.[12]  The DTSA provided for ex parte seizure, which can be a helpful tool in investigating and combatting trade secret misappropriation.  However, the rules are complex, if not onerous.  In appropriate cases, it may still be faster and easier, and just as effective, to go old school and seek a TRO under trade secret.

#6  The Trade Secret Owner (obviously)doesn’t have to disclose its trade secrets in its Complaint to protect those trade secrets.[13]  Nor is there any heighted level of pleading required for a DTSA complaint.[14]

#7.  You shouldn’t count on the DTSA to stop your former employees from competing with you – that’s what non-compete agreements are for.[15]  In the absence of a non-compete provision, courts will restrict an individual’s employment only where the individual has stolen its former employer’s trade secrets and there is a high probability that the individual will “inevitably disclose” this information to its new employer.[16]

#8.  Choice of Law Can be More Important Than Ever.  According to 18 U.S.C. § 1836(b)(3)(A)(i)(II), the remedies available under the DTSA may depend on state law, in the words of one district court, forcing the court into the “choice of law bramble.”[17]

#9.  Defendants may attempt to hide behind the “whistle blower” provisions.[18]  Plaintiffs who live in glass houses should not throw stones.  Trade secret owners, like all prospective plaintiffs, should consider potential adverse consequences of bringing suit.  Is there something that the potential defendant could tattle about?

#10.  The DTSA is not significantly different from state law including the Uniform Trade Secrets Act.[19]  The DTSA was patterned on the UTSA, and while there are some differences, the similarities outweigh the differences.[20]  The courts may look to the UTSA in interpreting the DTSA.[21]  Although one court noted that although the UTSA is effective in 48 states, those laws “vary in a number of ways and contain built-in limitations that make them not wholly effective in a national and global economy.”[22]

#11.  Restrictions of injunctions against employees may not apply to contactors.[23]  Under the DTSA, the Court cannot grant an injunction that “prevent[s] a person from entering into an employment relationship,” and the Court can only place conditions on employment “based on evidence of threatened misappropriation and not merely on the information the person knows.” 18 U.S.C. § 1836(b)(3)(A)(i)(I).  There is no indication that “employment relationship” encompasses the role of an outside contractor.

#12.  The balance of hardships favors the trade secret owner where the injunction would merely require defendant to comply with federal and state law.[24]

#13.  The DTSA won’t help those who don’t help themselves.  Like the UTSA, the DTSA requires that the trade secret owner take some responsibility for securing the alleged trade secret.[25]

[1] Protection Technologies, Inc. v. Ribler, 3:17–cv–00144–LRH–WGC 2017 WL 923912 (D. Nevada. March 08, 2017); Henry Schein, Inc. v. Cook, 16-cv-03166-JST 2016 WL 3418537 (N.D. California. June 22, 2016).

[2] Chubb Ina Holdings Inc. v. Chang,  16-2354-BRM-DEA 2017 WL 499682  (D. New Jersey February 07, 2017);  Free Country Ltd, v. Drennen, 16 CV 8746 (JSR) 2016 WL 7635516 (S.D. N.Y. December 30, 2016);

[3] Free Country Ltd, v. Drennen, 16 CV 8746 (JSR) 2016 WL 7635516 (S.D. N.Y. December 30, 2016).

[4] Henry Schein, Inc. v. Cook, 16-cv-03166-JST 2016 WL 3418537 (N.D. California. June 22, 2016).

[5] Henry Schein, Inc. v. Cook, 16-cv-03166-JST 2016 WL 3418537(N.D. California. June 22, 2016).

[6] Allstate Ins. Co. v. Rote, 16–cv–1432, 2016 WL 4191015, at *1–5 (D. Or. Aug. 7, 2016) (granting preliminary injunction in DTSA case where the defendant left her job before the DTSA was enacted but remained in possession of alleged trade secrets after the DTSA’s enactment); Syntel Sterling Best Shores Mauritius Ltd. v. Trizetto Grp., Inc., 15–cv–211, 2016 WL 5338550, at *6 (S.D.N.Y. Sept. 23, 2016)(finding viable a continuing misappropriation claim that began pre-enactment because the DTSA defines misappropriation as the “disclosure or use of a trade secret” and the complaint alleged that the defendants “continue[d] to use” the trade secrets after the DTSA was enacted) (emphasis in original); Brand Energy & Infrastructure Services, Inc. v. Irex Contracting Group, 16-2499 2017 WL 1105648 (E.D. Pa. March 24, 2017) (denying motion to dismiss as to continuing misappropriation that started prior to effective date); High 5 Games, LLC v. Marks, 13-7161 (JMV) 2017 WL 349375 (D.N.J. January 24, 2017)(granting motion to amend to add DTSA claim).

[7] Champions League, Inc. v. Woodard, 2016 WL 8193292 S.D. New York. December 15, 2016 (Denying leave to amend complaint to add DTSA claim because it would be futile because the DTSA applies only to acts of misappropriation that occur on or after the May 11, 2016, date of the enactment of the Act); Avago Technologies U.S. Inc. v. Nanoprecision Products, Inc., 16-cv-03737-JCS 2017 WL 412524   (N.D. California. January 31, 2017)(granting motion to dismiss where all of the actionable conduct alleged in the Counterclaim occurred before the DTSA came into effect)..

[8] Dazzle Software II, LLC v. Kinney, 16-cv-12191 2016 WL 6248906 (E.D. Michigan August 22, 2016), (Dismissing DTSA Count with leave to amend upon discovery of conduct following effective date of the act). Hydrogen Master Rights, Ltd. v. Weston, 16–474–RGA 2017 WL 78582 (D.Del. January 9, 2017)(DTSA Claims dismissed without prejudice because (1) the complaint fails to allege any nexus between interstate or foreign commerce; and (2) because he DTSA, by its own terms, applies only to an act of misappropriation that occur on or after the date of the enactment, and the Complaint only contains a conclusory allegation of continuing use and disclosure.); M.C. Dean, Inc. v. City of Miami Beach, Florida, 199 F.Supp.3d 1349 2016 WL 4179807  (S.D. Florida. August 08, 2016)(granting motion to dismiss for failure to state a claim); Cave Consulting Group, Inc. v. Truven Health Analytics Inc., 5-cv-02177-SI 2017 WL 1436044  (N.D. California. April 24, 2017) (Dismissed although agreeing post enactment use would be sufficient); Chubb INA Holdings Inc. v. Chang, 16-2354-BRM-DEA 2016 WL 6841075 (D. New Jersey. November 21, 2016)(granting motion to file amended complaint alleging violation of DTSA.).

[9] VIA Technologies, Inc. v. ASUS Computer International, 4-cv-03586-BLF 2017 WL 491172  N.D. California, San Jose Division. February 07, 2017(Granting Leave to Amend Complaint to add DTSA claim after discover showed post enactment use.).

[10] First Western Capital Management Company v. Malamed, 6–cv–1961–WJM–MJW 2016 WL 8358549 (D. Colorado. September 30, 2016)

This leads the court into the “choice-of-law bramble,”

[11] Dish Network L.L.C. v. Ramirez, No. 15–CV–04712–BLF, 2016 WL 3092184, at *7 (N.D.Cal. June 2, 2016) (balance of hardships tips in favor of plaintiff seeking injunction when it would “do no more than require Defendant to comply with federal and state…laws”).

[12] Magnesita Refractories Company v. Mishra, 2:16-CV-524-PPS-JEM 2017 WL 365619  (N.D. Indiana, January 25, 2017); OOO Brunswick Rail Management v. Sultanov, 5:17-cv-00017-EJD 2017 WL 67119  (N.D. California, San Jose Division. January 06, 2017); Protection Technologies, Inc. v. Ribler, 3:17–cv–00144–LRH–WGC 2017 WL 923912 (D. Nevada. March 08, 2017).

[13] Mission Measurement Corporation v. Blackbaud, Inc.,  16 C 6003 2016 WL 6277496 (N.D. Illinois, October 27, 2016)(Denying motion to dismiss DTSA claim, noting trade secrets need not be disclosed in detail in a complaint alleging misappropriation for the simple reason that such a requirement would result in public disclosure of the purported trade secrets.).

[14] Chubb Ina Holdings Inc. v. Chang,  16-2354-BRM-DEA 2017 WL 499682  (D. New Jersey February 07, 2017)(Denying motion to dismiss DTSA for failure to state claim because complaint included sufficient “factual allegations to raise a right to relief above the speculative level” that Defendants did, in fact, use Plaintiffs’ trade secrets, and noting “there is no heightened pleading standard for a misappropriation claim.”).

[15] Free Country Ltd, v. Drennen, 16 CV 8746 (JSR) 2016 WL 7635516 (S.D. N.Y. December 30, 2016) (Granting in part plaintiff’s motion for a renewed TRO by prohibiting defendants from using or disseminating plaintiff’s confidential information, but denying plaintiff’s request that defendants be prohibited from soliciting its customers, noting New York law recognizes a specific means for plaintiff to protect information under such circumstances: a non-competition provision.).

[16] Free Country Ltd, v. Drennen, 16 CV 8746 (JSR) 2016 WL 7635516 (S.D. N.Y. December 30, 2016).

[17] First Western Capital Management Company v. Malamed, 6–cv–1961–WJM–MJW 2016 WL 8358549 (D. Colorado. September 30, 2016),

[18] Unum Group v. Loftus, 4:16–CV–40154–TSH  2016 WL 7115967 (D. Massachusetts. December 6, 2016)( Denying motion to dismiss, granting preliminary injunction despite argument that defendant’s actions were exempted under § 1836(b) of the DTSA, which provides immunity under any federal and state trade secret laws to individuals who disclose trade secrets in confidence to an attorney, “solely for the purpose of reporting or investigating a suspected violation of law.).

[19] VIA Technologies, Inc. v. ASUS Computer International, 4-cv-03586-BLF 2017 WL 491172  N.D. California, San Jose Division. February 07, 2017(Finding differences between DTSA and uniform trade secret act did not justify denying motion to add DTSA claim to trade secret suit).

[20] Kuryakyn Holdings, LLC v. Ciro, LLC 15-cv-703-jdp 2017 WL 1026025  (W.D. Wisconsin. March 15, 2017)(“The DTSA gives rise to a federal cause of action, but the parties agree that substantively the UTSA and DTSA are “essentially the same,”).

[21] Kuryakyn Holdings, LLC v. Ciro, LLC, 15-cv-703-jdp 2017 WL 1026025 (W.D. Wisconsin. March 15, 2017); Earthbound Corp. v. MiTek USA, Inc., 16-cv-1150, 2016 WL 4418013, at *10 (W.D. Wash. Aug. 19, 2016).

[22]  Adams Arms, LLC v. Unified Weapon Sys., Inc., 16–cv–1503, 2016 WL 5391394, at *5–7 (M.D. Fla. Sept. 27, 2016).

[23] Engility Corporation v. Daniels, 16–cv–2473–WJM–MEH 2016 WL 7034976 (D. Colorado. December 02, 2016).

[24] Dish Network L.L.C. v. Ramirez, No. 15–CV–04712–BLF, 2016 WL 3092184, at *7 (N.D.Cal. June 2, 2016) (balance of hardships tips in favor of plaintiff seeking injunction when it would “do no more than require Defendant to comply with federal and state…laws”).

[25] Raben Tire Co., LLC v. McFarland, 5:16-CV-00141-TBR 2017 WL 741569 (W.D. Kentucky, Paducah Division. February 24, 2017)(Noting that Raben Tire Co.’s complaint is entirely devoid of any allegations of how it protected the information in question from dissemination.).

Two Heads May Be Better Than One, But Six Heads Won’t Help You Market Your Bar

Monte Thrasher brought a VARA complaint against Marci Siegel and Co-Op 28 for painting over his “Six Heads” mural in the Los Feliz neighborhood of Los Angeles:

so that a mural of Charles Bukowski, a noted poet and tragic alcoholic, could be painted, apparently to promote a bar to be known as “Bukowski’s:

The case, Thrasher v. Siegel, 2:17-cv-03047 is pending in the Central District of California.

There are some other notable applications of Visual Artists Rights Act (VARA), of which the property owners need to be aware.  Permitting artwork to be placed on property without the proper planning, can interfere with subsequent alterations to the building.

In Henderson v. Ziman, (2:14-cv-03042-SJO-AS) (C.D. California), artist Victor Henderson sued for damages for the destruction of the mural “Brooks Avenue Painting” that he helped paint in 1969:

His complaints were apparent resolved, and the case was dismissed about four months after filing.

In Cohen v. Wolkoff, 13-CV-05612 (FB) (E.D.N.Y) Wolkoff and four corporations owned a group of commercial buildings that over the years were “decorated” by many self-proclaimed aerosol artists.  To control this problem, Cohen approached Wolkoff and offered to become the curator of any future works that would be permitted to be painted on the walls.  Although the agreement’s precise terms remain disputed, Wolkoff orally agreed to this general bargain.  Under Cohen’s guidance, the quality of the aerosol art vastly improved, and the site became known as 5Pointz and evolved into a mecca for high-end works by internationally recognized aerosol artists:

Defendants decided to raze the buildings that were the canvas for the 5Pointz project in order to build two new condominium towers. While the plaintiffs were denied a preliminary injunction, the Court recently ruled on cross motions for Summary Judgment, and plaintiff’s claim for damages for the destruction of their art will go to trial.


Transformative Use or Infringement

In Cariou v. Prince, 714 F3d 694 [106 USPQ2d 1497] (2d Cir. 2013), the Second Circuit said that a use of a copyrighted work need not comment on the original artist or work, or on popular culture, in order to constitute “transformative” use that qualifies for fair-use defense.  All that is needed to qualify as a fair use, is that the new work alters the original with “new expression, meaning, or message.  Thus the Second Circuit reversed the district court judgment that Cariou’s photograph (left) was infringed by Prince’s “transformative” image (right).

Apparently intent on testing the lower limits of “transformation,” Richard Prince has continued with his appropriation style of artistry, and has been sued by two other photographers:

In Graham v. Prince et al, [1:15-cv-10160-SHS ] filed in the Southern District of New York on December 30, 2015, Graham complained about the reproduction of his photograph with a instragram-style border:

In Morris v. Prince et al., [2:16-cv-03924-RGK-PJW ] filed in the Central District of California on June 3, 2016, photograph Dennis Morris complained about the appropriation of a portrait he published in a book by Richard Prince:

In Salazar v. Prince et al., [2:16-cv-04282-MWF-FFM] filed in the Central District of California on June 15, 2016, model/makeup artist Ashley Salazar complained about the appropriation of a selfie she posted on instagram by Richard Prince:

In McNatt v. Prince et al, [1:16-cv-08896-SHS] filed in the Southern District of New York on November 16, 2016, McNatt complained about the reproduction of his photograph with a instragram-style border:

It hard to imagine that using almost an entire image and “framing” it with a few comments and graphics is “transformative,”  and we will have to wait to see what the courts say.  The Morris and Salazar cases have been dismissed by stipulation, the Graham and McNatt are still pending.

One wonders what upsets these plaintiff’s more, the fact that virtually their entire work is appropriated by someone, or the fact that that someone sells these “transformations” for as much as $100,000!


Two Bits, Four Bits, Six Bits, a Dollar, Cheer Uniforms are Copyrightable, Stand Up and Holler!

In Star Athletica, LLC v. Varsity Brands, Inc., (March 22, 2017), the Supreme Court affirmed the Sixth Circuit that the two dimensional designs appearing on the surface of Varsity’s cheerleader uniforms were copyrightable.

The Supreme Court granted certiorari to resolve widespread disagreement over the proper test for implementing 17 USC §101’s separate-identification and independent-existence requirements.  The Court held that a feature incorporated into the design of a useful article like an article of clothing is eligible for copyright protection only if the feature (1) can be perceived as a two- or three-dimensional work of art separate from the useful article and (2) would qualify as a protectable pictorial, graphic, or sculptural work—either on its own or fixed in some other tangible medium of expression—if it were imagined separately from the useful article into which it is incorporated.

The Supreme Court noted that the Copyright Act establishes a special rule for copyrighting a pictorial, graphic, or sculptural work incorporated into a “useful article,” which is defined as “an article having an intrinsic utilitarian function that is not merely to portray the appearance of the article or to convey information.”  The design of a useful article is considered a pictorial, graphical, or sculptural work only if, and only to the extent that, such design incorporates pictorial, graphic, or sculptural features that can be identified separately from, and are capable of existing independently of, the utilitarian aspects of the article.”

The Supreme Court said that this so-called separability test applied to the designs at issue because they were incorporated into the design of a useful article.  Applying the separability test the Supreme Court said that the first requirement — that the design can be identified separately from the utilitarian article — is not onerous one need only be able to look at the useful article and spot some two- or three-dimensional element that appears to have pictorial, graphic,or sculptural qualities.

The Court said that second requirement — capable of existing independently of the utilitarian article — is more difficult to satisfy; the decision maker must determine that the separately identified feature has the capacity to exist apart from the utilitarian aspects of the article.  In other words, the feature must be able to exist as its own pictorial, graphic, or sculptural work as defined in §101 once it is imagined apart from the useful article.  This means the feature cannot itself be a useful article or an article that is normally a part of a useful article.

In the view of the Court, the ultimate separability question, then, is whether the feature for which copyright protection is claimed would have been eligible for copyright protection as a pictorial, graphic, or sculptural work had it originally been fixed in some tangible medium other than a useful article before being applied to a useful article.

The Court said that applying the separability test to the surface decorations on Varsity’s cheerleading uniforms is straightforward. First, one can identify the decorations as features having pictorial, graphic, or sculptural qualities. Second, if the arrangement of colors, shapes, stripes, and chevrons on the surface of the cheerleading uniforms were separated from the uniform and applied in another medium—for example, on a painter’s canvas—they would qualify as two-dimensional works of art.

The Court cautioned that the only feature of the cheerleading uniform eligible for a copyright in this case is the two-dimensional work of art fixed in the tangible medium of the uniform fabric. The Court said that even if Varsity ultimately succeed in establishing a valid copyright in the surface decorations at issue here, it had no right to prohibit any person from manufacturing a cheerleading uniform of identical shape, cut, and dimensions to the ones on which the decorations in this case appear. They may prohibit only the reproduction of the surface designs in any tangible medium of expression—a uniform or otherwise.


All Trade Secrets Must Be Secret; But Not All Secrets are Trade Secrets

A pair of recent illustrate two important interrelated points about trade secret law: First, all trade secrets must be secret. Second, and less obvious, not all secrets are trade secrets.

In Hawg Tools, LLC v. Newsco International Energy Services, Inc., [2016COA176M] (Colo. App. December 1, 2016), the Colorado Court of Appeals reversed the trial court award of $1.3 million for misappropriation of trade secrets relating to sealed bearing packs for mud motors used in drilling, because “the evidence
did not prove that the design of the sealed bearing pack in question was a secret.”

As the Colorado Court of Appeals noted, the subject of a trade secret must be secret, and must not be of public knowledge or of a general knowledge in the trade or business.  While the jury found, at least implicitly, that the sealed bearing pack design was secret, the Court of Appeals review of the record revealed that no reasonable person would conclude that any evidence, or any reasonable inference arising therefrom, was presented on which the jury’s verdict against defendants could be sustained.

The Court found ample evidence to establish that the two desings were essentially the same, but it did not find sufficient evidence to distinguish plaintiff’s design its from other designs that were publicly available at the same time. In other words, the evidence in the record showed that the design of plaintiff’s sealed bearing pack was “of public knowledge or of a general knowledge” in the mud motor manufacturing business.

The $1.3 million verdict could not be sustained because the trade secret was not in fact a secret.

Part II of the less comes from the jury verdict in in Zenimax Media Inc. v. Oculus VR LLC, in the Northern District of Texas.  There, the jury rejected plaintiff’s trade secret misappropriation claims:

However, on the breach of the non-disclosure agreement, the jury found for plaintiff:

The jury found that Oculus as a successor to the agreement, and responsible for damages for its breach, and awarded $200,000,000.00 in damages:

One cannot and should rely exclusively on trade secret protection under state, and now federal law — not all secrets are trade secrets, i.e., not all secrets meet the definition of trade secret under state and federal law.  However, these “non-trade secret” secrets can have substantial value.  A good non-disclosure agreement remains an essential business tool.