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PART Ⅰ THE BASICS 1

Chapter r Trade Secrets—The Basics 3

1.1 Apache Helicopter Airstrikes and Lady Gaga 3

1.2 An Introduction to Trade Secrets 5

1.3 Trade Secrets—Definition and Four Famous Examples 6

1.3.1 Information 6

1.3.2 Secrecy 7

1.3.3 Value 9

1.3.4 Reasonable Efforts 10

1.4 Trade Secret Theft： Defining "Misappropriation" 11

1.5 Remedies for Trade Secret Misappropriation 13

1.5.1 Nonmonetary Relief 13

1.5.2 Monetary Relief 16

1.6 Criminal Trade Secret Law 17

1.7 Trade Secrets vs.Patents： When Trade Secrets Are the Best Strategy and When They’re Not 18

1.8 Summarizing Trade Secret Law 21

Chapter 2 Trade Secrets in Context： Why Trade Secrets Are Increasingly Important to Businesses, Employees, and the Economy 22

2.1 The Customer List in the Age of Google, LinkedIn, and Facebook 22

2.2 The Evolving Technologies, Social Norms, Politics, Economics, and Dozens of Other Factors That Shape the Use and Misuse of Trade Secrets 24

2.3 Trade Secrets Were Slow to Develop, Quick to Proliferate 24

2.4 New Technology 25

2.5 Employee Mobility and Attitudes 27

2.6 Increasing Value 29

2.7 The Flexible (and Expanding) Scope of Trade Secret Law 30

2.8 The Future of Trade Secrets 30

PART Ⅱ FOUR KEYS TO A SUCCESSFUL TRADE SECRET STRATEGY 33

Chapter 3 Key No.Ⅰ： How to Recruit, Hire, Train, and Terminate Employees 35

3.1 Mr.Chang’s ＄200 Million "Resignation" 35

3.2 Employees Are the Primary Source of Trade Secret Misappropriation 36

3.3 How to Recruit and Hire Employees 37

3.3.1 Vet Applicants with an Eye Toward Trade Secret Protection 37

3.3.2 Agreements with Incoming Employees 38

3.3.3 Hiring from Competitors 38

3.4 How to Train Employees 40

3.5 How to Terminate Employees 41

3.6 An Argument Against Doing Nothing 44

3.7 How to Avoid a ＄2oo Million Resignation 45

Chapter 4 Key No.2： Information Security 46

4.1 Founder of Alpha Mining Systems： "I was like the husband whose wife was getting it on the side" 46

4.2 The Right and Wrong Lessons from the Tale of Alpha’s Plundering 47

4.3 One Size Does Not Fit All 48

4.4 Basic Protections for Information 49

4.4.1 Limit Access to Information to Only Those Who Need It 49

4.4.2 Place Legends on Documents and Files 49

4.4.3 Implement an Information Tracking System 51

4.4.4 Dispose of Information Properly 52

4.4.5 Regulate Information That Must Leave the Company 52

4.4.6 Encourage Reporting of Violations and Investigate and Punish Violations 53

4.5 Basic Protections for Electronic Information 53

4.6 Non-memorialized Data 56

4.7 Rules for Receiving Trade Secrets from Outsiders 56

4.8 Government Liaisons 58

4.9 Information Security Should Not Be Static 58

Chapter5 Key No.3： Physical Security 60

5.1 A Business Feud Turns Toxic 60

5.2 The Non-digital World of Break-Ins and Dumpster Diving 61

5.3 Securing Physical Confidential Information and the Facilities That House Such Information 62

5.4 Be Wary of Visitors 65

5.5 A Closing Note About Employee Resistance 66

Chapter 6 Key No.4： Agreements to Protect Trade Secrets 68

6.1 Dampening the Aloha Spirit 68

6.2.The Importance of Written Agreements 70

6.3 Confidentiality and Invention Assignment Agreements with Employees 72

6.4 Confidentiality Agreements with Outsiders 74

6.5 Parties That Refuse to Sign Confidentiality Agreements 76

6.6 Noncompention and Nonsolicitation Agreements 77

6.7 Confidentiality Agreements Protect Against Most Threats 78

PART Ⅲ TRADE SECRETS IN PRACTICE 79

Chapter 7 Investigating Suspected Trade Secret Thefi 81

7.1 Informix to Commuting Oracle Employees： "Caution： Dinosaur Crossing" 81

7.2 Avoiding Informix’s Fate 83

7.3 Act Immediately in Response to Suspected Trade Secret Misappropriation 84

7.4 Attorneys Should Direct the Investigation 85

7.5 Conducting a Trade Secret Investigation 86

7.5.1 Gathering Information 87

7.5.2 Interviews 87

7.5.3 Monitoring 88

7.6 The Investigation Is Over.Now What? 89

7.6.1 Do Nothing 89

7.6.2 Fix the Leak 89

7.6.3 Talk to the Alleged Misappropriator 9o 91

7.6.4 Send Letters 9o 91

7.6.5 Alternative Dispute Resolution 91

7.6.6 File a Civil Lawsuit 92

7.6.7 Notify Law Enforcement 92

7.7 Look First, Leap Second 93

Chapter 8 Knowing What You’ve Got and Whether You’re Doing Enough to Protect It：A Trade SecretAudit 95

8.1 An "Information Addict" Misappropriates ＄400 Million in DuPont’s Trade Secrets 95

8.2 A Trade Secret Audit Defined 96

8.3 To Audit, or Not to Audit? 97

8.4 The Audit Team 98

8.5 The Content of a Trade Secret Audit： Identifying the Company’s Trade Secrets,Their Location, Their Value, and What Is Being Done to Protect Them 99

8.6 The Audit Report 102

8.7 Acting on the Audit Report 103

8.8 Audit, Report, Then Repeat (a Few Years Later) 104

Chapter 9 Trade Secret Litigation： What to Expect When You’re Litigating 106

9.1 Night Raids and an Accidental "Confession" in the Case That Wouldn’t Die 106

9.2 Working with Counsel 107

9.3 Early Decisions in Trade Secret Litigation 109

9.4 Important Trade Secret Litigation Lessons If You Are the Victim 112

9.4.1 Don’t Pretend Everything Is a Trade Secret 112

9.4.2 Coordinate Litigation Strategy with Non-litigation Conduct 113

9.4.3 Expect the Accused to Go on the Offensive 115

9.4.4 Consider the Impact on Customers, Suppliers, and Other Stakeholders 116

9.4.5 Identify and Remember Your Goals 117

9.5 Important Trade Secret Litigation Lessons If You Are the Accused 119

9.5.1 Don’t Make the Situation Worse 119

9.5.2 It Will Not Go Away Because You Ignore It 120

9.5.3 Don’t Allow the Plaintiff to Rely on Vague Descriptions of Its Trade Secrets 121

9.5.4 Conduct Your Own Investigation 122

9.5.5 Don’t Wait to Take Appropriate Action—Be Proactive 124

9.6 The Company That Ignores Trade Secrets Does So at Its Peril 126

APPENDIX A—LIST OF CASE STUDIES 127

NOTES 129

INDEX 143