USA Law and Practice Contributed by: Claudia Ray, Joseph Loy, Josh Berlowitz and Andrew (Keum Yong) Lee, Kirkland & Ellis LLP
1.9 Duration of Protection for Trade Secrets Trade secrets may remain protected indefinitely, so long as the trade secret owner maintains the secrecy of the trade secret. Accidental or intentional public disclosure may terminate trade secret protection, but such considerations are generally fact-based inquir - ies. Controlled disclosure of a trade secret – eg, for licens - ing or limited disclosure to third-party vendors and employees for business purposes – generally does not nullify trade secret protection. Owners of trade secrets should accompany any controlled disclosure of their trade secret with non-disclosure agreements, company policies or alternative safeguards that main - tain the confidentiality of the trade secrets. 1.10 Licensing A trade secret owner has a right to license the trade secret to a licensee through a contract or licensing agreement. The licensee may pay the trade secret owner royalties in exchange for using the trade secret. The trade secret owner must still take reasonable steps to maintain the secrecy of the trade secret in order to retain trade secret protection. See Turret Labs USA, Inc v CargoSprint , LLC, 2022 WL 701161, at *2–3 (2d Cir. Mar. 9, 2022). For example, the licensing agreement may contain a confidentiality restriction or a non-disclosure provision. The licensing agreement may require the licensee to pay the trade secret owner royalties even if the licensed information is no longer sufficiently secret to qualify as a trade secret, unless the agreement spe - cifically states otherwise, depending on state con - tract law – eg, Nova Chemicals, Inc v Sekisui Plastics Co , 579 F.3d 319, 328 (3d Cir. 2009) (“Trade secret licenses may endure even where the trade secret itself is destroyed by general disclosure”); Warner-Lambert Pharm Co v John J Reynolds , Inc, 178 F Supp 655 (S.D.N.Y. 1959), aff’d, 280 F 2d 197 (2d Cir. 1960). 1.11 What Differentiates Trade Secrets From Other IP Rights One primary difference between patent and trade secret protection is public disclosure. Unlike a trade secret, which does not have to be registered and
Similarly, reverse engineering the alleged trade secret from a commercially available product would not be an “improper means” of acquiring the information under trade secret laws (although such activity could violate agreements, such as those imposed by “shrink-wrap” or “click-wrap” licences). Both independent discovery and reverse engineering also suggest that the alleged trade secret is not difficult to properly acquire or dupli - cate, a factor often considered in evaluating whether trade secret protection is warranted. Independent discovery and reverse engineering can therefore be valuable defences to a defendant faced with allega - tions of trade secret misappropriation. Two parties could conceivably develop the same trade secret independently and without knowledge of the other’s development, and both parties would have independent causes of action against third parties for misappropriation. For the same reasons discussed in the foregoing, however, neither party would be able to successfully recover against the other for trade secret misappropriation. 1.8 Computer Software, Artificial Intelligence and Technology Certain aspects of computer software, artificial intelli - gence (AI) and technology, such as proprietary source code, AI training data and algorithms and internal software design and architecture materials, may be protectable trade secrets under the DTSA and various state trade secret laws if the ordinary standards for trade secret protection are met. There are no specific protections that are unique to computer software, AI and/or technology. Aspects of software that are apparent to an end user, such as the software’s general functionality or user interface, or an AI model’s outputs, are unlikely to receive trade secret protection unless the end user licence or other agreement imposes an obligation to keep this kind of information secret. The Computer Fraud and Abuse Act (CFAA) also establishes civil and criminal penalties for knowingly or intentionally either accessing a protected computer (without authorisation) or exceeding the authorised level of access.
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