Trade Secrets Scenarios
1. Tycoon owns an invaluable ancient Roman coin. Tycoon occasionally allows the coin to
be exhibited at museums but generally prefers to leave it sitting locked in a special vault
in his basement. The image from the face of the coin is used to advertise the wares of
Tycoons textile factory, so it is closely associated with the business by buyers. One
evening, Katz breaks into the home while Tycoon is away, busts open the vault and steals
the coin. Tycoon contends that Katz has misappropriated a trade secret.
Q: Was the invaluable coin, locked in a vault, a trade secret?
2. Business keeps a mailing list of all the residents in Business’s area. It is well known that
the list is available for a $10 fee at the town hall. Although the list is inexpensive, it is an
indispensable part of Business’s marketing operations. Business keeps its copy under
lock & key. It also keeps a backup copy in a secure location.
Q: Does the list have the necessary economic value to qualify for trade secret protection?
3. Soda Jerk sells a popular soft drink, Waterberry. It carefully guards the formula for
Waterberry. An employee of Soda Jerk, however, obtains the formula from the safe and
sells it to a competitor. When Soda Jerk seeks to recover from the employee and the
competitor for misappropriation, they present expert evidence that a team of skilled
chemists, working with considerable resources over several months, could have reverse-
engineered the formula. Accordingly, they argue, the formula is readily ascertainable and
not a trade secret.
Q: Is the formula readily ascertainable?
4. Dr. Warren, a cancer researcher at the University of Iowa, also works one day a week at
the University’s Cancer Care clinic. He has signed an agreement that, if he leaves the
University, he will not practice for two years within 50 miles of the University. He does
leave, and takes a job with Iowa Blood and Cancer Care, in Cedar Rapids, which is
within 50 miles. He does not take any patients with him. Studies show the area is
underserved in that practice area.
Q: Can the University get an injunction against him?
5. Equine Industries develops a new formula for nutritional supplements for horses. Equine
takes a lackadaisical approach to keeping this valuable information secret and allows
suppliers, visitors, and others free access to the information. Sure enough, many people
throughout history soon know the formula. Equine knows at present it cannot sue anyone
for trade secret infringement. Equine did not take the reasonable security measures
necessary for protection. But Equine decided to introduce a rigorous security program
that stringently limits access to the formula.
Q: Is the formula then a protected trade secret?
6. Lopez develops a version of the computer programming language, COBOL. Lopez takes
a number of security measures: carefully guarding the code, limiting its distribution,
avoiding disclosing information that would allow reserve engineering, and requiring
employees to sign confidentiality agreements. Parkin and Lopez agree to a joint venture
to commercialize Lopez Cobol. Lopez allows Parkin to copy Lopez Cobol onto a
personal computer and take it with him to Arizona. The business relationship falters.
When Lopez claims trade secret protection in Lopez Cobol, Parkin responds that Lopez
has failed to take reasonable security measures, because Lopez allowed Parkin to take a
copy to another state.
Q: Has Lopez failed to take reasonable security measures?
Scenario RubricIIdentify the relevant legal issue.25 pointsRCite the relevant rule, statute, case law, or legal theory that defines the issue. Also, note the relevant public policy.25 pointsAAnalyze the facts and compare them with the relevant rules or definitions and any public policy25 pointsCForm a logical conclusion about whether the issue is being handled in such a way as to support the public policy, or if there are problems. Propose a solution if there are problems.25 points Total100 points
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