The Other IP Trade Secret Law and 3D Printing

Reprinted with permission. The original article appears at http://www.inside3dp.com/ip-trade-secret-law-3d-printing/

Patent law and patent infringement litigation take up a lot of the bandwidth when it comes to discussions about intellectual property (“IP”) and technology, including 3D printing technologies. But patent infringement litigation has become more expensive and changing legal standards have made patent-based litigation increasingly difficult.

These problems have combined to turn trade secret law into the new darling of IP litigation ―and 3D printing will likely see its fair share of trade secret disputes. Unlike patent law, trade secret law does not require any filings or government office approvals as a pre-condition to protection. As a result, smaller and less-well funded 3D printing innovators may look to trade secret law to defend their proprietary innovations and competitive advantage. And 3D printing industry’s rapid expansion and consolidation make employees with 3D printing experience great targets for recruitment, another instance where trade secret claims often come up. Using trade secret law to protect proprietary 3D printing advancements has both its advantages and challenges, as the following review of trade secret law reveals.

Trade Secret Law

Trade secret law’s popularity starts with what can be a trade secret. Though the specifics vary from state to state―and for now trade secret comes from state law rather than a single federal source ― most state laws use a broad definition. That means anything from a formula, practice, process, design, instrument, pattern, or compilation of information may be a protectable trade secret, but only if certain conditions are met. Specifically the claimed secret must:

• Provide a competitive advantage
• Not be generally known in the industry; and
• Have had appropriate efforts made to keep it secret.

Some form of trade secret protection exists in all 50 states. Most states use a version of the Uniform Trade Secrets Act and the few that don’t offer similar protection based on their own common law.

Unlike patent litigation, a trade secret can be protected without proving the claimed secret’s usefulness, newness or non-obviousness. Unlike copyright — where registration isn’t required but provides additional advantages — the amount of a trade secret recovery does not depend on following a statute or registering something.

Instead, when trying to decide whether or not something is a trade secret that gets protection, courts look at:

• The extent to which the information is known outside the business;
• The measures taken to guard its secrecy; and
• The ease or difficulty someone would have finding out the secret on their own.

To get damages for someone taking the secret—or “misappropriation” under trade secret law―the trade secret owner must prove that someone else knowingly either directly or indirectly took the secret through improper means or through breach of a duty to keep it secret.

Trade Secrets and 3D Printing

Trade secret litigation could become a part of the 3D printing story in a variety of ways. Some individual users may grow to commercial scale using interesting adaptations, modifications, and processes that could be trade secrets. And many industries have already embraced the rapid prototyping 3D printing allows. Wherever it is used, the inherent portability of 3D printing files will make it easier for trade secrets in those files to be improperly used.

One case involving 3D printing shows how trade secret claims can also come up in employment situations. In Fisher/Unitech, Inc. v. Computer Aided Tech., Inc., a trade secret claim came out of the merger of Stratasys and Objet. The case arose after an employee moved from one certified 3D printer reseller to another, both of which, after the merger, sold Stratasys and Objet printers. Before the employee left, the employee took documents that included sample price quotes. The parties stipulated to the entry of a preliminary injunction with respect to any proprietary information. The court, however, rejected Fisher/Unitech’s request to enforce the employee’s non-compete agreement. The court decided that since Fisher/Unitech had already secured agreed injunctive relief to protect its proprietary information, enforcement of the non-compete agreement was unnecessary. The court also rejected Fisher/Unitec’s reliance on the inevitable disclosure doctrine, concluding that no real confidential information existed; the claimed confidential information was actually built upon information provided by the manufacturer and through “on the job training” and “trial and error.”

Beyond illustrating the value employees with 3D printing knowledge will have, Fisher/Unitech shows some of the potential difficulties that come with using trade secret law and non-compete agreements to protect proprietary information. Challenges include detecting and proving trade secret theft within an industry that has a highly mobile workforce and the, sometimes, subjective determination around what is actually a protectable trade secret.

Conclusion              

As 3D printing continues its expansion, everyone from makers to manufacturers will look to IP law to protect competitive advantage. For some, trade secret law will provide an effective and potentially more affordable way to do just that.