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Category: Bright Ideas

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BRIGHT IDEAS: Trade Secrets, Law and Practice

quinto_trade_secrets.jpgAs the second book in the Bright Idea series we have Trade Secrets, Law and Practice (Oxford University Press). David Quinto and Stuart Singer are the authors. David is a founding partner and head of internet litigation at Quinn Emanuel Urquhart Oliver & Hedges in Los Angeles, CA. Stuart Singer is a partner at Boies, Schiller & Flexner, LLP. I know David from my time at Quinn Emanuel and from our work together on The Law of Internet Disputes (Aspen).

The case that spurred David to write Trade Secrets was in its early stages when I was at the firm. Now, more than ten years later, the book is out. It has drawn priase from Jim Pooley (the author of one of the most useful treatises on trade secret law), Lance Liebman (a former Columbia Law School dean who now heads the American Law Institute), and Martha Barnett (a former ABA president). So here is David explaining what drove him to explore the way trade secrets operate and the journey involved in writing the book. With that, here’s David.

DAVID QUINTO:

Trade Secrets: Law and Practice has been a long time in the making. Almost ten years ago, I got involved in a knock-down, drag-out trade secrets dispute between my client, Avery Dennison, and 3M. Avery had innocently hired three of 3M’s R&D people: one contacted Avery seeking a job in Los Angeles because his fiancée had moved there and his 3M job had just been terminated; a second wanted to re-locate to Los Angeles to be near family and landed at Avery after a head hunter sent his resume there; and the third decided to move to California after he was transferred by 3M to a facility more than an hour’s drive from his home. The three employees had worked for 3M in upstate New York, Minnesota, and Canada. Significantly, none had worked on any product competitive with anything Avery manufactured. In Los Angeles, Avery did not see any particular problem. From 3M’s viewpoint in St. Paul, however, matters appeared more ominous. 3M and Avery competed in many areas and not only had Avery hired three R&D employees in quick succession, but all three were intimately familiar with technologies that could potentially be useful in manufacturing Avery’s products.

The litigation lasted several years. In the process, the parties conducted exhaustive discovery. Among our surprises were the discovery that 3M’s crown jewel trade secret had been patented (and, hence, wasn’t a trade secret at all) and that another claimed trade secret had been surreptitiously published by 3M as a hedge against the possibility that a competitor might independently discover it and attempt to patent it. At the end, there was no evidence of any use of any 3M information by Avery. However, by the time the parties entered into a confidential settlement following a three-day mediation, 3M had spent more than $30 million in attorneys’ fees leaving no stone unturned. Avery’s fees were substantially less, but were nonetheless substantial.

I was assisted in the litigation by my then-partner, Warrington Parker. On cold Minnesota nights, we thought about what the parties might have done differently to avoid incurring enormous legal fees fighting over nothing. We thought about how to prove a negative, that no information had been misappropriated. And we war-gamed the possible injunctive moves the parties could make given that the employees were all subject to non-compete agreements and given that California adamantly refuses to enforce such agreements. Could the employees be sued elsewhere? Could Avery be sued for inducing breach of contract? What would the Full Faith and Credit clause of the Constitution require with respect to enforcing in California a judgment entered elsewhere? What could be done to preempt a claim brought in another state?

After the suit was over, I continued think about problems unique to trade secrets litigation. For example, a number of states reject the doctrine of “inevitable disclosure” as a basis to award injunctive relief, but almost every state has a statute allowing a “threatened” misappropriation to be enjoined. What’s the difference? Will a “threatened” misappropriation justify the issuance of a permanent injunction, or merely a preliminary injunction? Is different injunctive relief available if a misappropriation is “inevitable” as opposed to “threatened”? Do the states that enjoin “inevitable” disclosures always do so, or only when a non-compete agreement is involved? How can a defendant find an expert to opine that something is not a trade secret when no competitor will disclose its manufacturing process? Which states will require a trade secret plaintiff to identify its trade secrets with reasonable particularity before commencing discovery? Is a state law requirement that the plaintiff identify its trade secrets before commencing discovery enforceable in federal court? Do different states follow different rules in determining whether and when ancillary claims will be preempted by a trade secret misappropriation claim? When might such claims be preempted even if no trade secret misappropriation is alleged? What defenses are unique to trade secret litigations and how are they established?

I believed that a book exploring the ins-and-outs of trade secret litigation on a state-by-state basis, written from each the plaintiff’s and the defendant’s perspective, would be useful. I also thought it would be useful to consider what measures could have been undertaken to prevent the misunderstandings that led to the 3M v. Avery litigation, the steps that a trade secret owner could take to investigate and prepare for a possible claim, how to protect trade secrets at trial, and when it makes sense to seek criminal prosecution of a trade secret thief. Eventually I submitted a book proposal to Oxford University Press, which circulated it for peer review. One of the reviews, shared with me anonymously, appeared to have been written by a law school friend, Stuart Singer. Stuart served as president of the Harvard Law Review, was asked to clerk for the U.S. Supreme Court immediately upon graduation, and is now a partner of David Boies at the Boies, Schiller & Flexner firm. I put it to him: if you’re so enthusiastic about the idea, why don’t you help me write the book? I’m enormously grateful that he agreed to do so.

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BRIGHT IDEAS: Robert Tsai on Eloquence & Reason

eloquence and reason.jpgI am pleased to have Robert Tsai as our first author in the Bright Ideas series. Robert is an associate professor at American University. He started teaching at the University of Oregon, where he received the university’s Lorry I. Lokey Award for exemplary interdisciplinary scholarship and the law school’s Orlando J. Hollis Teaching Award. His papers have twice been selected for the Stanford-Yale Junior Faculty Forum: once in constitutional theory and once in constitutional history. Before becoming a professor, Robert clerked for Hugh H. Bownes, U.S. Court of Appeals for the First Circuit, and Denny Chin, U.S. District Court for the Southern District of New York. His primary research interests include American political culture, the discourses of popular sovereignty, radical constitutionalism, the rules of criminal procedure, and the interaction between courts and other institutions. And Robert has guest blogged with us too.

So here is Robert Tsai on his book, Eloquence & Reason, (Yale University Press, 2008)

ROBERT TSAI:

For as long as I can remember, I have believed in the First Amendment. But I could not put my finger on the source of this vague feeling, which ripened over time. I could not recall anyone telling me I had to obey that provision, above all others, in the United States Constitution. It just made sense. Initially as an immigrant to this country and later as a student in the public schools, I took it on faith that to be an American was to enjoy the rights to express myself and to worship as I saw fit.

Even as I began to doubt that any complex democracy could actually strike a maximal rights posture, I remained struck by just how deeply ingrained this default position was. The modern First Amendment persists even though most countries have considered and rejected the strong pro-rights position. It occurred to me that, for better or worse, the values of the First Amendment comprise elemental features of American national identity. A number of distinguished thinkers have devoted their careers to assessing whether privileging freedom of expression is normatively desirable. I have been more interested in how we arrived in such a state of affairs and what it says about our political order.

The challenging question is: how do you prove these intuitions about the First Amendment to be true? Eloquence and Reason tackles this project mostly by showing how activists, lawyers, judges, and even presidents have employed the First Amendment. In the process, they created and helped to sustain a political culture in which certain political values became privileged. An ever-tighter linkage was created in the public mind between the First Amendment and the citizen’s sense of self. A language of rights arose and became systematized. Citizens learned to characterize a wide range of social matters as First Amendment problems, and advocates became highly skilled at leveraging the comparative advantages of the various forms of constitutional discourse.

To illustrate these themes, the book juxtaposes activists who agitated for civil rights for African Americans in the 1960s with social conservatives who sought to alter the law’s relationship with people of faith in the final decades of the twentieth century. It also examines how presidents can change the way people talk and think about constitutional rights. I discuss how Franklin Roosevelt prioritized the right of conscience—an idea not mentioned in the Constitution—and thereby pressured the Supreme Court to give it greater credence. Similarly, Ronald Reagan accentuated the right of religious expression and discouraged separationist discourse in constitutional debate.

It turns out that the actual wording of the First Amendment has played a relatively small part in how the law has developed. Instead, human beings turned to the language of the Constitution to master the world around them. Except in rare cases, the Constitution does not dictate answers so much as it empowers people to battle over plausible answers. It’s an unsettling answer to some, but it’s the only satisfactory answer for why people respect the Constitution even if they have never read it; and for why one can obey the First Amendment even though a denizen of eighteenth century America would have had difficulty imagining its current form.