August 14, 2014, 3:00 pm
California Appellate Court Extends Trade Secret Protections The protection of intellectual property is one of the most important issues of which a business or entrepreneur must be aware. In many cases, ideas and other intangibles are the most valuable assets a startup or company may have, and there are many legal mechanisms by which they may be protected from misappropriation. For example, company logos and other identifying marks can be protected by trademarks, while particular expressions of an idea may be eligible for copyright protections. In addition, inventions can be patented, giving the patent holder exclusive rights to make, use, offer for sale, or sell the invention. While these options can effectively protect various types of intellectual property, they also require that the rights holder disclose their idea to the public at large. Trade secrets, on the other hand, do not require public disclosure, ever. In fact, soft drink giant Coca Cola has used trade secret protection to maintain secrecy regarding its eponymous soft drink since its inception. Trade secret law was codified by California when it enacted the Uniform Trade Secrets Act (UTSA) in 1984, a law which provides parties whose trade secrets have been misappropriated both equitable and legal remedies. Altavion, Inc. v. Konica Minolta Systems Laboratory Inc. While trade secret protection has its limitations, a recent ruling handed down by the California Court of Appeals has expanded trade secret protection to general ideas. In Altavion, Inc. v. Konica Minolta Systems Laboratory Inc., Altivon developed a concept and technology which encoded information into a bar code of a document, making it “self-authenticating.” Specifically, the bar codes were embedded with the original content of a document, making it possible to determine whether a purported copy of a document had been altered in any way. In addition to the concept, Altvion had developed algorithms and encoding in order to make the concept possible. In order to commercialize their product, Altivon entered into negotiations with Konica Minolta Systems Laboratory, Inc. (Konica), a company that is in the business of printing, scanning, and copying documents. As a prerequisite to their negotiations, Altivon and Konica entered into a non-disclosure agreement that required all discussions to remain confidential. The talks eventually broke down, and Altivon discovered that Konica has been filing patents for items related to Altivon’s document authentication idea and technology. Altivon successfully sued Konica in 2007 for misappropriation of trade secrets, and was awarded $1 million in damages, as well as pre-judgment interest and attorney’s fees. Konica appealed, and the appellate court again sided with Altivon in 2014. In doing so, the court rejected Konica’s assertion that “generalized ideas and inventions are protectable by patents and thus cannot be trade secrets.” Konica’s argument relied on a previous case in which a court had stated that trade secret law only protected the right to disseminate information. The appellate court did not agree that this concept controlled here, and pointed to an overlap between patent and trade secrets law. In its opinion, the court stated that “it is clear that if a patentable idea is kept secret, the idea itself can constitute information protectable by trade secret law. In that situation, trade secret law protects the inventor’s right to control the dissemination of information.” Contact a California Intellectual Property Attorney Today This case demonstrates how complicated intellectual property laws can be as well as how IP protections can overlap. In order to determine which type of IP protection is most appropriate for your idea, you should discuss your case with a lawyer. Attorney Nate Kelly practices in intellectual property law in the San Francisco and Los Angeles markets. To schedule a free consultation, call us today at (310) 228-6215 from Los Angeles and (415) 336-3001 from San Francisco.