Patent and Trade Secret Law
Autumn 1997

Question 1

Maurice Chandreau was raised in the Loire Valley of France and had followed family traditions by entering into the wine growing life (the term industry seems far too antiseptic to capture the glory and drudgery of winemaking). Certain allowances must be made to the changing of times however, and unlike his father, and his father's father.

Maurice learned winemaking not only through working in the family vineyards but also attending University and getting a degree in oneology. At first Maurice found Southern California a big, shock, but as time went on he-grew to love the University of California at Davis. AS graduation drew near he decided to take a job at one of the proliferating wineries in California. Life was great. The winery Maurice was the vintner at, Grey Rock Vineyard, won numerous medals. Vintages sold out completely at premium prices and the good times were prevalent. Maurice bought a Ferrari Daytona Spyder, but deep down he needed some challenge, because success had been too easy.

Maurice was interested in developing fine German style white wines (clearly this was going to be a challenge) and chose a complex and little known style that roughly translated from the original German means "spiced pear nectar". The spiced component of the wine came from a natural yeast that grew only on the skin of the specific varietal grape. The problem was that the growing conditions in California were too fortuitous and the grapes grew in sugar content too fast.

Maurice solved this problem by altering the grape plant by recombinant means to allow the yeast to thrive on the grape skin sooner than it would in the natural plant. Maurice recognized the specifics of particular modification in August 1995, actually altered the grape seeds in October of 1995, planted the seeds and waited until October of 1997 to gather the first harvest, when the grapes allowed sufficient yeast growth to provide the correct balance and spiciness, as far as can be told with a nouveau wine.

Billy Ray Scoggins was born in Dead Horse, Texas and never followed any of the family traditions. Perhaps Because his family was rich and like many of the idle rich, he was perpetually in search of himself. He attended University and completely dissappointed his family by mastering in microbiology. He was well on way to a doctorate when a misunderstanding between the University and himself ensued about the use of the water tower as a wort vat lead to his dismissal. His failed experiment is still noted in Ripley's believe it or not as the largest beer brewing vessel ever, and may not have been so poorly taken if he had not been at Oral Roberts University. Billy left to tour Europe and when he became stranded in France found part-time work in a vineyard. Time passed and in 1994 Billy decided to encourage the owner of the vineyard to modify he grapes to allow for quicker growth. As fortune would have it Billy modified a German varietal that was to be planted in the vineyard. The varietal was the same as Maurice had chosen, and the modification was the exact same. Billy planted the grape in 1994, but a harvest was not concluded until November 1997, due to the late harvest season. The grapes were excellent.

Billy has filed for a French patent on the modified grape, and the wine made from the modified grape on December 1, 1997, and will file in the United Sates in February of 1998. Maurice filed a U.S. patent on November 15, 1997 claiming the grape.

Who will succeed in getting a U.S. Patent as between Billy and Maurice?. What claims will they get? What provisions of the law are necessary to resolve this question?

Question 2

The patent laws of the United States of America are directed to promoting progress of the useful arts. By offering inventors exclusive rights to their inventions, the patent system provides an incentive to individuals to produce innovations that profoundly change society in physically and spiritually.

This system works in almost a mystical fashion, as it did with Ted Occhliano, who upon becoming aware of patents recognized the various profound problems surrounding him in New Mexico and invented a tremendously improved chili roasting device and had it patented in 1996. Society enjoyed a tremendous leap forward and Ted became known as a hero. Such status comes with many benefits and a few burdens. Ted created a nonprofit charitable institution to assist students across the United States to better learn to write federal pleadings (the Center for Holisitic Inquiry of Law and Inquiry hereafter CHILI), and donated all proceeds from his chili roaster to this cause. While most people were pleased with CHILI a few grew very jealous and plotted to get even.

Ted felt- good that he had applied for and received a patent covering his chili roasting machine and the method of using, the machine to roast chilis (he did not use the biotechnology exemption under 35 USC 103, but rather relied upon rebutting the presumption of obviousness used in In re Dillon. Ted's chili business has met with great commercial success completely attributable to the roaster machine and method.

Wally "Vermont" Huxster, a well educated business person with expertise in patent law decided that a business opportunity existed in the market of chili roaster machines. He manufactured various parts of the machine and sold these kits to customers who bought off-the-shelf parts, such as common electric motors, propane burners and wheels, to complete the kits. A number of these kits were bought by a Canadian business, Muller, Ltd., located in Fort Erie, Ontario, right across the Buffalo river from Buffalo, New York. Muller completed a number of the machines and then produced larger versions of the same in order to roast peppers that they sold to businesses in Buffalo through their U.S. subsidiary, Muller, U.S.A. Muller also sold a hot-wing sauce using the peppers to various restaurants in the United States. This sauce used a secret combination of spices and won numerous awards for its excellence.

a. Please advise Ted as to whether he will be able to enforce his patent against these activities.

b. Explain what kinds of proof are necessary to win any of these actions.

c. Will Ted need to give any forms of notice to, the defendants in order to start remedies accruing?

Question 3

Moe Wimp invented, developed and patented a submersible apparatus for Wimp operations as described in U.S. Patent No. 5,000,000. Moe sold some of these submersibles to purchasers under the agreement that the submersible were to be used only for salvaging. At the same time Moe started a business using the submersibles to maintain and repair underwater structures such as drilling derricks, floating piers and bridges, the hulls of ships, etc. In order to achieve these various maintenance jobs several tools were developed by Moe's business that were kept as trade secrets. Only the operators of the submersibles were given access to the tools, everyone in the company was under contractual confidentiality, and the tools themselves were kept in black locker boxes except when they were deployed underwater on the submersibles.

As it turned out the real value of the patented submersible was not as a salvage craft, but rather as an underwater handyman. Moe's business flourished and whenever he was given the chance to buy one of his submersible, he did. An independent consultant, Rudy Role, noted that the limit on the growth of the business was the supply of submersibles.

Subsequent to this realization Rudy became aware that two submersibles leased to Bermudan Navy were "on the market". The leases allowed reassignment and so, seizing the reigns of fate, Rudy leveraged his liquid assets and bought the leases to both Bermudan submersibles. While Rudy had never operated one of the submersibles he did know all of the various suppliers that Moe had used, and upon quitting approached each of the suppliers to make "cleaning tools". Rudy hired various ex-employees and bid for the maintenance contract for the Naval base at Portsmouth, New Hampshire which he received. The contract calls for a total payment of $3.22 mm over three years.

Rudy asserts that he got the contract because he has a security clearance and his brother in law is the harbormaster. Furthermore, Rudy asserts that Moe would never have gotten the contract because of his membership in the Thespian Socialist Party during his college years.

What causes of action might be available to Moe? Assume New Hampshire Trade Secret Law applies and that all activities are within the United States. Please cite the statutory basis for your opinion.



*** (1996 REGULAR SESSION) ***


RSA 350-13:1 (1996)

350-B: 1. Definitions

As used in this chapter, unless the context requires otherwise:

I. "Improper means" includes theft, bribery, misrepresentation, breach or inducement of a breach of a duty to maintain secrecy, or espionage through electronic or other means.

II. "Misappropriation" means:

(a) Acquisition of a trade secret of another by a person who knows or has reason to know that the ,trade secret was acquired by improper means: or

(b) Disclosure or use of a trade secret of another without express or implied consent by a person who:

(1) Used improper means to acquire knowledge of the trade secret; or

(2) At the time of disclosure or use, knew or had reason to know that his knowledge of the trade secret was derived from or through a person who had utilized improper means to acquire it: or acquired under circumstances giving rise to a duty to maintain its secrecy or limit its use; or derived from or through a person who owed a duty to the person seeking relief to maintain its secrecy or limit its use; or

(3) Before a material change of his position, knew or had reason to know that it was a trade secret and that knowledge of it had been acquired by accident or mistake.

III. "Person" means a natural person. corporation. business trust, estate, trust, partnership, association, joint venture, government, governmental subdivision or agency, or any other legal or commercial entity.

IV. "Trade secret" means information, including a formula, pattern, compilation, program, device, method, technique, or process, that:

(a) Derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by, other persons who can obtain economic value from its disclosure or use-. and

(b) Is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.

NEW HAMPSHIRE REVISED STATUTES ANNOTATED Copyright (c) 1996 by The Director of Legislative Services of the State of New Hampshire and Michael, a division of Reed Elsevier Inc.

All rights reserved.


*** (1996 REGULAR SESSION) ***


RSA 350-B:2 (1996)

350-B:2. Injunctive Relief

I. Actual or threatened misappropriation may be enjoined. Upon application to the court an injunction shall be terminated when the trade secret has ceased to exist, but the injunction may be continued for an additional reasonable period of time in order to eliminate commercial advantage that otherwise would be derived from the misappropriation.

II. In exceptional circumstances, an injunction may condition future use upon payment of a reasonable royalty for no longer than the period of time for which use could have been prohibited. Exceptional circumstances include, but are not limited to, a material and prejudicial change of position prior to acquiring knowledge or reason to know of misappropriation that renders a prohibitive injunction inequitable.

III. In appropriate circumstances, affirmative acts to protect a trade secret may be compelled by court order.

NEW HAMPSHIRE REVISED STATUTES ANNOTATED Copyright (c) 1996 by The Director of Legislative Services of the State of New Hampshire and Michie, a division of Reed Elsevier Inc.

All rights reserved.



RSA 350-B:3 (1996)

350-B:3. Damages

I. Except to the extent that a material and prejudicial change of position prior to acquiring knowledge or reason to know of misappropriation renders a monetary recovery inequitable, a complainant is entitled to recover damages for misappropriation. Damages can include both the actual loss caused by misappropriation and the unjust enrichment caused by misappropriation that is not taken into account in computing actual loss. In lieu of damages measured by any other methods, the damages caused by misappropriation may be measured by imposition of liability for a reasonable royalty for a misappropriator's unauthorized disclosure or use of a trade secret.

II. If willful and malicious misappropriation exists, the court may award exemplary damages in an amount not exceeding twice any award made under paragraph I.