TRADESECRETSINCLOUDCOMPUTING

[FINALTHESISPAPER]

KHYATIDHULIA

UNIVERSITYOFWASHINGTONSCHOOLOFLAW

SPRING2010

ADVISOR:PROF.G.ROBERT

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TableofContents

I. ABSTRACT...................................................................................................................................... 3

II. INTRODUCTION ............................................................................................................................ 3

III. BASICINTRODUCTIONTOCLOUDCOMPUTING........................................................................... 5

IV. OVERVIEWOFTRADESECRETLAW.............................................................................................. 8

V. THEPROBLEM:TRADESECRETLAWAPPLIEDTOCLOUDCOMPUTING ........................................ 30

VI. MEASURESTOBEADOPTEDBYENDUSERTOSAFEGUARDTRADESECRETUNDERREASONABLE

STANDARDTEST................................................................................................................................. 36

VII. CONCLUSION ........................................................................................................................... 41

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I. Abstract

Trade secrets provide protection against the misappropriation of undisclosed information

whichhas economic value andwhich theowner has taken reasonable steps to protect from

disclosure. The paper analyzes and discusses the legal issues of hosting data in the cloud in

contextoftradesecret law. Itstartswithbasic introductiontocloudcomputingandexplains

thedifferenttypesofservicesofferedtotheenduserbythecloudserviceprovider.Itdiscusses

in detail the reasonable standard test under the doctrines of various judicial principles and

enumerates the steps, which the various courts have regarded as reasonable. It lists all

measuresthattheenduserofcloudcomputingservicescantaketosafeguardthetradesecret

under reasonable standard test. The discussion goes on further to understand the various

jurisdictional issues that arise because the data in the cloud might be stored in different

locations. At the end, it provides a checklist that could help the end user to leverage the

benefitsofcloudcomputingwithoutlosingthetradesecretstatusofdataorapplication.

II. Introduction

“Ifnaturehasmadeanyonethinglesssusceptiblethanallothersofexclusiveproperty,itisthe

actionofthethinkingpowercalledanidea,whichanindividualmayexclusivelypossessaslong

ashekeeps it tohimself;but themoment it isdivulged, it forces itself into thepossessionof

everyone,andthereceivercannotdispossesshimselfofit”1.

1Deborah Azar, Method to protect computer programs: the integration of copyright, trade secrets, andanticircumventionmeasures. Utah L. Rev. 1395 (2008) Original Citation: Letter from Thomas Jefferson toIsaacMcPherson (Aug. 13, 1813), 13, THEWRITINGSOFTHOMAS JEFFERSON326, 333–34 (Albert ElleryBerghed.,1907).

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Thequintessenceofheartofthetradesecretlaw2isthattheinformationisprotectedaslong

as, it iskeptasecret.Oncetheinformationisexposed, it losesthesecrecycomponentandis

available for use to the rest of the world. Information technology is rapidly changing the

mechanism in which information is acquired, processed, organized and stored in various

applications.Thisexplosivegrowthintheexchangeofinformationbringsnewchallengestothe

relevanceandapplicationoftradesecretlaw3.

Moreover, theemergenceof the Internetanddigitalizationareposingnewchallenges to the

oldandestablishedprinciplesoftradesecretlaw.TheadventofInternetanddigitalizationhas

a lasting impact inthemanner,weprotectandsafeguardourtradesecrets.Tradesecret law

has not changed in last twenty years, and therefore emergence of electronic storage and

disseminationof company’smostprizedbusiness strains the law’s ability toprotect valuable

information.4.The new technological breakthrough in the arena of technology is cloud

computing.Whencompaniesusecloudcomputing,they,nolongerhavetostoredataintheir

owndatacentersbutinsteadstoreitincloudandleveragetheeconomiesofscaleandresulting

costsavings.Informationstoredinsafetyofone’shouse,office’sprivateserverorharddiskin

comparisonwithstorageinthirdparty’sremotedatacenterposesquestionnotonlyaboutthe

securityoftheinformationbutalsoaboutprotectionaccordedunderregimesoflawliketrade

secret.Tradesecretlawisoneofthemostelusiveanddifficultconceptsinthelawtodefine5

2RobertC.Dorr&ChristopherMunch,ProtectingTradeSecrets,Patents,CopyrightsandTradeMarks,§2.01[B],ThirdEdition,WileyLawPubns(1980)3Arbi.B.Good,TradeSecretsandtheNewRealitiesoftheInternetAge2.Marq.Intell.Prop.L.Rev.51(52‐54)(1998)4BabraaL.Moore.ProtectingtradesecretsontheInternet.ExecutiveCounsel,http://www.eapdlaw.com/files/News/44bbfbfe‐67c9‐407c‐a160b3da02488307/Presentation/NewsAttachment/26a05ae8216c4dc983f5bc4b3d016c99/Protecting%20Trade%20Secrets_Barbara%20Moore.pdf5LearSiegler,Inc.v.Ark‐EllSprings,Inc.,569F.2d286,288(5thCir.1978)

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andhenceitsapplicabilityandadaptabilitytothisvirtualizedworldofcomputingiscomplicated

to comprehend. Storage of the valuable information in the far realms of the remote data

centershasseveral legal implications,which isoutsidethescopeofthispaper.However, this

paper will focus on cloud computing specifically in the context of reasonable standard test

undertradesecretslaw.

III. BasicIntroductiontoCloudComputing

Innovationfosterstechnologyandtechnologychallengestheoldschoolofthoughtoflegalities.

Fosteringinnovationisthegenesisofintellectualpropertylaw.Inthepastera,therehavebeen

number of technological changes that have changed the way we live today. Themanner in

whichmassproductionofelectricity inasingleunithaschangedtheeconomicsofscale, ina

similar fashion, cloud computing is changing the way in which companies store their data

and/orhostapplications.NicholasCarrofBigSwitchemphaticallystatesthat“Now,wearein

midstofanotherepochaltransformation.Whathappenedtothegenerationofpowerofcentury

agoisnowhappeningtotheprocessingofinformationinformofcloudcomputing”6.Typically,

the cloud computing infrastructure resides in a large data center and ismanaged by a third

party,whoprovidescomputingandstorageresources,anywherewithanInternetconnection7.

InCloudComputing, thecustomersdonotownthephysicalhardwarebut instead“rent” the

resources thatareprovidedby thecloud serviceprovider.Cloudcomputinghas changed the

6NicholasCarr,TheBigSwitchRewiringtheworldfromEdisontoGoogle,W.W.Norton&Company;Reprintedition(January19,2009)7PaulT.Jaeger,JimmyLin&JustinM.Grimes,CloudComputingandInformationPolicy:ComputinginaPolicyCloud?ForthcomingintheJournalofInformationTechnologyandPolitics.(unpublished)ForthcomingintheJournalofInformationTechnologyandPolitics.

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economics of scale for large and small enterprises by eliminating the upfront capital

expenditure(CapEx)onhardware,software,andservicesastheyonlypayforwhattheyuse8

Cloud Computing has been defined by National Institute of Standards and Technology, as

“Cloudcomputing isamodel forenablingconvenient,on‐demandnetworkaccess toashared

pool of configurable computing resources (e.g., networks, servers, storage, applications, and

services) that can be rapidly provisioned and released with minimal management effort or

service provider interaction. This cloud model promotes availability and is composed of five

essentialcharacteristics,threeservicemodels,andfourdeploymentmodels9”.

A computing model has five different layers‐ applications, software environments, software

infrastructure, software kernel, and hardware10. At the bottom of the stack, is physical

component of the system (hardware). Above that layer is the cloud application layerwhich

normally the end users accesses through web‐portals. The third layer is cloud environment

layer. The users of this layer are cloud application developers. The cloud service provider

suppliesdeveloperswithaprogramming‐language‐levelenvironmentwithasetofwell‐defined

APIs to facilitate the interaction. This system or layermay also be termed as software as a

service.Abovethatlayeris,thecloudsoftwareinfrastructurelayerwhichprovidesfundamental

resources to other higher‐level layers, which in turn can be used to construct new cloud

softwareenvironmentsorcloudapplications11.

8http://en.wikipedia.org/wiki/Cloud_computing9http://csrc.nist.gov/groups/SNS/cloud‐computing/10http://blog.bluelock.com/blog/5‐layer‐model11LamiaYouseff&MariaButrico,DilmaDaSilva,TowardaUnifiedOntologyofCloudComputing (explainingthedifferentlayersincloud)(http://docs.google.com/viewer?a=v&q=cache:vyTr8TfjRjYJ:www.cs.ucsb.edu/~lyouseff/CCOntology/CloudOntology.pdf/

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There are different types clouds computing models available to the end user to suit their

businessneeds:publicclouds,privatecloudsandhybridclouds.

PublicClouds: Apubliccloudisonebasedonthestandardcloudcomputingmodel,inwhich

thecloudserviceprovidermakesresources,suchasapplicationsandstorage,availabletothe

enduserovertheInternet12.

PrivateCloud:Inthiscomputingmodel,theresourcessuchasapplicationandstorageareonly

accessiblefromwithinthecompanyfirewallandisavailabletoonlythecompanyemployees.

HybridCloud: Inthiscomputingmodel,theenduserwillmanagesomeresourcesin‐houseor

privatecloudandsomeinthepubliccloud.

CommunityCloud:Inthismodel,theresourcesareavailableandaccessibletoaselectedgroup

oftrustedpartners.Thecloudserviceprovideroffersdifferentkindsofcomputingservicesto

theendusers.These services include Infrastructureasa service (IAAS),PlatformasaService

(PAAS)andSoftwareasaservice(SaaS).

12http://searchcloudcomputing.techtarget.com/sDefinition/0,,sid201_gci1356516,00.html

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InfrastructureasaService (IaaS): Whenthecloudserviceprovideronlyoffers thecompute,

storage and networking infrastructure, typically a hosted virtualization environment as a

service,itisofferingInfrastructureasaService13.

Platform as a Service (PaaS): When the cloud service provider is offering an integrated

platformtotheendusertobuild,test,anddeployandautomaticallyscaleapplications14, it is

offeringPlatformasaService.PaaSprovidesahigherlevelabstractionoverIaaS.

SoftwareasaService(SaaS):Whenthesoftwareisofferedasaservicebythecloudserviceto

theenduser,itisofferingSoftwareasaService.Thisserviceprovidesrichfunctionalityofthe

applicationandwherethecustomerdoesnothavetheneedtoinstall,operateormanagethe

applicationbutinsteadsubscribestoserviceandpaysbytheuser.

TheCloudServiceProviderisdifferentfromthetraditionalhostingservicesbecauseitprovides

theendusersmorecontrolthroughasetofwell‐definedAPIstofacilitatetheinteractionwith

thecloudresources.

IV. OverviewofTradeSecretLaw

Theprivilegetocompetewithothersincludesaprivilegetoadopttheirbusinessmethods,ideas

or processors of manufacture. However, such privilege has certain limitations imposed by

intellectualpropertylaw.IntellectualPropertylawregimeservestopromoteprogressofuseful

art and science. Patents and copyrights extend protection to the originator15 for a limited

periodoftimeonconditionofitsdisclosuretothepublic.

13http://en.wikipedia.org/wiki/Cloud_computing14http://en.wikipedia.org/wiki/Cloud_computing15 RogerMMilgrim,MilgrimonTrade Secret ,Vol. 1, §1.01[1],MatthewBender andCompany Inc. (Updated2009)

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Tradesecret lawisananomaly in intellectualproperty law16.TradeSecret isany information,

whichhasaneconomicvalueandprovideseconomicadvantageoverthecompetitors17.Trade

Secretonlyprotectsvaluableinformation,whichhasbeenreasonablysafeguarded.Incontrast

tothepatentandcopyrightregimes, theprotectionextendedtosuchvaluable information is

notconfinedtolimitedtimeperiod.Thetradesecretprotectionenduresaslongas,thetrade

secretstatusisvaluableandhasnotbeendisclosedtothepublic.

The significant difference of fact between trade secret law and these diverse intellectual

protectionregimesisthatknowledgeofthedevicesandprocesseswhichnotprotectedasthe

tradesecrets, isavailabletothecopierwithoutimpropermeansfromthepublicdisclosureof

the information. The employment of impropermeans to procure trade secret is thebasis of

liabilityunderthisbranchoflaw18.

Trade secret protects wide range for information, which drives the economic growth of the

industry.Tradesecretisoneofthemostvaluableassetsofthecompanyandthesurvivalofthe

companymaydependonitsabilitytoprotecttradesecrets.ItispertinenttonotethatUnited

Statespubliclytradedcompaniesownsanestimated$5trillion intradesecret information19.

Prior to obtaining patent protection, virtually all inventions are covered by trade secret

protection20.

16RobertG.Bone,ANewLookattheTradeSecretLaw:DoctrineinSearchofJustification,86Calif.L.Rev.241.(1998)17Rowe,ElizabethA., ContributoryNegligence andTechnologyandTrade Secrets,University of FloridaLevinCollegeofLawResearchPaperNo.2008­06.(May01,2009).http://ssrn.com/abstract=116116618RobertG.Bone,ANewLookattheTradeSecretLaw:DoctrineinSearchofJustification,86Calif.L.Rev.241.(1998)19Rowe,ElizabethA., ContributoryNegligenceandTechnologyandTradeSecrets,UniversityofFloridaLevinCollegeofLawResearchPaperNo.2008­06.(May01,2009).http://ssrn.com/abstract=116116620Rowe,ElizabethA,Rethinking“ReasonableEffort”toprotectTradeSecretInADigitalWorld(2008)

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If thetradesecretofonecompanyweremisappropriated,then itwould leadgreateconomic

lossforthecompany.JudgePosnernotedintheleadingopinionofRockwellGraphicSystems,

Incv.DEVIndustries,Inc21thatthetradesecretlawencouragestheactorstodevelopvaluable

informationalresourcesbyprotectingthemfromimproperacquisitionbyothers22.Moreover,

tradesecretlawcloselyregulatesstandardofcommercialethics,guidesofmoralityofbusiness

worldandunderscoresfairdealing23.

Ifthecompetitorhasderivedtradesecretinformationbyimpropermeansorunderbreachof

confidentiality relationship, the trade secret owner would be entitled to remedies for

misappropriationoftradesecret.Tradesecretlawdoesnotimposealiabilityformerecopying

of the data; others are free to inspect the publically available data to reverse engineer to

procuresecretinformationfromit24.

Tradesecretlawimposesaliabilityonlywhenthedataisobtainedbyimpropermeans.Ifsome

oneknows the trade secret lawfully, theyhave the trade secret rightsof theirownprovided

theytookeeptheinformationsecret‐atleastuntiltoomanypeoplediscovertheinformation25.

A. CommonLawOriginofTradeSecretLaw

21RockwellGraphicSystems,Incv.DEVIndustries,Inc,925F.2d174(7th.Cir.1991)22RogerESchechter&JohnRThomas.IntellectualProperty, theLawofCopyrights,PatentsandTrademark,WestPublishingCompany(April2003)23 A. Elizabeth Rowe, Saving Trade Secret Disclosures on the Internet through Sequential Preservation, 42WakeForestL.Rev.1(Spring2007)24BoardofTradev.DowJones&Co.,98III.2d.109(1983)25KewaneeOilvBriconCorp.416U.S.470(1974)26 Robert G. Bone,A New Look at the Trade Secret Law: Doctrine in Search of Justification, 86 Calif.L.Rev.241.(1998)27ChristopherRebelJ.Pace.TheCaseForAFederalTradeSecretsAct.8Harv.J.L.&Tech(1995).28A.ElizabethRowe,Saving TradeSecretDisclosuresonthe InternetthroughSequentialPreservation, 42WakeForestL.Rev.1(Spring2007)29Peabodyv.Norfolk,98Mass.452(1868)30 Robert G. Bone,A New Look at the Trade Secret Law: Doctrine in Search of Justification, 86 Calif.L.Rev.241.(1998)31Peabodyv.Norfolk,98Mass.452(1868)

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Thetradesecretlawhasoriginatedfromcommonlaw.Sinceitsemergenceinthemiddleofthe

nineteenth century, trade secret lawhasdevelopedprimarily asa creatureof state common

law26. The cause of action for trade secret misappropriation was imported from English

commonlawtoAmericancommonlawinaseriesofmid‐nineteenthcenturydecisionsbythe

highestcourtsofseveraleasternstates27.

Themainissuesduringthattimewerewhetherthecourtsofequityhadthejurisdictiontogrant

injunctive relief and whether the agreements not to use or disclose were void as unlawful

restraints of trade28. In 1968, Massachusetts Supreme Court in Peabody v. Norfolk29,

expoundedthetradesecretlawinUnitedStates30.Hestatedinhislandmarkopinionthat“ifa

32TaylorvBlanchard36Mass.523(1837)33O.&W.ThumCov.Tloczynski,114Milch.149,72N.W.140(1987)34StonevGoss,65N.J.Eq.756,55A.736(1903)35PressedSteelCarCov.StandardSteelCarCo,210,Pa.464,60A.4(1904)36DonaldChisum&MichealAJacobs,UnderstandingIntellectualPropertyLaw,§3B[3],Lexisnexis/MatthewBender(October30,2004)37JamesW.Hill,TradeSecrets,UnjustEnrichment,andtheClassificationofObligations,4Va.J.L.&Tech.2(Spring1999)38RogerE.Schecter&JohnRThomas,IntellectualProperty,theLawofCopyrights,PatentsandTrademarks,§24.2,WestPublishingCompany(April2003)39DonaldChisum&MichealAJacobs,UnderstandingIntellectualPropertyLaw,§3B[3],Lexisnexis/MatthewBender(October30,2004)40JamesW.Hill,TradeSecrets,UnjustEnrichment,andtheClassificationofObligations,4Va.J.L.&Tech.2(Spring1999)41PiperJulie,Ihaveasecret?ApplyingtheUniformTradeSecretsActtoconfidentialinformationthatdoesnotrisetotheleveloftradesecretstatus.Marq.Intell.Prop.L.Rev.(2008).OriginalCitation14A.M.JUR.3d.ProofofFacts619,§6(2006)42HenryH.Perritt,Jr,TradeSecrets:A PractitionersGuide,PractisingLawInstitute(PLI);2ndedition(January1,2005)43 Andrew Beckerman‐Rodau, Trade Secrets‐The New Risks to Trade Secrets Posed by Computerization,RutgersComputer&Tech.L.J.Vol.28(2002)44HenryH.Perritt,Jr,TradeSecrets:APractitionersGuide,PractisingLawInstitute(PLI);2ndedition(January1,2005)45RestatementofTorts(Commentb)

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manestablishesandmakesitvaluablebyitsskillandattention,thegoodwillofthatbusinessis

recognizedbythelawasproperty.”31

In Taylor v Blanchard32, the court accredited the principle that “public has no right to “a

businessman’s trade secrets and that a contract for their exclusive use is not a restraint of

trade..”TheotherhistoricalsignificancecasesincludeO.&W.ThumCov.Tloczynski33,Stonev

Goss34andPressedSteelCarCov.StandardSteelCarCo35weremostsignificantcontributorsto

thebodyofprecedent thatwasprimaryauthority forUnitedStates trade secret law inearly

1930’s.36

RestatementofTorts

As part of the early 20th century, the American law Institute’s 1939 Restatement Of Torts

included two sections on trade secrets.37 However, trade secretswere not addressed in the

1978SecondRestatementofTorts.TheAmericanLawInstituteconcludedthattradesecretlaw

had grownmoredependent on Tort law than itsmanyother general fields of lawandupon

statutorydevelopments38

UniformTradeSecretsAct

Inthe1980’sthestatesbegantoadopttheNationalConferenceofCommissionsUniformTrade

SecretAct(UTSA).UTSA,largelycodifiedthecommonlaw39.UTSA,isenactedinthemajorityof

states. UTSA, follows the Restatement of Torts, but also relies on subsequent case laws to

provide more and useful definitive legal standards40. National Conference of Commissions

Uniform Trade Secret recognizedwhen drafting UTSA, that “trade secret protection ismore

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important now because there has been an unprecedented growth in computer,

biotechnologicalandcommunicationsindustries”41

TheRestatement(Third)ofUnfairCompetition

In1994,theAmericanLawInstitutepublishedtheRestatement(Third)ofUnfaircompetition42.

Under theRestatement (Third)ofUnfairCompetition,a tradesecret is “any information that

canbeusedintheoperationofabusinessorotherenterprisethatissufficientlyvaluableand

secrettoaffordanactualorpotentialeconomicadvantageoverothers.”

TheEconomicEspionageAct

TheEconomicEspionagecreatesa federalcrime for theftof tradesecrets43. Itprotects trade

secretsundertwoprovisionsnamely,18U.S.C.§1831(a)whichcriminalizesthetheftoftrade

secretstobenefitforeignpowersand18U.S.C.§1832,criminalizestheirtheftforcommercial

oreconomicpurposes44.

B. DatathatQualifiesasaTradeSecret

Theendusermaystorewiderangeofdatainthecloudrangingfromstatistics,formulas,sales

records,customerinformation,pricinginformation,andsourcecode.However,notallofthem

would comewithin the ambit of trade secret protection. It is necessary for the purpose of

analysis to scrutinize theguidelinesunder respectivedefinitionsofRestatementof Torts and

UniformTradesecretsAct.Thesedefinitionshavelaidouttheprerequisitesforqualificationof

data/orinformationastradesecret.

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A exact definition of trade secret is not possible under the Restatement”45 and hence it

contains list of factors that are determinative for purposes of ascertainingwhether the data

wouldqualifyasatradesecret46.

According to the definition under the Restatement, the trade secret would include “any

formula,patternordeviceorcompilationofinformationwhichisusedinone’sbusinesswhich

would give him a competitive edge, if such process or device for is continuously used in

operatingthebusinessratherthenforasingleuseorephemeralevents”47

TheRestatementcontainssixfactorswhichinclude“(a)theextentofinformationknowntothe

outside business, (b) known by employees and other people involved in business, (c)

reasonablemeasurestaken,(d)amountofmoneyexpandedindevelopingtheinformationand

theeaseandthe(e)valueoftheinformation(f)difficultywithwhichtheinformationcouldbe

properly acquired or duplicated by others“48 to be considered in determiningwhether given

information is trade secret or not. In otherwords in order to qualify as a trade secret, the

subjectmattermustescape fromthemundaneand theordinary49. Inaddition to thesubject

matterbeingmundane,reasonableeffortsmusthavebeenmadeforsecrecy50.

Under, Uniform Trade Secrets Act, a trade secret is any information including a “formula,

pattern, compilation, program, device, method, technique or process which has an

independenteconomic valueandwhich isnot generally known to thepublic and reasonable

46 Donald Chisum & Micheal A Jacobs, Understanding Intellectual Property Law § [3C][1][a],Lexisnexis/MatthewBender(October30,2004)

47Restatement§757(Commentb)48RestatementofTorts49MilgrimonTrade Secrets,RogerMMilgrim ,DefinitionalAspects, §1.01[3] , 1‐223.Original Citation:EdNowogroskiInc,vRucker,50U.S.P.Q2d1268137Wash.2d,427,971,P.2d936,942‐945(1999)

50RogerMMilgrim,MilgrimonTradeSecret ,Vol.1,§1.01[3] ,MatthewBenderandCompany Inc. (Updated2009)OriginalCitation:Buffets,IncvKlinke,73,F3d965(9thCir.1996)

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methodshavebeenundertakentosafeguardit.”51Thelegislatorshavedraftedthedefinitions

of UTSA and Restatement of Torts to be inclusive in their approach which enable them to

encompassvariousother typesofnew informationand/ordata resultantofnew innovations

and technological advances. However, whether particular information constitutes a trade

secretisaquestionoflawinsomejurisdictionsandaquestionoffactinothers52.Thetypesof

information/data that has been accorded the trade secret status are scientific data such as

chemicalprocess53, formulas54,manufacturingmethods55, businessplansandprofits and loss

accounts56, customer lists57, computer programs58 employee knowhow59, pricing distribution

andmarketingplans60.

C. ReasonableStandardRequirementUnderTradeSecretlaw

“Solongastheoriginatororpossessorofthenakedidea…keepsittohimself,itishisproperty,

but it ceases tobehis ownwhenhepermits it topass fromhim…..Ideasof this sort, in their

relationtopropertymaybelikenedtotheinterestwhichapersonmayobtaininbeesandbirds

andfishinrunningstreams,whichareconspicuousinstancesofferaenaturae”.Iftheclaimant

keepsthemonhisownpremises,theybecomehisqualifiedproperty,andabsolutelyhissolong

astheydonotescape.Butifhepermitsthemtogohecannotfollowthem”.Apersonreduces

informationto“captivity”bykeepingitsecretandimplementingprecautionstoprotectagainst

51UniformTradeSecretsAct§152SecureServersTechIncvTime&SpaceProcessingInc,722FSupp.1354(E.DVa1989)53SmithKlineBeechamPharmaceuticalsCovMerk&Co.,766A.2d422,488(Del.Super.Ct.200)54JointStockSoc’yvUDVN.Am.,104F.Supp.2d390,409(D.Del2000)55CobotCorpvThaiTantalum,Inc.25USPQ2d1619(Del.Ch.1992)56AmericanTotalisatorCov.AutototeLtd.,No.7268,1983WL21374(Del.Ch.Aug18,1983)57DelmaraDrillingCov.AmericanWellSys,Inc,No8221,1988WL7396(Del.Ch.Jan,26,1988)58 American Totalisator Sys. v Automatic Totalisators (U.S.A) Ltd, No. 5562, 1978WL 4479 (Del. Ch.Apr.20,1978)59BernardPersonnelConsultants,IncvMazarella(No.11660,1990WL124969(Del.Ch.Aug28,1990)60PepsiCo,Incv.Redmond54F.3d1262(1995)

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disclosure and diffusion61. The principal gatekeeper to trade secret status is that the

information must have been subjected to reasonable efforts to maintain secrecy62. The

reasonable efforts standard is probably themost important factor in determiningwhether a

tradesecretholderownsaprotectabletradesecret63.

Thetenetofreasonablenessrequirementisreflectingfromthefollowingjudgmentsofvarious

courts.

InJ.T.Healey&Son,Inc.v.JamesA.Murphy&Son,Inc.,64thecourtreaffirmedtheprincipleby

statingthat, “[I]f thepersonentitledtoa tradesecretwishestohave itsexclusiveuse inhis

ownbusiness,hemustnotfailtotakeallproperandreasonablestepstokeepitsecret...‘’

The corresponding trade secret laws of different states have established a generic rule of

applicationofreasonableeffortstodeterminetradesecretstatus.UnderAlabamalaw,among

otherfactors,reasonableefforttomaintainsecrecy isusedasabenchmarktodeterminethe

tradesecretstatus65.(UnisourceWorldwide,IncvSouthCentralAlabamaSupply,LLC66).Under

FloridaLaw, itwasheld that toconstitutea tradesecret, the tradesecretownerhas to take

reasonableeffortstomaintainsecrecy.(MerrillLynch,Pierce,Fenner&Smith,Inc.vDumm67).

61RobertG.Bone,TradeSecrecy,Innovation,andtheRequirementofreasonablesecrecyprecautions.62Roger,E Schecter, Intellectual Property, the Law of Copyrights, Patents andTrademarks,West PublishingCompany,April2003.63 Rowe A. Elizabeth. Contributory Negligence, Technology and Trade Secrets, (2009)http://works.bepress.com/elizabeth_rowe/5andMBL(USA)Corp,Diekman,445N.E2d418,425(III.App.Ct1983) (“Althoughmany factors shouldbeconsidered todetermine if a tradesecretexists,what isprimaryimportanceiswhetherandhowanemployeractstokeeptheinformationsecret”)64J.T.Healey&Son,Inc.v.JamesA.Murphy&Son,Inc.,357Mass.728,737‐39(1970)65BrianMMalsberger,Trade Secets: A state by state Survey, BNA Books (Bureau of National Affairs) (July1997)66UnisourceWorldwide,IncvSouthCentralAlabamaSupply,LLC199F.Supp.2d1194,1211(M.DAla.2001)67MerrillLynch,Pierce,Fenner&Smith,Inc.vDumm,191F.Supp.2d1346,1351(M.D.Fla.2002)

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UnderKentuckylaw,itwasheldthatwhen,plaintiffexercisesnoeffortstomaintainsecrecyof

thetradesecret,thenheloseshisrighttothetradesecretstatus.(RogersvDesaInt’l,Inc68).

UnderLouisianalaw,plaintiffhastoundertakereasonableeffortstomaintainsecrecy(Reingold

v Swfitships, Inc69.) Similarly under the provisions of Ohio law, it is required that the trade

secretownertakehastoundertakereasonablestepstomaintainitssecrecy.(ValcoCincinnati

Incv.N&DMachiningServ., Inc70).Mostlyall thestateshavesummeduptherequirementof

reasonablenessascertainingthetradesecretstatus.

Though,reasonableness,whichisacommonlegaltest,iseasytostatebuthardtodefine.71To

meet the reasonableness test, the law requires the trade secret owner to undertake actual

efforts to theextent that theyare rigorousenough to forceanother touse, improper, illegal

andunethicalmeanstodiscoveratradesecret72.

One of the factors listed in the Restatement, which is considered in determining whether

particular informationisatradesecret, is“theextentofmeasurestakenbyhim(tradesecret

owner)toguardthesecrecyoftheinformation.

UTSA requires that efforts to maintain secrecy “be reasonable under the circumstances”.

UTSA’scommentapprovinglysummarizesthecommonlawrequirementasfollows73:

“[R]easonablemeasures tomaintain secrecyhavebeenheld to includeadvisingemployeesof

theexistenceof the tradesecret, limitingaccess to tradesecreton“need toknowbasis”and

68RogersvDesaInt’l,Inc,183F.Supp2d955,958(E.D.Mich.2002)69ReingoldvSwfitships,Inc,126F.3d645,640,44USPQ.2d1481(5thCir1997)70ValcoCincinnatiIncv.N&DMachiningServ.,Inc,492N.E.2d814,819(Ohio1996)71RobertG.Bone,TradeSecrecy,Innovation,andtheRequirementofreasonablesecrecyprecautions.72Slaby,DavidW.;Chapman,JamesC.;O'Hara,Gregory,TradeSecretProtection:AnAnalysisoftheConceptEffortsReasonableundertheCircumstancestoMaintainSecrecy,5SantaClaraComputer&HighTech.L.J.321(1989)73UniformActComment§1.

18

controlling plant access. On the other hand public disclosure of information through display,

tradejournalpublications,advertising,orothercarelessnesscanprecludeprotection.74

Hence, It is indeed important that careful efforts to preserve the trade secrecy would be

requiredby theenduser to retainhis rights in the trade secret afterhostinghis data in the

serverofthecloudprovider.Howeverthelevelofsecrecyandreasonablenessrequiredisnot

reflectedintheprovisionsofthelawofeitherUTSAorRestatementofTorts.Itisthedutyof

thetradesecretownertoprotectitstradesecrets.Theburdenofprovingthatreasonablesteps

havebeentakenfallsontheplaintiff75. Thecourtsthroughtheirdecisionshavemadeitclear

that the tradesecretowner,who isnotvigilantaboutsafeguarding its tradesecrets, cannot

expect others to hold a higher obligation to preserve the secret.76 The level of reasonable

efforts taken isdirectly relative to the finding that themisappropriaterhasderivedthe trade

secretthroughimpropermeans.

The courtshave throughnumerous verdicts createdhomogenous yardstick todetermine the

levelofreasonablenessrequiredformaintainingthestatusoftradesecret.Anentitythathas

taken reasonable steps to protect valuable business information only knows with certainty

whetheracourtwillagreethattheinformationisindeedatradesecretwhenthecourtactually

makes thedetermination77.Theprimary ruling in thevariouscasesdiscussedhereinbelow is

thatthethresholdoflevelofreasonablenessisnotveryhighandstringent.

74UniformActComment§1.75FisherStovesInc,vAllNighterStoves,Inc626F.2d76FisherStovesInc,vAllNighterStoves,Inc626F.2d77Slaby,DavidW.;Chapman,JamesC. ;O'Hara,Gregory ,TradeSecretProtection:AnAnalysisoftheConceptEffortsReasonableundertheCircumstancestoMaintainSecrecy,5SantaClaraComputer&HighTech.L.J.321(1989)

19

1. E.IduPontdeNemorus&Companyv.Christopher78

The courtnoted that the lawdoesnot requireunreasonableprecautions toprevent another

fromdoingthatheoughtnottodoinfirstplace.

2. TubularThreading,Inc.v.Scandaliato79

Thecourtstatedthat“theeffortsrequiredtomaintainsecrecyarethosereasonableunderthe

circumstances,andcourtsdonotrequireextremeandundulyexpensiveproceduresbetaken

toprotecttradesecrets”80.

3. Sheetsv.YamahaMotorsCorp81

The court stated, “that the trade secret owner needs to take steps that are reasonably

necessaryunderthecircumstancestomaintainsecrecy.

4. RockwellGraphicsSystems,Inc82

The court stated, “Reasonableness is to be evaluated by comparing the costs of precautions

withthebenefits”.

5. CompuserveCorpv.SerenaSoftwareInt’lInc83

The court In this case held that “[o]ne need not make every conceivable effort to protect

secrecy”84.

AsJudgePonserhasexplained,“abalancebetweenvigilanceandpracticalitymustbeachieved:

“[T]he question is whether additional benefit in security could have exceeded [the]cost of

contemplatedprotection.”

78E.IduPontdeNemorus&Companyv.Christophe,431.F.2d1012(5thCir.1970)79TubularThreading,Inc.v.Scandaliato,443So.2d712,714(La.Ct.App.1983).80TubularThreading,Inc.v.Scandaliato,443So.2d712,714(La.Ct.App.1983)81Sheetsv.YamahaMotorsCorp,849F.2dat18382Sheetsv.YamahaMotorsCorp,925F.2dat179‐18083CompuserveCorpv.SerenaSoftwareInt’lInc,77F.Supp.2d.816,82284CompuserveCorpv.SerenaSoftwareInt’lInc,77F.Supp.2d.816,822

20

Hence, in the lightof thecases, itcouldbeemphaticallystated, that thecourtshavetakena

view thatextremeandundulyexpensiveproceduresarenot required tobe taken toprotect

tradesecretsagainstflagrantindustrialespionage85.

In determining that the trade secret owner has exercised reasonable diligence number of

factorsaretaken intoconsideration86.AsUTSAorRestatementofTortshasnotprovidedany

guidanceonthereasonableeffortsrequirement,hencethesufficiencyofthesecrecyisjudged

inthelightofthecircumstances,includingthecaselawsandindustry.

Theseunderlyingdecisionsof the courtsunderpin theguiding standards to theenduserson

how to determine, if the reasonable standard test has beenmet. The test for determining

reasonableness standard is not consistent by the courts. However the courts look into the

followingaspects (a)confidentialityagreements (b)controlaccesstothedata (c) information

generallyknownoutside (d)expenditure tokeep the informationconfidential (d)affirmative

stepstobetaken

(i) ConfidentialityandNon‐DisclosureAgreements

Courtshaveheld that informationmayremaina tradesecreteven if theownerdiscloses the

information to its licensees, vendors, or third parties for limited purposes87. If the end user

disclosesinformationtothecloudserviceproviderunderthetermsofconfidentialityandnon‐

disclosureagreements,thenthedatamightnotloseitstradesecretstatus.Courtshaveheld

that informationmayremainatradesecreteveniftheownerdisclosestheinformationtoits

85UniformActComment§186UniformTradeSecretsAct,The;Klitzke,RamonA.64Marq.L.Rev.277(1980‐1981)87RogerM.Milgrim,MilgrimonTradeSecrets,§1.04,MatthewBender,(1984)

21

licensees,vendors,orthirdpartiesfor limitedpurposes88.Whetheratransferoftradesecrets

toacloudserviceproviderextinguishesthetradesecrethasyettoberuledupon.

Datathat isdisclosedbytheendusertothecloudserviceprovider isunderthetermsofthe

confidentialityandnon‐disclosureagreements.Theseagreementscreatearelationshipofduty

ofconfidencebetweenthepartiesandthecloudserviceproviderisboundbythetermsofthe

agreements not to disclose or use the data of the end user. The decisions of the courts in

SaltmanEngineeringCoyLd.v.CampbellEngineeringCoy.Ld89affirmthatifinformationisgiven

byonetradertoanotherincircumstanceswhichmakethatinformationconfidential,thenthe

secondtrader isdisentitledtomakeuseoftheconfidential informationforpurposesoftrade

bywayofcompetitionwiththefirsttrader90.

Similarly,thecourts inLacMineralsLtd.v. InternationalCoronaResourcesLtd., 91andCocov.

A.N.Clark(Engineers)Limited,92heldthat“Adutyofconfidenceariseswhenapersonacquires

knowledge of confidential information, including trade secrets, under circumstances inwhich

thepersonhasnoticeoragreedthattheinformationisconfidential”93.ThecourtinCocovA.N

Clark (Engineers)suggested,a test todetermine if thedutyofconfidencearisesbetweenthe

parties.Itstatedthat“itisanobjectiveone(test):whetherareasonablepersonstandinginthe

shoesoftherecipientoftheinformationwouldhaverealizedthattheinformationwasgivenin

confidence”.

88RogerM.Milgrim,MilgrimonTradeSecrets,§1.04,MatthewBender,(1984)89SaltmanEngineeringCoyLd.v.CampbellEngineeringCoy.Ltd,(1948)90SaltmanEngineeringCoyLd.v.CampbellEngineeringCoy.Ltd,(1948)91LacMineralsLtd.v.InternationalCoronaResourcesLtd,[1989]2S.C.R.57492Cocov.A.N.Clark(Engineers)Limited,[1969]R.P.C.41(Ch.D.)93Cocov.A.N.Clark(Engineers)Limited,[1969]R.P.C.41(Ch.D.)

22

TheDelawareCourtofChanceryinDataGeneralCorp.v.DigitalComputerControls,Inc94,held

thatDataGeneralhadtakenadequatemeasurestoprotecttheconfidentialityofthediagrams,

stating,"disseminationisnotsignificantifinconfidence.”

Itistobenotedthat,breachofconfidentialitygivesrisetotwoindependentlegalclaims:one

formisappropriationoftradesecret;theotherforbreachofcontract95.

The following are the summary of cases, which reflect the principal of confidentiality

relationship.

a. TechniconDataSys.CorpvCurtis1000,Inc96

Technicon,wasadeveloperofhospitalrecordsystemandthedefendant,Curtis1000reversed

engineeredtheinterfaceofacomputerizedsystemforstoringhospitaldata.Thecourtgranted

preliminary injunction on the ground that various techniques were used by the plaintiff to

achievesecrecy,whichincludedtheuseofconfidentialityagreements97

b. BaystateTechs.,Incv.BentlySys.,Inc98

BaystateTechnologiesfiledacomplaintagainstBentleySystems,Incallegingmisappropriation

of trade secrets in violation of M.G.L. c. 42 and copyright infringement99. Bently

misappropriatedcertaintradesecretsinBaystate’sCADsoftware.Oneofthefactors,thecourt

usedfordeterminingwhether,theplaintiff’sactionsandpoliciesconcerningthetreatmentof

94DataGeneralCorp.v.DigitalComputerControls,Inc,357A.2d105,188U.S.P.Q.(BNA)276(Del.Ch.1975)95RogerM.Milgrim,MilgrimonTradeSecrets,§1.04,MatthewBender,(1984)96TechniconDataSys.CorpvCurtis1000,Inc,224U.S.P.Q.286,290,1984‐2CCH.97RogerM.Milgrim,MilgrimonTradeSecrets,§1.04,MatthewBender,(1984)98BaystateTechs.,Incv.BentlySys.,Inc,946F.Supp.1079,1092(D.Mass.1996)99BaystateTechs.,Incv.BentlySys.,Inc,946F.Supp.1079,1092(D.Mass.1996)

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itstradesecretweresufficienttoprotectitsclaimedsecrecywastheexistenceorabsenceofan

expressagreementrestrictingdisclosure100.

c. ElectornicDataSys.Corp.v.Heinemann101

Inthiscase,thecourtheldthatthevindicationofconfidentialityagreementsisoneofthepolicy

considerationscourtshaverecognizedasreasonsfortradesecretprotection.

d. J.T.Healy&Son,Inc.v.JamesA.Murphy&Son,Inc.&Ors102.

Thecourtstatedinthiscase,“onewhoclaimsthathehasatradesecretmustexerciseeternal

vigilance.Thiscallsforconstantwarningstoallpersonstowhomthetradesecrethasbecome

knownandobtainingfromeachanagreement,preferablyinwriting,acknowledgingitssecrecy

andpromisingtorespectit”103.

e. HollomanvO.Mustad&Sons(USA),Inc104.,

Thecourt in thiscase,heldthat thetradesecret lawacquiredthroughbreachofconfidential

relationship or discovered through improper means to be the proper subject of a

misappropriationclaim105.

TerminationofConfidentialityandNon‐DisclosureAgreements

Cloudserviceprovidermaytakecertainstepsforsecurityofdata.Howeverthesestepsmight

create a hurdle, later when the agreement between them is terminated. If the agreement

between the cloud serviceprovider and theenduser is terminated,would the cloud service

100BrianMMalsberger,TradeSecets:AstatebystateSurvey,BNABooks,93,(BureauofNationalAffairs)(July1997)101ElectornicDataSys.Corp.v.Heinemann,493S.E2d132,134‐35(Ga.1997)102J.T.Healy&Son,Inc.v.JamesA.Murphy&Son,Inc.&Ors,357Mass.728(1970),260N.E.2d723103J.T.Healy&Son,Inc.v.JamesA.Murphy&Son,Inc.&Ors,357Mass.728(1970),260N.E.2d723104HollomanvO.Mustad&Sons(USA),Inc,196F.Supp.2d450,459(E.DTex.2002)105HollomanvO.Mustad&Sons(USA),Inc,196F.Supp.2d450,459(E.DTex.2002)

24

provider, be still bound by the terms of confidentiality and non‐disclosure agreements to

safeguardtheoriginaldataaswellascopiesofdata?

ThedecisionofthecourtinCadburySchweppesv.FBIFoodsLimited106wouldprovidea

guiding light to this dilemma of combination of technology and law. The facts of the case

pointed out, that a licensor revealed to the licensee, under license, confidential information

abouta recipe fora tomatococktailwithclambroth.After receivingnotice to terminate the

license, the licensee used the confidential information to develop a competing product. The

courtheld the licenseewasunder anobligation toprotect the trade secret and the licensee

evenaftertermination107.

DeletionofMultipleCopiesAfterTerminationofConfidentialityandNon‐DisclosureAgreements.

Redundancy data would have a major impact after termination of the agreement(s).

Redundancyofdatacreatesahurdlebecausethecloudserviceproviderhascreatedmultiple

copiesofthedataforsecurityofdataineventdataislost.A pertinent glitch would arise, for

enduserswhomightlaterwanttomigratetheirdatafromthecloud,andtheuseragreement

doesnotautomaticallyprovidefordeletionofdatafrommultiplelocations.

Henceitisimportantfortheinterestsoftheendusers,thatthecloudserviceuseragreements,

shouldcreateaprovisiontotheeffectthat“therightsandthedutiesundertheagreementwill

surviveevenaftertheagreement”.Further,aprovisionshouldbeadded“thatthecopiesofthe

datawouldbeautomaticallydeletedafterthetermination”

106CadburySchweppesv.FBIFoodsLimited,[1999]1S.C.R.142107CadburySchweppesv.FBIFoodsLimited,[1999]1S.C.R.142

25

Itisalsoimportanttonotethatitmightnotbepossibletofullydeleteallthecopiesofthedata,

sincefulldatadeletionisonlypossiblebydestroyingadisk,whichalsostoresdatafromother

clients.Whenarequesttodeleteacloudresourceismade,thismaynotresultintruewipingof

the data (as with most operating systems)108. Where complete data wiping is required, the

cloudserviceprovider,shouldadheretospecialproceduresforcompletewipingofthedata.

(b) ControlAccesstotheData

The tradesecretowner is required toundertake reasonable steps toascertain that thedata,

which is sought to be protected under the doctrine of trade secret law, is only accessed by

relevantpeople.Ifthecloudserviceproviderauthorizesthedatatobesharedbyotheruserson

thesharedserver,thedatamightloseittradesecretstatus.

Moreover, the data of the end user is stored on a hypervisor of the cloud service provider,

whichrunsmultipleoperatingsystemsonasingleserver.Thisenablesmultipleuserstooperate

on single server. Due to this multi‐tenancy factor of cloud, the end user might not have

completecontrolovertheaccessofhisdata.Moreoverthedata,mightbefrequentlyappended

orupdatedor logs couldbe created for thebillingpurposesof thedata.Hence, if the cloud

serviceproviderdoesnotexecuteahighcontrolaccessregime,thenthecourtmayconsider,

thisasadefaultonthepartofthecloudserviceprovider.

Even though there isabusinessarrangementby thecloudserviceproviderand theenduser

and although, confidentiality and non‐disclosure agreements between the parties define the

contours of confidential relationship, end the user however should never simply leave the

details of the protection up to the Cloud Service provider without confirming that they are

108EuropeanNetworkandSecurityAgency,CloudComputing,Benefits,RisksandAssessment,(Nov2009).

26

robust109. InCarboline Co v. Lebeck110, the court held that the trade secret owner had not

taken reasonable measures to maintain secrecy where, among other things, it took no

measurestoprotectinformationinthehandsofsuppliersorcustomers111.

Aanotherproblemthatcouldarisefortheenduser is thatthedata,couldbereplicatedand

stored in diverse geographical locations, hence, itmight be very difficult for the enduser to

have complete control access to thedata, ashemaynotbeawareabout the locationofhis

datastorage.

LimitedControlAccessDuetoDataRedundancy

Toensuredurabilityandreliabilityoftheenduserdata,thecloudservicesproviderresortsto

dataredundancy.Theystoremultiplecopiesofthesamedata inmultiple locationssothat in

eventofhardwarefailureorwhendisasterstrikesadatacenter,theenduserdataalwayshas

accesstothedata.Dataredundancysystemisadheredforthemotivetocombatsystemfailure

and consequential loss of data. Cloud service provider achieves client data redundancy by

replicatingfullcopiesondifferentstoragenodes112.

Data redundancy can be employed with technique of erasure‐correcting code to further

tolerate faults or server crash as user’s data grows in size and the original data from being

retrievedbytheuser113.Thesystemhasbeenengineeredinsuchawayastocontinuetofully

functionalevenintheeventofamajorservicedisruptionwithinadatacenter.Thisredundancy

109 Vicotria A Cundiff,ReasonableMeasures to Protect Trade Secret in a Digital Enviourment, Franklin LawReview(2009)110CarbolineCov.Lebeck,990F.Supp.762,767,‐68(E.D.Mo.1997)111CarbolineCov.Lebeck,990F.Supp.762,767,‐68(E.D.Mo.1997)112RanjitNayak,CloudFilesIntroductionDocumentationRelease1.1.0.113RanjitNayak,CloudFilesIntroductionDocumentationRelease1.1.0.

27

could be achieved at the following levels – Data Replication, Business Data Replication and

ServerImageDataReplication114

LevelI:DataReplication

Cloud service providers use database management systems, usually with a master/slave

relationshipbetweentheoriginalandthecopiestoreplicatedata115.Inthissystem,twocopies

ofdataarestoredinthecloud.Theoriginalcopyofthedataisthetermedasmasterfileand

thecopyofdataistermedastheslavecopy116.

Level2‐BusinessDataReplication

Businessdata replication involves replicationofonlybusinessdatawithoutoperating system

andotherapplications117.

Level3‐ServerReplication

Inserverreplication,thedatastoredinthecloudisreplicatedalongwiththeapplicationsand

theoperatingsystem118.

Duetodatareplication, theendusermight losecontroloverhisdata.Theeffectofmultiple

replicatedcopiesinthelightonreasonablestandardmeasurehastobeascertainedforpurpose

ofsafeguardingtherightsofthetradesecretholder.Inamisappropriationclaim,theenduser

wouldhavetoprovethatdata,hasnotlostthetradesecretstatusbythevirtuelimitedcontrol

access to the copies of the data. I propose, that end user should undertake reasonable

measurestoensurecontrolovercopiesofdatatopreventdisclosure.Thereasonablestepsmay

includeencryptionofallcachedcopiesstoredindifferentgeographiclocations.114CloudStation,WhitePaper:Hybrid&FeaturedCloudManagement.115http://en.wikipedia.org/wiki/Replication_(computer_science)#Database_replication116CloudComputingPanel,Portland(2010)117CloudStation,WhitePaper:Hybrid&FeaturedCloudManagement118CloudStation,WhitePaper:Hybrid&FeaturedCloudManagement

28

(c)Expendituretopreservesecrecy

Theamountofexpenditure incurredbytheenduserforcreatingastrongerwalltopreserve

the secrecy of the data, is one of the determinative factors under reasonable standard test.

Highexpenditure incurred inusing latest technology forencryptionor installationof firewalls

woulddefinitelyfavortheenduser.

(d)Informationgenerallyknownoutside

It is axiomatic that publicly available information cannot qualify for trade secret status.119.

Information couldeasily lose its trade secret status throughpublicdisclosure. Evenanactof

allowingabusinessvisitortoseeasecretplantprocessduringaplanttourmaybesufficientto

destroytradesecrecy120.Hencethefirsthurdlefortheenduser,ineventthathistradesecret

storedinthecloudismisappropriatedwouldbeprovingthatinformationstoredbyhimhasnot

lostitstradesecretstatusbyvirtueofthestorageinthismedium.

InSteinbergMooradDunnv.Dunn,Inc121,itwasheldthat,oneoftheelementsoftradesecret

misappropriationclaimisthattheinformationmustnothavetobegenerallyknown.

InRuckelshausv.MonsantoCo.122,itwasheldthat“Informationthatisofpublicknowledgeor

thatisgenerallyknowninanindustrycannotbeatradesecret.”123,Similarly,inKewaneeOilCo.

v.BicronCopr.,124,itwasheldthat“thesubjectofatradesecretmustbesecret,andmustnot

119A. Elizabeth Rowe, Saving Trade Secret Disclosures on the Internet through Sequential Preservation, 42WakeForestL.Rev.1(Spring2007)120G.PeterAlbert,WhiteselLaff,&SaretLaff, IntellectualPropertyLawinCyberSpace,Whitesel&SaretLtd,(PrecisionMoulding&Frame,IncvSimpsonDoorCo.,77Wash.App.20,888P.2d1239(1995)121SteinbergMoorad&DunnvDunnIncWL3196234122Ruckelshausv.MonsantoCo,467U.S.986,1002(1984)123Ruckelshausv.MonsantoCo,467U.S.986,1002(1984)124KewaneeOilCo.v.BicronCopr,416U.S.470,475(1974)

29

beofpublicknowledgeorofageneralknowledgeinthetradeorbusiness.”125

However, it does not necessarilymean that, “generally known” equates to be knownby the

general public. The comments in the UTSA clarify this perplexity to indicate that “generally

known”doesnotnecessarilymeanknownbythegeneralpublic126.Iftheprincipalpersonswho

can obtain economic benefit from information are aware of it, there is no trade secret127.

ReligiousTechnologyCtr.v.NetcomOn‐LineCommunicationServs128., Inc.&DVDCopyControl

Ass’n Inc. v. Bunner129, reinstate that even if one person knows about the trade secret that

couldderiveeconomicbenefitfromit,thenthedatacouldloseitstradesecretstatus.

Applyingunderlyingprinciplesof theabovecases, tocontextof cloudcomputing, could itbe

impliedthat,cloudserviceproviderderiveseconomicbenefitfromthedataandthereforethe

dataisheldtobegenerallyknown?RipostetothisquandaryliesintheprovisionsoftheUTSA,

whichprovideanumbrellaprotectiontothedatasharedwithcloudserviceprovider.Dutyof

confidenceimposedbyconfidentialandnon‐disclosureagreementsprotecttheenduser. It is

theprinciplerightofthetradesecretownertograntaccesstothesecrettootherssubjectto

contractual duty not to use or disclose it [Milgrim on Trade Secrets, Roger Migrims, §4.01]

Hencethedisclosuremadetothecloudserviceproviderunderconfidentialitytermswouldnot

tantamounttodisclosurewhichwouldenablethetradesecrettobegenerallyknown.

(e) Affirmativestepstobetakentoprotecttradesecret

Thetradesecretowner is requiredtoundertakeaffirmativestepstoprotecthis tradesecret.

125KewaneeOilCo.v.BicronCopr,416U.S.470,475(1974)126A. ElizabethRowe,Saving Trade SecretDisclosures on the Internet through Sequential Preservation, 42WakeForestL.Rev.1(Spring2007)127UniformActComment§1128ReligiousTechnologyCtr.v.NetcomOn‐LineCommunicationServs,10Cal.Rptr.3d(2004).129DVDCopyControlAss’nInc.v.Bunner,1997U.S.Dist.LEXIS23572,(N.D.Cal.Jan.3,1997)

30

Thisprincipleisenumeratedinthecasesmentionedhereinbelow.

a. IncaseIncvTimexCorp130

TheFirstCircuitCourtofAppealsstatesthatinordertoprotectatradesecret,affirmativesteps

must be taken to preserve its secrecy regarding a party against whom misappropriation is

claimed.

b. InMetallurgicalIndusIndus.IncvFouretek,Inc131

Thecourt inthiscasestatedthat,“effortstoprotectsecrecyarealsotiedtotherequirement

thattradesecretshavevalueindeed,whetherornotacompanytookadequatestepstoprotect

a secret is anevidenceof subjectivebelief that the informationwas a trade secret and thus

worthyofprotection”.

V. TheProblem:TradeSecretLawAppliedtoCloudComputing

Themoderndevelopmentoftechnologysignificantlyimpactsintellectualproperty132.Therehas

beenincrediblechangeinthetechnologyofcomputinginthepastyears.CloudComputinghas

beenenvisionedas thenext‐ generationarchitectureof ITEnterprise133. The revolution from

storingdata in thepersonal servers to theeraof cloud computinghas changed theway,we

havelooked,understoodandusedinformationtechnology.

130IncaseIncvTimexCorp,488F.3d46,52‐53,83U.S.P.Q.2d1032(IstCir.2007)131MetallurgicalIndusIndus.IncvFouretek,Inc,790F.2d.1195.1199‐1200(5thCir.1986)132 Andrew Beckerman‐Rodau, Trade Secrets­The New Risks to Trade Secrets Posed by Computerization,RutgersComputer&Tech.L.J.Vol.28(2002)133CongWang,QianWang,&KuiRen,EnsuringDataStorageSecurityinCloudComputing,ComputerSecurity–ESORICSSpringer(2009)

31

Incontrasttotraditionalsolutions,wheretheITservicesareunderproperphysical,logicaland

personnel controls, Cloud Computing moves the application software and databases to the

largedatacenters134.

Moving data into the cloud offers great convenience to users since they don’t have to care

aboutthecomplexitiesofdirecthardwaremanagement.135Thebusinesshavenowstartedto

rethinkthewaytheyuse,buyandstoreinformationtechnology.Ratherthandevotingalotof

cashforpurchasingservers,theyarepluggingintothenewgrid‐CloudComputing136.However

this recent typeofparadigmshift to cloudcomputing imposesnewchallenges to intellectual

propertylaw.

Oneof thechallenges,whichare imposedby this computingplatformshift, is the traditional

outlook of trade secret law for protection of valuable data,which has a fixedmechanismof

managingandusingvaluabledata.Thenewmediumofstoringvaluabledatainthevirtualized

remoteserversmayentailriskoflossintradesecretstatusandtheunderlyingprotectionunder

thevariousprovisionsofthetradesecretlaw.

The Cloud Service Provider stores the data of the end user in virtual servers in remote data

storage units. If such data qualifies for a trade secret protection under the Restatement of

TortsandUTSA,thenitmayhavelegalimplicationstotheeffectthat,ifreasonablemeasuresto

protectthedatafromdisclosure,arenotundertaken,itwouldceasetobeatradesecret.The

pertinent issue would be whether the current trade secret legal framework, appropriately

134CongWang,QianWang,&KuiRen,EnsuringDataStorageSecurityinCloudComputing,ComputerSecurity–ESORICSSpringer(2009)135CongWang,QianWang,&KuiRen,EnsuringDataStorageSecurityinCloudComputing,ComputerSecurity–ESORICSSpringer(2009).136NicholasCarr,TheBigSwitchRewiringtheworldfromEdisontoGoogle,W.W.Norton&Company;Reprintedition(January19,2009)

32

addresses the consequences of such disclosure. It is to be noted that even if the data is

accidentlyaccessedbythecloudproviderorthethirdparty,itmightloseitstradesecretstatus.

InKewaneeOilCo.v.BicronCorp137,thecourtstatedthatevenabonafidetradesecretisnot

protectedagainstdiscoverybyfairmeans,includingaccidentaldisclosure.

A,cloudprovidercanaccessthevirtualmachine,wherethedataoftheenduserisstoredand

they could also install backdoor log in to access the data. An end user is aware of these

underlyingrisksofstoringhisdataonthecloud.Ifstilltheenduser,isoptingtostorehisdatain

the cloud, could it be concluded, that he hasmigrated from the safety zone of trade secret

protection?Intheearlycaseof1982,PalinMfgCovWaterTechnologyInc138,thecourtheld

thatonewhohasdisclosedhis tradesecret tootherswithoutappropriatesafeguardscannot

claimthereafterittobeatradesecret.

Consequently,ifsuchdataismisappropriatedbythecloudserviceproviderorunrelatedthird

party, then theprotectionaccorded to theenduser,under theprovisionsofunderlying law,

wouldnotbeaccorded.

Additionally, inthismodel,thedataisdistributedindiversegeographicalregionsforensuring

thesecurityofdata.Thismay imposesignificant jurisdictional limitationsontheutilizationof

legalremediestoprotectthedata,sincelegalredressunderoursystemisgenerallybasedon

thegeographic locations139. However,all thedatastoredbytheendusermaynotqualifyas

trade secrets under Uniform Trade Secrets Act and Restatement. It is important for the

137KewaneeOilCo.v.BicronCorp,416U.S.470(1883)138PalinMfgCovWaterTechnologyInc,982F.2d1130(1992)139AndrewBeckerman‐Rodau, TradeSecrets­TheNewRiskstoTradeSecretsPosedbyComputerization,Rutgers

Computer&Tech.L.J.Vol.28(2002)

33

purposesoftheanalysis,tofirstdemarcatebetweendataprotectableastradesecretfromthe

datathatisnotprotectedastradesecret.

A. QualificationofDataAsTradeSecretInContextofCloudComputing

Thekindsofinformation/datastoredinthecloudvariesfromindustrytoindustry.Duetothe

dynamicnatureofscalabilityofthecloud,anumberofdevelopersaredeployingtheirsoftware

applications in the cloud140. The software applications deployed in the cloud might contain

sourcecodes,whichthedevelopermightwanttoindividuallydocumentandstoreinthecloud

forbuildingnewerversionofapplicationsinthecloud.Henceitisimportanttoinquirewhether

thesesoftwareprogramscouldbeprotectedastradesecrets.

SoftwarePrograms/Applications:ProtectionAsTradeSecrets

Theenduserwill deploy softwareprograms in the cloud.These softwareprogramscouldbe

protected as trade secrets. A computer program is considered as a trade secret under the

Florida law141. InLibertyAm.Ins.Group, Incv.WestpointUnderwriters,L.L.C142, thecourtheld

that“thesubjectsoftwarehasindependenteconomicvaluebecauseit isnotknowntoandis

notreadilyascertainablebyotherpersonswhocouldderiveeconomicvaluefromitsdisclosure

andtheplaintiffhadtakenreasonablemeasurestomaintainsecrecyofthesoftwareincluding

itssourcecode”andhencethesoftwarecouldberegardedastradesecret.

140The Social and Economic Impact of the Cloud, Cloud Computing Panel Discussion Code Camp,Portland.(May22,2010)

141 BrianMMalsberger,Trade Secets: A state by state Survey, BNABooks (Bureau of National Affairs) (July1997)

142LibertyAm.Ins.Group,Incv.WestpointUnderwriters,L.L.C199F.Supp.2d1271,1302(M.D.Ga.1992)

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The software codewas comfortably found to bewithin the definition of trade secret

underMassachusetts law143. Thedesign, technologyandmarketingplansof a softwarewere

alsoheld tobe trade secrets inAltaAnalytics, Inc v.Muuss144 on similar factorsdiscussed in

LibertyAm.Ins.Howeverthecourt inHoganSys., IncvCybersourceInt’l, Inc145 divertingfrom

thedecisioninBernardPersonnelConsultants,IncvMazarella146(whichheldthattheemployee

knowhow could be protected as trade secret) stated that “[g]eneral knowledge, skill and

experienceinthecomputersoftwareindustrydonotconstituteastradesecret”.

ApplicationsintheCloudContainingOpenSourceElements

In the cloud, various software applications are deployed on many instances and the cloud

provider would provide not only the necessary storage capacity but also computing

infrastructure to run the application in cloud. These software programs and/or applications

mayhavecertainelementsinthesourcecodederivedfromopensourcesoftware.Theissuein

thisscenario,wouldbe,whether,suchapplicationscouldbeprotectedastradesecretsbecause

certainelementsofcodearealreadydisseminatedtopublicviaopensourcemedium.Thisissue

wasresolvedbyUnitedStatesCourtofAppealsfortheTenthCircuitin,RivendellForestProds.

v.Georgia‐PacificCorp147,whereinitwasheldthat"atradesecretcanincludeasystemwhere

the elements are in the public domain, but there has been accomplished an effective,

143BrianMMalsberger,Trade Secets: A state by state Survey, BNA Books (Bureau of National Affairs) (July1997)OriginalCitation:HarvardApparatus,IncvCowen130.F.Supp.2d.161(D.Mass.2001)

144AltaAnalytics,Incv.Muuss,75.F.Supp.2d773,785,(S.DOhio1999)145HoganSys.,IncvCybersourceInt’l,Inc,158F.3d.319,32448U.S.P.Q.2d.1668(5thCir.1998)146BernardPersonnelConsultants,IncvMazarella,1990WL124969147RivendellForestProds.v.Georgia‐PacificCorp,28F.3d1042(10thCir.1994)

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successful andvaluable integrationof thepublicdomainelementsand the trade secret gave

theclaimantacompetitiveadvantage..."

ThecourtinfurtherinEssexGroupvSouthwireCorp.,148statedthat“thetradesecretcanexist

inacombinationofcharacteristicsandcomponents,eachofwhichisinpublicdomain,butthe

unified process design and operation ofwhich in unique combination, affords a competitive

advantageandprotectivetradesecret”.

Under the New York law, a combination of public domain elements may be a trade secret

within themeaning of Restatement of Torts § 757. In Softel Inc v. DragonMed.& Scientific

Communications, Inc149, the court held that the combination of public domain elements of

plaintiff’scomputersourcecodewasheldtobeatradesecret.Henceevenifthedatastoredby

theenduserinthecloud,hasopensourceelementsinit. Itcouldstillbeaccordedthetrade

secretstatus.

B. TradeSecret:JurisdictionIssues

Cloud computingmeans thatdatamayalwaysbe in transit," said Teppler, "never anywhere,

alwayssomewhere."150Acloudserviceproviderstoresmultiplecopiesofthedataindifferent

geographicalregionsandconsequentlythedataisdispersedacrossandstoredinmultipledata

centersallovertheworld151.Thiscouldraisejurisdictionalissue.

Thetradesecretmisappropriationcasesariseunderthecommonlawofmanystatesand

UTSA inmany states, accordingly the subject‐matter jurisdiction lies in state courts inmany

148EssexGroupvSouthwireCorp,269Ga.553,501S.E.2d501(1998)149SoftelIncv.DragonMed.&ScientificCommunications,Inc,118F.3d955,968,43U.S.P.Q.2d1385(2ndCir.1997)150http://www.enterprisestorageforum.com/continuity/news/article.php/3814821/Cloud‐Computing‐Poses‐E‐

Discovery‐Legal‐Risks.htm151DavidNavetta,LegalImplicationsofCloudComputing‐PartOne(theBasicsandFramingtheIssues)(2009)

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cases.152. If theenduser, filesatradesecretmisappropriationclaimagainstthecloudservice

provider, itcouldraisean issue,whereaparticularstatecourt,haspersonal jurisdictionover

thecloudserviceprovider,onthesolereasonthatthecopyofthetradesecret,wasstoredin

the data center in that state. This quandary in the system of cloud computing distributed

channelwouldarise this complication inpersonal jurisdictionarena.Hence in their interests,

thecloudserviceprovidershouldcomprehendbeforehand, thebenefitsof storingacopyof

usersdatainaparticulardatacenterlocatedinastateversusotherstate.

It is to be noted that, the multiple data copy issue, could have a important legal

consequence for end user, as application of data protection rules could also follow from

locationchoices153.Fore.gastatewheretheenduser’sdataismoreprotectivethaninstatein

comparisonwithanotherstate,wherealsothecopyofthestored.Tocombatthissituation,the

endusershouldcarefullypickuptheforumswherethecloudserviceprovidermayhavedata

centers,wherehigherlevelofdataprotectionisgrantedbythecourtsinthatstate.

VI. Proposals: Measures to be adopted by End User to safeguardTradeSecretunderReasonableStandardTest

Thelawdoesnotrequirethetradesecretownertobuildanimpenetrablefortressaroundthe

around its trade secret154, the end user should however take into account in designing a

reasonable protection programwhichwill ensure him the protection under the trade secret

law.Thesemeasuresinthelightofthecourtsdecisionarediscussedhereinbelow

152HenryH.Perritt,Jr.,TradeSecretsPractitioner’sGuide,(2ndEdition),PracticingLawInstitute(2004)153RobertGellman,PrivacyintheCloud:RisksandConfidentiality,WorldPrivacyForum.154Vicotria A Cundiff,ReasonableMeasures to Protect Trade Secret in a Digital Environment, Franklin Law Review(2009)

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I. EncryptionAsaPrecaution

Cryptographymightbeoneof the technology tools for theenduser toprotecthisdata.The

goalofencryption is to scrambleobjects so that theyarenotunderstandableorusableuntil

theyareunscrambled.Thetechnical termsforsuchprocessareencryptinganddecrypting155.

Encryption is also used to protect data in transit andwhen data is stored. There have been

numerousreportsofdataintransitbeinginterceptedinrecentyears156.

Current cryptosystems come in two basic configurations. The first is a "shared single key

cryptology"whichrequiresthesamekeytoencryptanddecryptthemessage157.Thesecondis

a "public key cryptography," which uses two keys; one to encrypt the message and one to

decryptit158.

The cloud providerwill always encrypt datawhen it is at transit, however datamay not be

encrypted it is at rest (stored). Existing cloud serviceprovidersmayprovidebasic encryption

keyschemestosecurecloudbasedapplicationdevelopmentandservices,ortheymayleaveall

suchprotectivemeasuresuptotheircustomers159.

Theenduserhasdiscretionofencryptingdatawhenitisatrest.Itispertinenttonotethatthe

keyusedforencryptiontothedatastoragecouldalsobewiththeprovider.

155Computer Science and Telecommunications Board Commission on Physical Sciences, Mathematics, and

Applications, TheDigital Dilemma, Intellectual Property in the Information Age. National Academy Press,WashingtonD.C(2000)

156FiberOpticNetworksVulnerable toAttack, InformationSecurityMagazine,November15,2006, SandraKayMiller

157Henderson,CharlesP,Encryption,keyrecovery,andCommercialTradeSecretAssets:AProposedLegislativeModel.RutgersComputer&Tech.L.J.(1999)

158Henderson,CharlesP,Encryption,keyrecovery,andCommercialTradeSecretAssets:AProposedLegislativeModel.RutgersComputer&Tech.L.J.(1999)

159CloudSecurityAlliance ,SecurityGuidance for CriticalAreasofFocus inCloudComputing (Version2.1)(December2009)

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If the encryption and decryption key is the with the cloud provider, there would be a

substantial,riskofaccessofthedatatothecloudprovider.Thisproblemmightbeeliminated

by a recent technological development in the field of cryptography, whereby homomorphic

encryption thatwould allow applications to compute directly on encrypted data, and return

encryptedresultstotheenduser. Thiswouldenablecouldprovidertocomputeinthecloud

withoutactuallygivingthecloudprovideraccesstothedata160.

The courts have taken diverse opinions regarding whether encryption of the data could be

adequatetomeettherequirementsofreasonablestandardtestunderthedoctrinesoftrade

secretlaw.

ThecourtinHeartlandHomeFin.,Incv.AlliedMortgageCapitalCorp161,heldthat“theuseof

an encrypted email to transmit the alleged trade secret and the password protection were

insufficienttomeettherequirementgiventhelackofothersecuritymeasures”162.

Inanothercase,InTwinVisionCorpvBellSouthCommc’nSys.,163thecourtdidnorprovideany

lightorguidance,onwhetherencryptionalonewouldbesufficientevidencethattradesecret

ownerhastakenreasonableefforttopreservethetradesecretstatus.

However, only encryption of the data may not constitute reasonable protection under the

principlesofLiebertvMazur164wherein, thecourt stated thatsimplyby restrictingcomputer

160HomomorphicEncryptionBreakthroughAvailableathttp://www.schneier.com/blog/archives/2009/07/homomorphic_enc.ht(July9,2009)161HeartlandHomeFin.,Incv.AlliedMortgageCapitalCorp,No1:05CV2659,2007U.SDist.LEXIS8882162HeartlandHomeFin.,Incv.AlliedMortgageCapitalCorp,No1:05CV2659,2007U.SDist.LEXIS8882163TwinVisionCorpvBellSouthCommc’nSys,No97‐55231,1998U.SApp.LEXIS13607164LiebertvMazur,827N.E.2d909(III.App.Ct.2005)

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access to customer lists by requiring a password is not sufficientmeasures to provide trade

secretprotectiontotheinformation165.

In Aetna, Inc. v. Fluegel166, the court commenting on commenting on plaintiff’s use of

encryption for somedocuments as evidenceof its reasonablemeasures tomaintain secrecy,

recognized the use of encryption as evidence of the trade secret owner’s efforts to protect

tradesecrets.Howeverthecourtshasthusnotyetreachedapointwherefailingtousesuch

encryptionas amatterof course constitutes aper se failure to take reasonablemeasures to

preservesecrecy167Henceiftheenduserisconcernedaboutstoringsensitiveandconfidential

datainthecloud,theendusershouldencryptthedata(individualfiles)beforeuploadingitto

thecloud168.

II. ConfidentialityAgreementsandNon‐DisclosureAgreements

Oneofthemeasurestheendusercouldadopttosafeguarditstradesecret istoenter intoa

Non‐DisclosureagreementandConditionalityAgreement.Theseagreementswillcontractually

createonobligationontheendusertoprotectthetradesecret. Ifthecloudserviceprovider

misappropriates the trade secret, it couldhave legal consequences for breachof contract as

wellasmisappropriationunderUTSA.§41oftheUTSAimposesthedutyofconfidencetothe

cloud service provider and hewould be liable under §40 ofUTSA for appropriation of trade

secret,ifthereisaConfidentialityAgreementandNon‐DisclosureAgreementssignedbetween

thepartiesand thecloudserviceproviderhasacquired the tradesecretby impropermeans.

165LiebertvMazur,827N.E.2d909(III.App.Ct.2005)166Aetna,Inc.v.Fluegel,No.CV074033345S,2008WL544504(2008)167VicotriaACundiff,ReasonableMeasurestoProtectTradeSecret inaDigitalEnvironment,FranklinLaw

Review(2009)168JineshVaira,CloudArchitectures,AmazonWebServices.

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Theseagreementsmustbeinexistenceatthetimewhentheenduserishostshisdatainthe

cloud169. The language of the agreements must be clear and unambiguous170 and more

importantlyitsshouldcreateadutyofconfidentiality171

III. ContractuallypreventReverseEngineering

An end user may store his trade secret in the cloud, the end user or third party may be

restricted under the doctrines of the trade secret law to access or use the trade secret.

However the trade secret lawwon’t protect the enduser’s trade secret, if the cloud service

provideror the thirdpartygainsaccess to the tradesecretbymeansof reverseengineering.

The court in Kewanee v. Bicron172 stated that “While trade secret law does not forbid the

discovery of the trade secret by fair and honestmeans e.g., independent creation or reverse

engineering173”

Itisthereforeimportantfortheendusertocontractuallyprohibitthecloudserviceproviderto

reverseengineerthetradesecret.ThecaselawsPaintonCovBourns,Inc174,DiodesvFranzen175

reflect a general consensus that a contractual prohibition against reverse engineering is

enforceable176

IV. ChecklistfortheEndUser

169RTECorpv.CoatingsInc,267N.W.2d.226,232(Wis1978)170DioneevvSoutheastFoamConverting&PackagingInc.,397S.E.2d110,112(Va.1990)171WanbergvOceanSprayCanberries.,Inc194U.S.P.Q350,352,1977,WL22790(N.D.1II.1977)&172Kewaneev.Bicron,416U.S.470,476(1974)173RogerMMilgrim,MilgrimonTradeSecret ,Vol.1, §1.01[1],MatthewBenderandCompany Inc. (Updated2009)174PaintonCovBournsInc,442F.2d216,223(2dCir.1971)175DiodesvFranzen,260Cal.App.2d224,250,67Cal.Rptr.19(1968)176RogerMMilgrim,MilgrimonTradeSecret ,Vol.1, §1.05[5],MatthewBenderandCompany Inc. (Updated2009)

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CHECKLISTFORTHEENDUSER

Data/applicationstobehostedinthecloudqualifyasatradesecret.Ref:QualificationofdataasTradesecret

Confidentiality Agreement or NDA between the End user and CloudServiceProviderRef: Measures to be adopted by End Users in safeguarding their tradesecrets

Inwhichstate(location)mydatastored?

Ref:DataisalwaysinTransit:JurisdictionsIssues

CanIhavecontrolaccesstomultiplecopiesstoredinthecloud?

Ref:Reasonablestandardrequirement.

Agreementswillsurvivetheterminationoftheagreement.Ref: Measures to be adopted by End Users in safeguarding their tradesecrets

CompletewipingofallthecopiesstoredinthecloudRef: Measures to be adopted by End Users in safeguarding their tradesecrets

Anti‐ReverseEngineeringprovisionintheAgreementRef: Measures to be adopted by End Users in safeguarding their tradesecrets

DataEncryptionRef: Measures to be adopted by End Users in safeguarding their tradesecrets

VII. Conclusion

Astechnologyevolvesitchallengestheintellectualpropertylaw177.Thetradesecretlawmust

adjusttothenewrealitiesoftheeraoftechnologicaldevelopment.Themannerinwhich,the

tradesecrethasevolvedtoadjusttonewchallengesboughtbytheadventof internet. Itwill

also have to adjust to the new boom of cloud computing. Once the trade secret law177RogerMMilgrim,MilgrimonTradeSecret,Vol.2,MatthewBenderandCompanyInc.(Updated2009)

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accommodatescloudcomputingwithinitsambit,newandinterestingdevelopmentsinthelaw

will takeplace.CloudComputingandother technologieswon’tprove tobe thedeathof the

tradesecret,insteadthesewillpaveawayfornewtechnologiesinthefuturetobeadaptedby

the law.Howeverwhatmighthavebeena reasonableprecaution tenyearsago toprotect a

tradesecretisnotnecessarilyreasonabletodayinthelightofchangedcircumstancestoday178.

Thisshortchecklistmightenabletheendusertohosthisdataonthecloudwithoutlosinghis

tradesecretstatus.

178Rowe,ElizabethA.,ContributoryNegligenceandTechnologyandTradeSecrets,UniversityofFloridaLevin

CollegeofLawResearchPaperNo.2008­06.(May01,2009).http://ssrn.com/abstract=1161166