IP: Questions

Questions?

Questions from Trade Secrets 1

Question 1

In the Fortek case, if Metallurgical had gone bankrupt, how was the information still of value to it? On a related note, if a company goes out of business, what happens to its trade secrets - are the up for grabs, or do the heads of the company have the only rights to them? Thanks!

Answer 1

On page 38 of the text, quoting Ruckelshaus v. Monsanto, 467 U.S. 986, the book says, "A trade secret can form in the res of a trust, and it passes to the trustee in bankruptcy." Ruckelshaus at 1002-1004. So the trustee would have a claim against any misappropriation, even after the company went belly up. I assume it would raise some interesting issues as to what duty employees under confidentiality agreements have to the company in bankruptcy, as well as what interest the company has in protecting the secrets. There is also a strong public policy argument that if a company that has gone bankrupt does not do something with its trade secrets they should fall into the public domain. Afterall, information likes to be free. -- Ben Snitkoff

Thanks! Information likes to be free, but creditors and trustees in bankruptcy like to be paid. Might they litigate even more vigorously than the original company would have?

[Note that in Metallurgical, it was the defendants' former company that went bankrupt. Evidence that the trade secret wasn't worth much to them when they misappropriated it, or that the employees weren't loyal to anyone?] WendySeltzer 10:56, 4 September 2007 (EDT)