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INTRODUCING A TAKEDOWN FOR TRADE SECRETS ON THE INTERNET

2007 Wis. L. Rev. 1041 (2007)

Elizabeth A. Rowe

I. Introduction

Late on a Friday afternoon in October, Wal-Mart executives discover that the content of their sales circulars for the entire Christmas season has just been posted on fatwallet.com, a bargain-shoppers discussion forum. The posted content includes Wal-Mart's closely guarded sale prices. Fearing that competitors may use the valuable pricing information to compete unfairly, Wal-Mart's attorneys immediately contact the operators of the Web site to request that they remove Wal-Mart's trade-secret information. The operators refuse. They contend, correctly, that since the information is not copyrighted, they have no obligation to remove it under the Digital Millennium Copyright Act (DMCA), which does not cover trade secrets. The information remains posted throughout the weekend and for another four days until Wal-Mart obtains a temporary restraining order from the court to have the material removed. By then, however, overjoyed shoppers have distributed the circulars all over the Internet, and, using this information, Wal-Mart's competitors are modifying their planned promotions.

This Article explores, for the first time, an existing void in trade-secret law. When a trade-secret owner discovers that its trade secrets have been posted on the Internet, there is currently no legislative mechanism by which the owner can request that the information be taken down. The only remedy to effectuate removal of the material is to obtain a court order, usually either a temporary restraining order or a preliminary injunction. When a trade secret appears on the Internet, the owner often loses the ability to continue to claim it as a trade secret and to prevent others from using it. Accordingly, trade-secret owners bear the burden of being vigilant and acting quickly if there is to be any chance of preserving the trade-secret status of the information. The current requirement of a court order for a takedown not only is costly but also is too slow for trade-secret owners because of the speed with which users distribute information over the Internet. Obtaining a temporary order from a court would likely take no fewer than several days.

Given that secrecy is vital to preserving trade-secret status, time is of the essence to trade-secret owners, and each hour that a trade secret is available on the Internet is an hour too long. In order to address this time-lapse problem, this Article explores a proposal for trade-secret takedown legislation similar to that which provides for the immediate removal of suspected copyright violations under the DMCA. A takedown provision for trade secrets would provide self-regulation and privatized enforcement in an effort to permit trade-secret owners to save their trade secrets from near-certain death on the Internet. A takedown provision would offer an expedited process for disabling access to trade-secret information in the interim period between discovery of the misappropriated material and issuance of a ruling by a court.
The threat of trade secrets appearing on the Internet occurs with sufficient frequency and potentially poses grave threats to trade-secret owners and the functioning of the economy. Thus, the threat merits action or at least an open discussion. The fact that no less than forty-two amicus briefs supporting the trade-secret owner were filed in DVD v. Bunner, a significant trade-secret-disclosure case, is but one salient indication of this issue's importance to industry.

Indeed, there might be an even larger number of reported trade-secret-disclosure cases were it not for the nature of trade secrets and the lack of a takedown mechanism. Unlike copyright law, which has yielded many instances of reported and unreported cases involving copyright infringement on the Internet, trade-secret law has not provided adequate remedies. This might have caused trade-secret owners who suffered from Internet postings to disguise their claims in copyright clothing in order to request a takedown under the DMCA. Moreover, because the value of a trade secret lies in its secrecy, most misappropriators who have acquired others' trade secrets and plan to use them for their own competitive advantage have no incentive to publicize the secrets. [FN9] Thus, historically, trade-secret-misappropriation cases have only implicated disclosure of the secrets in a very limited fashion, such as to a new employer.
The Internet's rise, however, has spawned a motivation to acquire trade secrets for a reason other than competitive advantage--employee revenge. The ease with which virtually anyone can post information on the Internet, coupled with the Internet's “disinhibiting effect” and a general decline in employee loyalty, has allowed disgruntled employees to achieve the ultimate revenge against their former employers by destroying trade secrets. One court noted the shift in the balance of power made possible by the Internet: “With the Internet, significant leverage is gained by the gadfly, who has no editor looking over his shoulder and no professional ethics to constrain him. Technology blurs the traditional identities of David and Goliath.” Accordingly, Internet disclosures are likely to become a greater problem than they have been in the past. Trade-secret owners also *1046 hesitate to file suits because they fear that such lawsuits will incite even greater discussion or even disclosure of their trade secrets online. One trade-secret owner resorted to filing suit as an anonymous plaintiff in order to avoid further economic harm from the publicity, but the court ultimately prohibited the owner from proceeding anonymously.

Despite the apparent necessity for this kind of legislative mechanism, Congress should tread cautiously to maintain an appropriate balance between protection for trade-secret owners, on the one hand, and the public's right to free expression and the use of information in the public domain, on the other hand. Ultimately, the objective should be for policy makers to create legislation that a trade-secret owner can use as a shield to protect its intellectual property rather than as a sword to suppress publication of embarrassing content. It is also important that Congress tailor any legislation to fit existing trade-secret-law principles in order to ensure consistency in implementation and application by courts. The legislation proposed in this Article keeps these objectives in mind.

Part II of this Article provides relevant background about the law pertaining to trade secrets on the Internet. Part III explains why a takedown provision for trade-secret law merits consideration. Part IV summarizes the DMCA safe-harbor provision. Part V introduces components of trade-secret-takedown legislation while Part VI addresses potential areas of concern, such as the First Amendment and technological challenges. Part VII concludes by arguing that in light of the various considerations explored in the Article, Congress should consider takedown legislation for trade secrets using the DMCA safe-harbor provision as a starting point.

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