Sammy, Nuk or Tiger

I. Background Fish Tank Facts:

In September of 2012, our family had plans to host several families at our house to watch the Clemson v. Florida State football game being played in Tallahassee. My wife loves people and entertaining. To create a fun, festive, and pleasant environment for the game, she and the children, while running errands that Saturday, decided to purchase a small fishbowl. Included in this “small” fishbowl were three Orandas. An Oranda, as shown above, is a bright “orange” and white fish from the goldfish family, pretty hearty but they do require a decent amount of space, oxygen, etc. (more than provided in a 2.5 gallon fishbowl).

As diehard Clemson fans excited about the game that night, the children had already named these three fish: (1) Sammy (Watkins), (2) Nuk (Hopkins), and (3) Tiger. Apologies to Tahj Boyd, but I do think that his spirit was embodied in the fish they named Tiger. By the time we got home from church the next day, it was clear that the water in the fishbowl was not clear, and the fishbowl was not large enough for the three Orandas. On Monday morning, the tank was so cloudy you could barely see through it.

And so arose the need for the “first of many” trips to the local pet store, armed with information from the Internet on how to make a home-made moving bed filter for the fishbowl. By Monday afternoon, the filter design for the fishbowl had been adamantly vetoed by my wife, and I also knew we needed a larger structure and a different location (not in the kitchen!). I still don’t understand why it could not have stayed on the island in the middle of the kitchen, or what the problem was with a few air tubes, and wires hanging out of it, but that is getting into the Mars and Venus stuff which is well beyond the scope of this or any other blog. So I was off to the pet store for what would be the second of numerous pet store trips.

The result of this second trip was the purchase of a 10 gallon tank, more rocks, an artificial plant, more plastic tubing for filter(s), filter media, and a second air pump. The tubing and the air pumps were eventually used to create our “trade secret,” aquarium filter(s). And thus began the quest to educate myself and the children on aquatic life, good bacteria, pH, nitrates, nitrites, and ammonia. Oh yeah, I bought a water testing kit during one of the pet store trips.

II. Fish Tank Trade Secrets:

Looking back, this was also the beginning of the development of a Fish Tank Trade Secret portfolio. To date, and solely for discussion purposes, we have identified the following as examples of trade secrets developed with respect to our 10 gallon freshwater fish tank:

1) filter construction, operation and cleaning;
2) cleaning method(s);
3) algae prevention, a/k/a Otto Sinklus; and
4) [others]…

The detailed descriptions of these trade secrets are withheld to protect their status as trade secrets! Everyone in my family has signed a NDA, well not really, but should we chose to commercialize these trade secrets, they may need independent counsel. Recall that (in some states) an employer may need to get their employees to sign non-competes when they are hired or else give them a raise so that the restrictive covenant (e.g., non-compete) is supported by consideration.

III. Trade Secret Definition:

Under the South Carolina version of the Uniform Trade Secret Act (SCUTSA), S.C. Code Section 39-8-10 et seq., “trade secret” is defined as follows:

(5) “Trade secret” means:

(a) information including, but not limited to, a formula, pattern, compilation, program, device, method, technique, product, system, or process, design, prototype, procedure, or code that:

(i) derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by the public or any other person who can obtain economic value from its disclosure or use, and

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

(b) A trade secret may consist of a simple fact, item, or procedure, or a series or sequence of items or procedures which, although individually could be perceived as relatively minor or simple, collectively can make a substantial difference in the efficiency of a process or the production of a product, or may be the basis of a marketing or commercial strategy. The collective effect of the items and procedures must be considered in any analysis of whether a trade secret exists and not the general knowledge of each individual item or procedure.

S.C. Code Section 39-8-20(5) (bold emphasis added).

IV. Analysis of Trade Secret(s) Status:

Since these above described techniques, methods, products, systems, and processes meet the criteria set forth in subsections (a)(i), (a)(ii) of S.C. Code Section 39-8-20(5), and further can be considered for their collective effect as per subsection (b), our client (i.e., me) could affirm under oath that a trade secret or secrets exists. At that point, we have evidence in support of a trade secret and a factual issue to be decided by a court in litigation.

As a practical matter, missing from this hypothetical scenario is that these Fish Tank Trade Secret(s), arguably, have not yet attained “independent economic value,” via use in the marketplace, and certainly if they did, the value would not likely justify litigation. However, the SCUTSA specifically allows for “potential” economic value. S.C. Code Section 39-8-20(5)(a)ii). So when start an aquarium/fish tank service company, would this knowledge imparted, for example, to one of my sons (under non-compete of course) qualify as a trade secret? Clients could be local families and / or businesses that do not have time, energy, motivation or skills to maintain their tanks.

Note that the statutory definition of trade secret specifically refers to the fact that the trade secret information can “collectively make a substantial difference in the efficiency of a process.” S.C. Code Section 39-8-20(5)(b). So, when we start our fish tank cleaning, maintenance and service company, which will need a good suggestive tradename by the way, the overall effect of the trade secret products, procedures and practices should tip the scales in our favor for trade secret status and protection of at least one trade secret.

So what about a carpet cleaner? Are his or her acquired skills any less confidential or valuable? Where do we draw the line between transferable job skills and trade secret information? Is the difference in the recordkeeping? It may well be, as records can definitively show an intent to develop and maintain trade secrets as opposed to a post hoc rationale for attempting to stop an employee from leaving and taking clients or customers. Remember, the question of trade secret or job skills is one that both former employers and prospective employers need to be asking themselves regarding the departing employee.

V. Take Aways / Questions ?

A. Same / Similar / Substantially Identical Trade Secret, Multiple Owners: If independently developed, any two (or more) companies can own the same trade secret(s), and they may / should never know that the other (or others) are using the same processes. Trade secrets, unlike patents, do not provide for an exclusive right to practice the invention(s).

This raises the question: Could or has a company ever patented a process that may have been denied a patent if the trade secrets of their competitors were publicly known? Almost certainly yes they have, and such facts would create quite a dilemma for the trade secret holder that sees their process as the subject of another’s patent application. Was the invention sought to be patented independently derived? This could probably be determined from reviewing the connections of the alleged inventors with the owner of the trade secret. Alas, a subject for a future post … patent policy favors disclosure, right to practice, etc.

B. The Three R’s: My 9 year daughter corrects me when I tell her that her education is all about the three R’s, namely: Reading, wRiting and aRithmetic. It is hard to get anything past a 9 year old, right? The three R’s here are: Recordkeeping, Recordkeeping and Recordkeeping, specifically with respect to the “reasonable measures” to identify and protect the trade secret(s).

C. What About Your Fish Tank Trade Secrets?: Is your business or any one you know in business undervaluing, underestimating or ignoring the value of their trade secrets? For many, the answer is most likely YES, and as stated in one of our inaugural posts, the trick may come down to your recordkeeping and control over the information that you may one day need to publicly claim as a trade secret to protect your business.

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