Soft Corporation is a leading maker of software and operating systems. It undertakes great measures to protect the secrecy of its new products under development, plans to launch new products, technical product specifications, and product source codes, all of which it considers company trade secrets. A disgruntled employee, John Sneaky, one of the few persons with access to the source code to Soft’s soon to be released operating system, Win100, posts the source code (labeled “Confidential & mdash; Soft Proprietary Information”) on a members-only website critical of Soft, Softsucks.com.

 

Soft discovers the posting within six hours of its appearing on the site, and after informing the site operator that the information is a stolen Soft trade secret, it is immediately removed. Prior to its removal, however, Sam Quickbuck, had downloaded the source code. When he realized the next day that the source code was no longer available on Softsucks.com he decided to capitalize on the opportunity.

 

He posted a notice on his website offering the code for sale: “Win100 source code, original, (jacked from inside) available for sale. Get it here before it’s even released and stick it to Soft. If you wanna buy it ($50) I’ll give you a password to download it.”

 

Soft sues Quickbuck for misappropriation of trade secrets, seeking a preliminary injunction to prohibit his use and sale of the source code. After a hearing, the court denies relief to Soft, reasoning that despite Soft’s best efforts to keep the source code secret, it has lost its trade secret status by virtue of it appearing on the Internet, and that Quickbuck cannot be enjoined from using it. Soft now faces widespread use of its source code by other competitors and a resulting loss of market share for its Win100 operating system. As a result of the ruling, it can no longer claim the source code as a trade secret.

 

This hypothetical [1] introduces the problem and accompanying questions tackled by this Article. When, for instance, an employee discloses an employer’s trade secrets to the public over the Internet, does our current trade secret framework appropriately address the consequences of that disclosure? What ought to be the rule which governs whether the trade secret owner has lost not only the protection status for the secret, but any remedies against use by third parties? Should the ease with which the Internet permits instant and mass disclosure of secrets be taken into consideration in assessing the fairness of a rule which calls for immediate loss of the trade secret upon disclosure?

 

Elizabeth A. Rowe*