“Holy Secret Recipe, Batman!”: Superheroes, the Misappropriation of Trade Secrets, and Economic Espionage

(This guest post was written by T. Stephen Jenkins, an associate in the Commercial Litigation Practice Group of Pepper Hamilton LLP.)

While Law and the Multiverse has featured several posts on various forms of intellectual property law (e.g. patent, copyright, and trademark), it has yet to discuss trade secrets . . . until now.  Trade secrets commonly appear in comic books, and given the recent concern with computer security and the alleged theft of trade secrets by domestic and international hackers, theft of trade secrets is a worthwhile topic to discuss.  (Warning:  minor spoilers ahead)

 

I. What IS a Trade Secret?

A person or company holding a trade secret, as its name suggests, seeks to safeguard information that is known by the person or company that is not readily known by anyone in the public.  Trade secrets can overlap with other forms of intellectual property, such as non-patentable inventions, trade dress, and “know-how.”  However, unlike many other forms of intellectual property where recovery of damages might be limited by lack of federal registration (disclosure) of the intellectual property (e.g. copyrights and patents), generally speaking, a trade secret holder may be able to recover damages if he or she maintained a reasonable level of protection to prevent non-disclosure of the trade secret.  The Uniform Trade Secrets Act (“UTSA”), which 48 of 50 states have adopted (or introduced) in some form, defines a trade secret as

(1) information, including a formula, pattern, compilation, program, device, method, technique, or process, that (2) derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by, other persons who can obtain economic value from its disclosure or use, and (3) is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.

Uniform Trade Secrets Act §1, ¶ 4.

Trade secrets are common—and even famous—in the real world.  One of the most famous examples is the Coca-Cola secret recipe, which, for years has been guarded and has been the subject of threats of economic espionage.  Other examples of famous trade secrets include KFC’s “11 herbs and spices” and Google’s search algorithm.  Even less apparent examples of trade secrets have gained fame including the methodology for creating the New York Times Best Sellers’ list and Starwood Hotels’ (the owner of Westin hotel chain) luxury ambience.  Each of the above satisfies the three elements of the UTSA definition of a trade secret.

First, each example easily satisfies the information prong.  See  1-1 Milgrim on Trade Secrets § 1.01 (“The classic definition of trade secrets is stated at § 757, comment b, of the 1939 Restatement of Torts. . . . It covers any information (which can be embodied in a physical thing . . .”).  Second, because some have attempted to either unlawfully misappropriate and/or reverse-engineer the above trade secrets, it is probably safe to assume each trade secret has independent economic value in not being generally known.  Third, all are highly protected (though safeguarding all the details that create a Starwood Hotel’s luxury ambience is undoubtedly challenging).

Given the broad definition of a trade secret under UTSA, one can see how patterns, formulas, or devices in the Multiverse likely qualify as trade secrets.  The challenge is demonstrating whether these secrets have economic value.

The most famous comic book trade secret may be the Super Soldier Serum that created Captain America (and other characters), which many have tried to misappropriate (e.g. the Red Skull) and reverse engineer (e.g. the Green Goblin).  Though the Super Solider Serum was the product of government military research, there is a strong case that is has economic value.  Many villains and fictional enemies of the United States have tried to misappropriate the secret formula and use it either to gain a military advantage or to create a steady supply of mercenaries for hire.  Therefore, it is reasonable to assume that the Super Soldier Serum could meet the trade secret requirements.

Other examples might include:

  • Devices:  Spider-Man’s webshooters and Batman’s gadgets;
  • Programs/Patterns:  X-men Danger Room (depending on whether or not it is sentient) and Cerebro/Cerebra;
  • Methods/Techniques/Processes:  The method to access the Speed Force and the process of joining adamantium to Wolverine’s skeleton;
  • Formula: Vibranium and its derivative uses including Captain America’s shield, the Super Solider Serum, and the Anti-Life Equation;
  • Information/Compilations:  S.H.I.E.L.D.’s database on superheroes and villains and Justice League’s/X-Men’s/Avengers team-up database.

A superhero’s secret identity (within the Multiverse) may also be a trade secret, though not as easily established as the above.  See the Law and the Multiverse’s post on secret identities and privacy for an analogous argument.  For public superheroes such as those registered under the Marvel Universe’s Superhuman Registration Act, their secret identities may not enjoy trade secret protection.  However, other superheroes have had to protect their secret identities against those trying to kill them or sell their secret (e.g. Spider-Man).  They have also obtained benefits in their non-superhero professions from keeping their superhero identities secret (e.g. Peter Parker (photographer) / Spider-Man, Clark Kent (journalist) / Superman, and Matt Murdock (attorney) / Daredevil)).  Thus, for these superheroes, a secret identify might qualify as a trade secret.

 

II. What Laws Protect Trade Secrets?

In contrast to patents, copyrights, and trademarks, which federal law either establishes and/or strongly protects, trade secrets’ protection mostly arises from state law, though recently, international and federal protection of trade secrets has increased.  Most states have adopted UTSA in some form, which provides for civil actions for injunctive relief and damages within three years after misappropriation is discovered.  Two U.S.-signed treaties, the Agreement on Trade Related Aspects of Intellectual Property Rights (“TRIPS”) and the North American Free Trade Agreement (“NAFTA”) also provide some protection.

Recently, the federal Economic Espionage Act (“EEA”), 18 U.S.C. §§ 1831 et seq.,  and the Computer Fraud and Abuse Act (“CFAA”), 18 U.S.C. § 1030 et seq., have become enforcement tools against criminal misfeasors.  Both the EEA and the CFAA provide harsh civil and criminal penalties for the trade secret theft. See 18 U.S.C. §§ 1831 et seq. (providing for fines up to $10 million and/or 15 years imprisonment for economic espionage or trade secret theft); 18 U.S.C. § 1030 et seq. providing for unspecified fines and/or up  to 20 years imprisonment).

 

III. Who in the Multiverse Has Violated the EEA or the CFAA?

Though there are several examples of potential violations of the EEA and the CFAA in the Multiverse, a favorite comes from Marvel Entertainment’s popular Iron Man “Armor Wars” storyline (for a DC Comics example, see the mini-series aptly named The Hacker Files).

 

A. The Facts

“Armor Wars” is an Iron Man story arc that has appeared in many of Marvel’s comic book series.  In addition, it was featured in the second season of the Iron Man:  Armored Adventures televised cartoon.  In the Iron Man:  Armored Adventures version, Tony Stark is a teenager balancing being a superhero and a high school student.  Tony’s main antagonist is Obadiah Stane, who ousted Tony from the family company Stark International.

Stane, then Chair of the Board of Stark International, enlists Ghost to steal the Iron Man armor specifications.  Ghost goes to Tony’s hideout to steal the specs from Tony’s computer.  Stane also makes a deal with Doctor Doom, handing over the armor specs to Dr. Doom in exchange for help with creating a version of the armor for Stane.  Using Tony’s armor specs, Stane creates his own version of the Iron Man armor, becoming Iron Monger but is exposed as being involved with Ghost.  Ghost also sells the Iron Man armor specs to Justin Hammer (in this version a 21-year old spoiled rich kid), who creates his own version of the Iron Man armor, becoming Titanium Man.

 

B. Is There a Cause of Action Under the EEA or the CFAA?

While the cartoon takes a different approach to resolve the problem, consider whether a prosecutor or Tony could bring a claim under the EEA or the CFAA against (1) Ghost, (2) Stane, (3) Dr. Doom, and (4) Hammer (collectively, the “Misfeasors”).

 

1. Economic Espionage Act

Under the EEA, a prosecutor or Tony could bring claims of both theft of trade secrets (42 U.S.C. § 1832) and economic espionage (42 U.S.C.§ 1831).  The EEA makes it unlawful for a person to steal a trade secret and transmit it to a person who knows he or she is not authorized to possess it.  The EEA also makes it unlawful for a person to steal a trade secret with the purpose or knowledge that the delivery of the trade secret will benefit a foreign government (economic espionage).

The Misfeasors are all potentially liable for theft of trade secrets.  The EEA provides that “[w]hoever, with intent to convert a trade secret . . . steals, or without authorization,” or “appropriates . . . information” or “receives, buys, or possesses such information” or “attempts . . . or conspires . . . to commit any offense” described above shall be subjected to fines and/or imprisonment.  First, the Iron Man armor specs, at least in this storyline, are trade secrets  because they meet all the requirements under UTSA (see above Captain America/Super Soldier Serum analysis).  Moreover, the reason Stane and Hammer pay Ghost to steal the specs is because they want to derive economic value.  Second, the Misfeasors were involved in a conspiracy to misappropriate the specs:  Ghost stole the specs; Stane and Hammer bought the stolen specs, and Dr. Doom received the stolen specs.

However, not all of the Misfeasors are clearly liable for economic espionage under the EEA.  The EEA’s economic espionage provision is conceptually the same as its theft of trade secret provision, but requires that a misfeasor transmit a trade secret “intending or knowing that the offense will benefit” a foreign government or agent.  Here, the foreign government or agent is Latveria or Dr. Doom, respectively.

Hammer is likely not liable for economic espionage because it would be difficult to prove that he intended or knew that Dr. Doom would gain the armor specs.  In contrast, Stane and Dr. Doom are likely liable because they conspired for Dr. Doom to obtain the specs.  But the trickier case is Ghost who was happy to sell the specs to highest bidder.  Because it was Stane and not Ghost who gave the specs to Dr. Doom, Ghost can argue that he did not intend or know that his theft would benefit Dr. Doom.  However, given that “a conspiracy can exist even if each participant does not know the identity of the others or does not participate in all the events,” cf. United States v. Monroe, 73 F.3d 129, 131 (7th Cir. 1995) (internal citations omitted), Ghost’s argument may fail.

 

2. Computer Fraud and Abuse Act

The Misfeasors are also likely liable under the CFAA, which provides that “[w]hoever . . . knowingly accessed a computer without authorization or exceeding authorization . . . obtain[s] information that has been determined by [U.S. law] to require protection against unauthorized disclosure . . . [and] transmits . . . or conspires [to transmit]. . . to any person not entitled to receive it” will be subject to fines and/or imprisonment.  18 U.S.C. § 1030 (a)–(c).  The analysis under the CFAA is similar to the theft of trade secret analysis but requires that the information be obtained from a “protected computer.”  Under the CFAA a protected computer is either (1) a computer “exclusively for the use of a financial institution or the United States Government, ”18 U.S.C. § 1030(e)(2)(A), or (2) a computer used in “interstate or foreign commerce or communication,” 18 U.S.C. § 1030(e)(2)(B).  The latter requirement is a low standard to meet

Tony’s computer is a protected computer because it was used in interstate communication.  Thus, the Misfeasors could be facing years of imprisonment or at least hefty fines.  Dr. Doom may escape penalty given that, as the sovereign of his own country, he will likely not extradite himself for prosecution.  And if the U.S. government came after Dr. Doom or any of the Misfeasors, it would likely take years to reach a resolution, which is probably why the story arc’s writers resolved the issue in a much swifter way.

Using the EEA and the CFAA to pursue real-world misfeasors may increase in the coming years.  The EEA and the CFAA give federal prosecutors—and to a lesser extent civil litigants—broad power to prosecute alleged misfeasors, making even attempts to misappropriate trade secrets actionable.  “The Department of Justice has made the investigation and prosecution of corporate and state sponsored trade secret theft a top priority. . . . The FBI is also expanding its efforts to fight computer intrusions that involve the theft of trade secrets by individual, corporate, and nation-state cyber hackers.”  See Office of the President, Admin. Strategy on Mitigating the Theft of U.S. Trade Secrets at 7.

While there are many proponents and opponents of their use, there is no doubt that the Economic Espionage Act and the Computer Fraud and Abuse Act have had profound effects.  Of course, you can always come to Law and the Multiverse to see how the EEA and the CFAA continue to affect super powered individuals—and Pepper Hamilton LLP if you ever need real-world advice.

10 Responses to “Holy Secret Recipe, Batman!”: Superheroes, the Misappropriation of Trade Secrets, and Economic Espionage

  1. This was an excellent piece.

    I am curious about the international aspects of Dr. Doom’s involvement though. Even if the U.S. somehow gained custody of him physically, could he not argue that at the time of his violation of the EEA he was simply not subject to the law since he was in Latveria?

    If Stane or his agents came to Latveria (I haven’t followed that story arc, so I don’t know) it would even be possible that Dr. Doom did not so much as communicate with anyone while they were in America and took all of his actions in Latveria while dealing with people that were at least at that moment in Latveria. Would that insulate him or would the law still reach him if it could somehow gain custody?

    • Dr. Doom may also have protections as a foreign head of state. It may be worth looking into Stane’s culpability for giving this technology to Latveria.

    • If the crime happened in America, then America has jurisdiction over the crime. However, they’d have to obtain jurisdiction over the person in order to prosecute, which is probably a problem with regard to Doom. In most cases, we obtain personal jurisdiction by asking the defendant’s own nation to detain and extradite him, which Doom is unlikely to do (since there are generally no diplomatic relations with Latveria, there’s probably no extradition treaty, and of course Doom is unlikely to order himself deported so long as he retains monarchy in Latveria. However, no diplomatic relations means no diplomatic immunity, either, if he chooses to come here (unless, of course, he demands and receives diplomatic immunity prior to coming.

      • Doom has diplomatic immunity though, and he does frequently visit the US on state business (seemingly, at least- I’m thinking of that JMS Spidey story where Spiderman saved Doom at a New York airport from assassins, the one where he introduces Mary-Jane to Captain America; Doom was complaining about having to be there). I think we can just assume that much as the US does not like Doctor Doom and gets a tad annoyed at his bids for world domination or attempts to murder certain American celebrity citizens, its just a hell of a lot safer for everyone to keep diplomatic channels open. Think of Latveria less as some kind of rogue state with an eccentric despot leader, and more like the Soviet Union during the Cold War- except Latveria is more advanced than either of them by a considerable margin, and of Latveria and America went to war Latveria would dominate.

      • Remember that for the most part the writers are wedded to status quo in the comics. The exact power of the U.S. and of Latveria is what they need to have one of their stories involving a team of superheroes having a challenge.

        Anyway, setting that aside, sovereign immunity isn’t a perfect shield. Heck, Stark could sue the state of Latveria in a court of law. Admittedly Doom isn’t likely to even send a lawyer to deal with it, let alone abide by the ruling, but he could find his overseas assets seized and difficulty with banks.

      • James Pollock

        “Doom has diplomatic immunity though, and he does frequently visit the US on state business”
        Well, I chalk that up to comic-book writers not actually understanding how diplomatic immunity actually works. In any case, as often as Doom comes to the U.S., it’s usually unauthorized… for which the penalty is removal… and he usually self-deports.
        However, it’s frequently stated that there are no diplomatic relations with Latveria (meaning that anyone captured in Latveria has no embassy at which to seek recourse or sanctuary.) Now, my familiarity is primarily with older Fantastic Four storylines, and not current ones, so it’s possible that things have changed… but in one of the Marvel Ultimate Alliance games, there’s a level set in Latveria where the prologue is quite specific about “no diplomatic relations”.
        Typically, the United States is more lenient in allowing “diplomats” to enter the U.S. specifically for purposes of meeting with the U.N. at U.N. headquarters in New York, so Doom could probably get temporary authorization to enter the U.S. and diplomatic immunity for purposes of going to the U.N. After his many skirmishes on U.S. soil, though, I’d think they’d be very specific as to what he’s allowed to do while in the U.S., with immunity covering him only while engaged in those allowed activities.

      • In regards to diplomatic immunity, its often granted for a specified area. Doom for example could get diplomatic immunity, but only for a certain radius around the UN headquarters, or even for a specific travel route to and from the airport or his lodging.

      • Latveria definitely has an embassy in America though (including in the older stories), even if the US doesn’t have one there. Its an odd relationship. As for unauthorised entry, like I said at least once he used an American airport. But possible he just uses some kind of teleportation device to go straight to his embassy. I wouldn’t be surprised if he has some kind of special deal or circumstance going on that allows him to travel to and from America freely (its not like anyone can stop him). I don’t think there are many cases when he has ever been deported, and I think the amount of crimes he has committed on US soil could easily be grounds for arrest if simply taken as an Act of War. Again, I think this just mainly comes down to the US is so absolutely terrified of Doctor Doom that they don’t bother trying to stop him. They can’t throw him in jail- he will definitely escape, and it might simply be a Doombot (hmm….what are the diplomatic rights of the Doombot, I wonder? Or would that be considered using weapons against the US?) And just try removing him by force. But mainly because if they annoy Doom too much, he might retaliate, and that would be a very bad thing indeed, because the US cannot win a war against Latveria (they’ve done VR simulations, plus he’s easily conquered the world several times and often crippled the country at will). Doom probably represents a case where the law simply cannot be enforced, and thus is allowed to do as he pleases- within reason.

  2. Could Doom be tried in abstensia (sp?) if he refuses to come to The US to face charges?

  3. I know that for at least a while in the Cold War-era comics, Latveria held the status of a repugnant but sometimes-useful ally, being an Eastern European state that wasn’t aligned with the Communist Bloc. Dictator? Sure, but not a Red dictator.

    So while the official relations could be quite cool (that world-conquering thing gets such bad press), there’s a reason not to cut Doom off entirely. And yes, there was a Latverian embassy in New York as of at least the second Secret War series.

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