DRAFT. PJC xxx.aa Question on Existence of Trade Secret

Transcription

1 PJC xxx.aa Question on Existence of Trade Secret QUESTION Did Paul Payne own a trade secret in the [formula, pattern, compilation, program, device, method, technique, process, financial data, or list of actual or potential customers or suppliers] listed below? Trade secret means information, including a [formula, pattern, compilation, program, device, method, technique, process, financial data, or list of actual or potential customers or suppliers] that: 1. 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 2. is the subject of efforts that are reasonable under the circumstances to maintain its secrecy. Proper means are discovery by independent development, [reverse engineering,] or any other means that is not improper. Improper means include: theft; bribery; misrepresentation; breach or inducement of a breach of a duty to maintain secrecy, to limit use, or to prohibit discovery of a trade secret; or espionage through electronic or other means. Answer Yes or No for each trade secret you find Paul Payne owned. 1. [Sample trade secret instruction]. Answer: 2. [Sample trade secret instruction.] Answer: COMMENT When to use. This question submits the issue of the existence of one or more trade secrets for misappropriation claims brought under the Texas Uniform Trade Secrets Act (the Act ), effective September 1, See Tex. Civ. Prac. & Rem. Code 134A.002. It should be used only if there is a dispute about the existence of a trade secret. Broad-form submission. Tex. R. Civ. P. 277 requires that the court shall, whenever feasible, submit the cause upon broad-form questions. Tex. R. Civ. P. 277; see Thota v. Young, 366 S.W.3d 678, 689 (Tex. 2012) (quoting Tex. Dep t of Human Servs. v. E.B., 802 S.W.2d 647, 649 (Tex. 1990) ( interpreting whenever feasible to mandate broad-form submission in any or every instance in which it is capable of being accomplished )). If there is legal uncertainty on one or more theories of recovery, broad-form submission may not be feasible, and separate questions may be required. See Romero v. KPH Consolidation, Inc., 166 S.W.3d 212, 215 (Tex. 2005) (single broad-form proportionate responsibility question may not be feasible if one theory 1

2 is legally invalid or not supported by sufficient evidence); Crown Life Insurance Co. v. Casteel, 22 S.W.3d 378, (Tex. 2000) (broad-form submission combining valid and invalid theories of liability was cause of harmful error). For further discussion, see Introduction 4(a) or PJC In some cases, such as when only a single trade secret is claimed, a broader question that combines issues of both existence and misappropriation may be feasible. In such cases, the question below may be used: Did Don Davis misappropriate a trade secret owned by Paul Payne? To find misappropriation of a trade secret, you must find that a trade secret existed that was owned by Paul Payne, and that Don Davis [Insert applicable instruction(s) regarding improper means of acquisition, use, or disclosure from PJC xxx.bb.] [Insert applicable definition instruction(s) from PJC xxx.aa above.] Answer Yes or No. Answer: Sample trade secret instructions. The nature of a trade secret is necessarily fact-specific. Therefore, the following sample instructions are illustrative only, using hypothetical situations to examples of how instructions may be worded to submit the existence of various types of trade secrets. Sample A the chemical formula for Paul Payne s [widgets]. Sample B the pattern for Paul Payne s [widgets]. Sample C the compilation of specified data for the design/production of Paul Payne s [widgets]. Sample D Paul Payne s [widget] program. Sample E the method for designing/manufacturing Paul Payne s [widgets]. Sample F the technique for designing/manufacturing Paul Payne s [widgets]. Sample G the process for designing/manufacturing Paul Payne s [widgets]. Sample H Paul Payne s financial data for his [widget] business. Sample I Paul Payne s list of actual or potential customers or suppliers for his [widget] business. 2

3 Ownership of trade secret. The Act does not expressly require ownership of trade secrets to sustain a misappropriation claim or to recover damages. Tex. Civ. Prac. & Rem. Code 134A.002(3); see LBDS Holding Co., LLC v. ISOL Tech. Inc., No. 6:11 CV 428, 2014 WL , at *1 (E.D. Tex. 2014). But ownership of a trade secret has been construed to be an element of a misappropriation claim under the Act. St. Jude Med. S.C., Inc. v. Janssen-Counotte, No. A 14 CA 877 SS, 2014 WL , at *14 (W.D. Tex. Dec. 17, 2014) (applying Texas law). Texas courts construing the Act have not yet addressed whether a plaintiff who has a right to use the trade secret may recover for misappropriation. The Act specifies the extent to which it displaces other Texas law regarding remedies for misappropriation of trade secrets. Tex. Civ. Prac. & Rem. Code 134A.007. To the extent that prior Texas law regarding ownership of trade secrets has not been displaced, Texas courts held prior to the Act that a plaintiff must establish ownership of the trade secret as an element of its misappropriation claim. Rusty s Weigh Scales & Serv., Inc. v. N. Tex. Scales, Inc., 314 S.W.3d 105, 109 (Tex. App. El Paso 2010, no pet.); Mabrey v. SandStream, Inc., 124 S.W.3d 302, 310 (Tex. App. Fort Worth 2003, no pet.). The supreme court treated a licensee of a trade secret as an owner who could pursue a claim for misappropriation. K&G Oil Tool & Serv. Co. v. G&G Fishing Tool Serv., 314 S.W.2d 782, 785, 790 (Tex. 1958); see also LBDS Holding Co., 2014 WL , at *1. Trade secret. The definition of trade secret is derived from the Act. Tex. Civ. Prac. & Rem. Code 134A.002(6). The court should only submit the bracketed portions of the definition that could apply to the particular trade secrets alleged. The definition does not include the six factors noted by the Texas Supreme Court in resolving a discovery dispute in In re Bass, 113 S.W.3d 735, (Tex. 2002) (orig. proceeding) ( (1) the extent to which the information is known outside of his business; (2) the extent to which it is known by employees and others involved in his business; (3) the extent of the measures taken by him to guard the secrecy of the information; (4) the value of the information to him and to his competitors; (5) the amount of effort or money expended by him in developing the information; (6) the ease or difficulty with which the information could be properly acquired or duplicated by others. ). In re Bass identified pre-act factors that a trial court faced with a discovery dispute should consider in determining the existence of a trade secret, not factors that should be included in a jury instruction. Proper means & reverse engineering. The definitions of proper means and reverse engineering are derived from the Act. Tex. Civ. Prac. & Rem. Code 134A.002(4) (5). The Act defines proper means to include reverse engineering unless prohibited. Tex. Civ. Prac. & Rem. Code 134A.002(5). The Committee notes that no Texas case has yet addressed the meaning of unless prohibited under the Act. In a case where reverse engineering of a product or device is not prohibited and is raised by the pleadings and the evidence, the following definition may be submitted: Reverse engineering means the process of studying, analyzing, or disassembling a product or device to discover its design, structure, construction, or source code provided that the product or device was acquired lawfully or from a person having the legal right to convey it. Uniform construction. The Act provides that it should be applied and construed to effectuate its general purpose to make uniform the law with respect to the subject of this chapter among states enacting it. Tex. Civ. Prac. & Rem. Code 134A.008. Similarly, the Texas Government Code also provides that a uniform act included in a code shall be construed to effect its general purpose to make uniform the law of those states that enact it. Tex. Gov t Code

4 PJC xxx.bb Question on Trade-Secret Misappropriation If you answered Yes for any part of Question xxx.aa, then answer the following question as to that part. Otherwise do not answer the following question. QUESTION Did Don Davis misappropriate Paul Payne s trade secret? To find misappropriation of a trade secret, you must find that Don Davis [acquired the trade secret, and that Don Davis knew or had reason to know that the trade secret was acquired by improper means; or] [disclosed or used the trade secret without Paul Payne s express or implied consent, and that Don Davis used improper means to acquire knowledge of the trade secret; or] [disclosed or used the trade secret without Paul Payne s express or implied consent, and that Don Davis, at the time of the disclosure or use, knew or had reason to know that his knowledge of the trade secret was derived from or through a person who had utilized improper means to acquire it; or] [disclosed or used the trade secret without Paul Payne s express or implied consent, and that Don Davis, at the time of the disclosure or use, knew or had reason to know that his knowledge of the trade secret was acquired under circumstances giving rise to a duty to maintain its secrecy or limit its use; or] [disclosed or used the trade secret without Paul Payne s express or implied consent, and that Don Davis, at the time of the disclosure or use, knew or had reason to know that his knowledge of the trade secret was derived from or through a person who owed a duty to Paul Payne to maintain its secrecy or limit its use; or] [disclosed or used the trade secret without Paul Payne s express or implied consent, and that Don Davis knew or had reason to know, before a material change of his position, that it was a trade secret and that knowledge of it had been acquired by accident or mistake.] Improper means [is/are theft; bribery; misrepresentation; breach or inducement of a breach of a duty to maintain secrecy, to limit use, or to prohibit discovery of a trade secret; or espionage through electronic or other means]. Answer Yes or No for each trade secret. 1. [Sample trade secret instruction]. Answer: 2. [Sample trade secret instruction.] Answer: 4

5 COMMENT When to use. This question submits the issue of liability for misappropriation of one or more trade secrets under the Texas Uniform Trade Secrets Act (the Act ), effective September 1, See Tex. Civ. Prac. & Rem. Code 134A.002. Misappropriation. Section 134A.002(3) of the Act provides for six alternative improper methods of acquisition, use, or disclosure of trade secrets. The instruction above complies with the Act by listing these six alternative improper methods of acquisition, use, or disclosure in brackets, but only the method(s) supported by the pleadings and evidence should be submitted. The definition of improper means is taken from section 134A.002(2). The definition does not contain an exclusive list of improper means. Only those means raised by the evidence should be submitted. The Texas Supreme Court discussed the cause of action for misappropriation of trade secrets in Hyde Corp., 314 S.W.2d at (relying on RESTATEMENT (FIRST) OF TORTS 757 (1939)). The cause of action was further discussed in Stewart & Stevenson Services, Inc. v. Serv- Tech, Inc., 879 S.W.2d 89, (Tex. App. Houston [14th Dist.] 1994, writ denied). See also Phillips v. Frey, 20 F.3d 623, 627 & n.5 (5th Cir. 1994) (applying Texas law). Violation of duty imposed by confidential or contractual relationship. Confidential relationships imposing duties relating to a trade secret can exist in various situations. See, e.g., Tex. Civ. Prac. & Rem. Code 134A.002(3) (describing circumstances in which duties concerning trade secrets arise under statute); H.E. Butt Grocery Co. v. Moody s Quality Meats, Inc., 951 S.W.2d 33, 36 (Tex. App. Corpus Christi 1997, writ denied) (finding negotiations during sale of business created confidential relationship); Am. Derringer Corp. v. Bond, 924 S.W.2d 773, 777 (Tex. App. Waco 1996, no pet.) (finding that a former employee is prohibited from using confidential information or trade secrets acquired during his employment); Crutcher- Rolfs-Cummings, Inc. v. Ballard, 540 S.W.2d 380, 287 (Tex. Civ. App. Corpus Christi 1976, writ ref d n.r.e.) (finding a confidential relationship because the plaintiff and the defendant were licensor and licensee and also joint adventurers). If the court determines that, as a matter of law, there was a contractual or confidential relationship giving rise to a duty to maintain the trade secret s secrecy or limit its use, an instruction to that effect may be necessary. A party involved in a confidential relationship is under a duty not to use or disclose trade secret information obtained during the course of the relationship. See Am. Derringer Corp., 924 S.W.2d at 777. In Hyde Corp. v. Huffines, the Court articulated the rule as provided by section 757 of the Restatement of Torts concerning confidential relationships: a party is liable if his disclosure or use of another s trade secret is a breach of the confidence reposed in him by the other in disclosing the secret to him. 314 S.W.2d 763, 769 (Tex. 1958); see also Am. Derringer Corp., 924 S.W.2d at 773. Proper means & reverse engineering. In cases where PJC xxx.aa is not submitted, the definitions from that question of proper means and reverse engineering (if applicable) should be submitted with PJC xxx.bb. Commercial use. The Act does not define use. Prior to the Act, trade secret use was defined at common law to mean commercial use by which the offending party seeks to profit from the use of the secret. Atlantic Richfield Co. v. Misty Products, Inc., 820 S.W.2d 414, 422 (Tex. App. Houston [14th Dist.] 1991, writ denied) (citing Metallurgical Indus. Inc. v. Fourtek, Inc., 790 F.2d 1195, 1205 (5th Cir. 1986)); see also Global Water Group, Inc. v. Atchley, 244 S.W.3d 924, 930 5

6 (Tex. App. Dallas 2008, pet. denied). If there is a factual dispute concerning the nature of the use, the court may include the following instruction derived from Atlantic Richfield : Use of the trade secret means commercial use by which the offending party seeks to profit from the use of the secret. Limitations. The statute of limitations for trade secret claims is three years and is subject to the discovery rule. Tex. Civ. Prac. & Rem. Code If limitations is at issue, the committee recommends this question, which is adapted from PJC , be included: By what date should Paul Payne, in the exercise of reasonable diligence, have discovered the [acquisition] [use] [disclosure] by Don Davis of Paul Payne s [identify trade secret(s) submitted in PJC xxx.aa]. Former employees. The Act does not expressly address use of trade secret information by former employees. In cases where a former employee s use of information may be at issue, the court may provide an instruction as follows: An employee may use general skills and knowledge obtained though previous employment to compete with the former employer. A former employee, however, may not use confidential or proprietary information acquired during the employment relationship in a manner adverse to his former employer. This instruction is derived from Sharma v. Vinmar Intern., Ltd., 231 S.W.3d 405, 424 (Tex. App. Houston [14th Dist.] 2007, pet. dism d), and T-N-T Motorsports, Inc. v. Hennessey Motorsports, Inc., 965 S.W.2d 18, 22 (Tex. App. Houston [1st Dist.] 1998, no pet.). 6

7 PJC 115.xx[a] Question on Trade-Secret Misappropriation Damages [Insert predicate, PJC 115.1] QUESTION What sum of money, if any, if paid now in cash, would fairly and reasonably compensate Paul Payne for his damages, if any, caused by such misappropriation? Consider the following elements of damages, if any, and none other. [Insert appropriate instructions. See samples in PJC.xxx.xx[b]] Do not add any amount for interest on damages, if any. Answer separately in dollars and cents for damages, if any. a. [Element A] sustained in the past. Answer:. b. [Element A] that, in reasonable probability, will be sustained in the future. Answer:. c. [Element B] sustained in the past. Answer:. d. [Element B] that, in reasonable probability, will be sustained in the future. Answer:. COMMENT When to use. PJC 115.xx[a] should be predicated on a Yes answer to PJC xxx.bb and may be adapted for use in most trade-secret misappropriation cases by the addition of appropriate instructions setting out legally available measures of damages. See PJC 115.xx[b]. If only one measure of damages is supported by the pleadings and proof, the measure may be incorporated into the question. Elements of damages submitted separately. The Committee generally recommends that multiple elements of damages be separately submitted to the jury. Harris County v. Smith, 96 S.W.3d 230, (Tex. 2002) (broad-form submission of multiple elements of damages may lead to harmful error if there is a proper objection raising insufficiency of the evidence to support one or more of the elements submitted). Further, [p]rejudgment interest may not be assessed or recovered on an award of future damages. Tex. Fin. Code (wrongful death, personal injury, or property damage cases); see also Johnson & Higgins of Tex., Inc. v. Kenneco Energy, Inc., 962 S.W.2d 507, 514, 530 (Tex. 1998) (reconciling equitable prejudgment interest with statutory prejudgment interest); Perry Roofing Co. v. Olcott, 744 S.W.2d 929, 931 (Tex. 1988) (unliquidated damages in contract cases); Cavnar v. Quality Control Parking, Inc., 696 S.W.2d 549, (Tex. 1985) (personal injury, later extended to other types of cases). Therefore, separation of past and future damages is required. 7

8 Elements considered separately. Golden Eagle Archery, Inc. v. Jackson, 116 S.W.3d 757, 770 (Tex. 2002), provides an instruction for cases involving undefined or potentially overlapping categories of damages. In those cases, the following language should be substituted for the instruction to consider each element separately: Consider the following elements of damages, if any, and none other. You shall not award any sum of money on any element if you have otherwise, under some other element, awarded a sum of money for the same loss. That is, do not compensate twice for the same loss, if any. Prejudgment interest. Instructing the jury not to add interest is suggested because prejudgment interest, if recoverable, will be calculated by the court at the time of judgment. If interest paid on an obligation is claimed as an element of damages, it may be necessary to modify the instruction on interest. Future damages. Future damages may not be recoverable if an injunction is obtained. Pursuant to the Texas Uniform Trade Secrets Act (the Act ), effective September 1, 2013, an injunction may condition future use of the trade secret upon payment of a reasonable royalty in exceptional circumstances. Tex. Civ. Prac. & Rem. Code 134A.003(b). In such cases, Sample C from PJC 115.xx[b] should be submitted to determine the future royalty. The Committee notes that no Texas case has yet addressed what constitutes exceptional circumstances under the Act. Attorney s fees. Under the Act, the court may award reasonable attorney s fees to a prevailing party in certain circumstances, such as when a claim of misappropriation is made in bad faith or wilful and malicious misappropriation exists. Tex. Civ. Prac. & Rem. Code 134A.005(1), (3). Texas courts have not yet addressed whether issues such as reasonableness, bad faith, or wilful and malicious misappropriation are to be determined by the court or the jury. For a question submitting reasonableness to the jury, see PJC Exemplary damages. Pursuant to the Act, only wilful and malicious misappropriation may form the basis for an award of exemplary damages in misappropriation-of-trade-secret cases. Tex. Civ. Prac. & Rem. Code 134A.004(b). Texas courts have not yet addressed whether the meaning of wilful and malicious in this context differs from the definition of malice ordinarily submitted in exemplary damage cases. See PJC B. 8

9 PJC 115.xx[b] Sample Instructions on Actual Damages Trade-Secret Misappropriation Sample A Plaintiff s actual loss Paul Payne s lost profits caused by the misappropriation. Sample B Defendant s unjust enrichment Profits that Don Davis earned from the misappropriation [or] Development costs that Don Davis avoided by the misappropriation Sample C Reasonable royalty The price that a willing buyer and a willing seller would have agreed upon, at the time of the misappropriation, as a fair price for Don Davis s use or disclosure of the trade secret. COMMENT When to use. Section 134A.007 specifies the extent to which the Texas Uniform Trade Secrets Act (the Act ), effective September 1, 2013, displaces other Texas law regarding remedies for misappropriation of a trade secret. To the extent other Texas law has not been displaced by the Act, it is examined below. The Act provides for three measures of damages: (1) actual loss caused by misappropriation; (2) unjust enrichment caused by misappropriation that is not taken into account in computing actual loss; and (3) in lieu of damages measured by any other methods, a reasonable royalty for the misappropriator s unauthorized disclosure or use of the trade secret. Tex. Civ. Prac. & Rem. Code 134A.004(a). As explained below, the sample elements of damages provided above are not intended to be exclusive, and it may be appropriate to modify an element, or to submit an element other than those listed above, in a particular case. Plaintiff s actual loss. The Act provides that a plaintiff is entitled to recover the actual loss caused by misappropriation of a trade secret. Tex. Civ. Prac. & Rem. Code 134A.004(a). Cases decided prior to the Act often used the plaintiff s lost profits caused by the misappropriation to measure actual loss, and that measure is used in Sample A above. See Elcor Chem. Corp. v. Agri- Sul, Inc., 494 S.W.2d 204, 214 (Tex. App. Dallas 1973, writ ref d n.r.e.); see also Bohnsack v. Varco, L.P., 668 F.3d 262, 280 (5th Cir. 2012) ( Damages in misappropriation cases can take several forms [including] the value of plaintiff's lost profits ); RESTATEMENT OF TORTS 757 cmt. e; RESTATEMENT (THIRD) OF UNFAIR COMPETITION 45 cmts. d, e (1995). For further discussion of lost profits, see the comment to PJC Depending on the evidence, actual loss may include elements in addition to lost profits, or lost profits may not be an appropriate measure of actual loss. In such cases, additional or alternative instructions on the appropriate measure of damages must be provided. See PJC and instructions. for sample 9

10 Defendant s unjust enrichment. In some cases, the defendant has used the plaintiff s trade secret to his advantage with no obvious effect on the plaintiff save for the relative differences in their subsequent competitive positions. Lykes-Youngstown Corp., 504 F.2d at 535. The Act provides that a claimant is entitled to recover the unjust enrichment caused by misappropriation of a trade secret. Tex. Civ. Prac. & Rem. Code 134A.004(a). Cases decided prior to the Act examine various forms of benefits, profits, or advantages gained by the defendant in the use of the trade secret. Lykes-Youngstown Corp., 504 F.2d at Unjust enrichment damages may be measured by the defendant s actual profits from the misappropriation of the trade secret, Bohnsack, 668 F.3d at 280; Lykes-Youngstown Corp., 504 F.2d at 536, 539; Elcor Chem. Corp., 494 S.W.2d at 214, or the development costs the defendant avoided incurring through misappropriation, Bohnsack, 668 F.3d at 280; Lykes-Youngstown Corp., 504 F.2d at Depending on the facts, either the defendant s profits or costs avoided or both may be submitted, and each measure may be modified as necessary to ensure that the jury s verdict can be translated into a judgment without awarding the plaintiff a double recovery. If the defendant earned profits from the misappropriation, the plaintiff may recover the total amount of the defendant s profits or some apportioned amount corresponding to the actual contribution the trade secret(s) made to the defendant s profits. Lykes-Youngstown Corp., 504 F.2d at 539. The Act permits recovery for both actual loss and unjust enrichment to the extent the unjust enrichment caused by the misappropriation is not taken into account in computing actual loss. TEX. CIV. PRAC. & REM. CODE 134A.004(a). Reasonable royalty for use. The Act authorizes recovery of a reasonable royalty for a misappropriator s unauthorized disclosure or use of a trade secret, but it provides that such damages are in lieu of damages measured by any other method. Tex. Civ. Prac. & Rem. Code 134A.004(a). Cases decided prior to the Act examine this measure of damages as well. E.g., Elcor Chem., 494 S.W.2d at 214; Calce, 309 S.W.3d at 738; see RESTATEMENT (THIRD) OF UNFAIR COMPETITION 45 cmts. d, g (1995). A reasonable royalty is the amount of money the plaintiff and defendant would have agreed upon at the time of the misappropriation as a fair price for licensing the defendant to put the trade secret to the use it intended. MGE UPS Sys., Inc. v. GE Consumer & Indus., Inc., 622 F.3d 361, 367 n.2 (5th Cir. 2010); Lykes-Youngstown, 504 F.2d at This standard evaluates the actual value of what has been appropriated. Id. at 537; see also Metallurgical Indus. Inc. v. Fourtek, Inc., 790 F.2d 1195, 1208 (5th Cir. 1986). In determining this price, the following factors may be considered: (1) the resulting and foreseeable changes in the parties competitive positions; (2) past prices that purchasers or licensees paid for the trade secret; (3) the total value of the secret to the plaintiff, including development costs and the importance of the secret to the plaintiff s business; (4) the nature and extent of the defendant s use of the trade secret; and (5) other factors such as whether an alternative process exists. Fourtek, 790 F.2d at 1208; Lykes-Youngstown, 504 F.2d at 540; Calce, 309 S.W.3d at 738. Hypothetical sale. The Act does not specifically include a measure of damages allowing recovery of the amount that would be paid in a hypothetical sale of the trade secret at the time it was misappropriated, though pre-act cases recognized this measure as a species of actual loss or unjust enrichment damages. E.g., Bohnsack, 668 F.3d at 280; Lykes-Youngstown Corp., 504 F.2d at 535 & n.26; Precision Plating & Metal Finishing, Inc. v. Martin-Marietta Corp., 435 F.2d 1970). 1262, 1263 (5th Cir. 10

11 The hypothetical sale theory considers the amount a reasonable purchaser would have paid for the trade secret. Bohnsack, 668 F.3d at 280. This method calculates damages by looking at the investment value of the trade secret. Precision Plating, 435 F.2d at In other words, damages are determined by what an investor would pay for the return he foresees from owning the trade secret, taking into account the facts, circumstances, and information available at the time. Id. This measure of damages is used when the defendant has deprived the plaintiff of the trade secret s use or destroyed its value, such as by publishing the trade secret so that no secret remains. Lykes-Youngstown Corp., 504 F.2d at 535. If the law, the pleadings, and the evidence warrant the submission of a hypothetical-sale damage instruction, the following form may be used: Sample D Hypothetical sale The value that a reasonably prudent investor would have paid for the trade secret at the time of the misappropriation See Bohnsack, 668 F.3d at 280. Contractual remedies. The Act does not affect contractual remedies premised upon misappropriation of trade secrets. Tex. Civ. Prac. & Rem. Code 134A.007(b)(1). 11