Trade Secret Protection
As a business grows, success in the marketplace may depend on how well the creativity that started that growth is protected. Trade Secret Protection is a valuable form of intellectual property that is often overlooked.
If you are planning on submitting a patent application to the USPTO or other patent
agency, it may be critical to keep your patent specifications and application as
a trade secret until application, publication, or issue depending on the circumstances.
The proper strategy is vital in case your patent application does not issue-
Trade secrets are protected by both state laws (which vary from state-
The UTSA provides a legal framework for improved trade secret protection for industry.
Enactments Alabama, Alaska, Arizona, Arkansas, California, Colorado, Connecticut, Delaware, District of Columbia, Florida, Georgia, Hawaii, Idaho, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Maryland, Michigan, Minnesota, Mississippi, Missouri, Montana, Nebraska, Nevada, New Hampshire, New Mexico, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, Puerto Rico, Rhode Island, South Carolina, South Dakota, Tennessee, U.S. Virgin Islands, Utah, Vermont, Virginia, Washington, West Virginia, Wisconsin, Wyoming
2011 Introductions Massachusetts, New Jersey
How should you be protecting your business? Trade secrets? Trademarks? Patents? Copyrights?
Intellectual Property is more than just patents: Trademarks, service marks, copyrights
and trade secrets are also important tools in protecting innovation. Intellectual
Property also includes brand names, slogans, taglines (tag lines) & logos, domain
names, web sites (who really owns what is being developed?), pending patent applications,
pending trademark applications, consulting and non-
Performing an Intellectual Property audit is a means of finding out what you’ve got and what it’s worth and where it can be improved. Intellectual Property Rights are very fact oriented and what works for one business will be different from another. It depends on what types of innovation you need to protect.
The strategy for protecting your IP assets needs to be tailored to the specific requirements of your business and needs to take into account your company’s relationships to its employees, its suppliers, and its customers. Having your innovation leak out through misappropriation hurts your organization and your bottom line. There are a number of quizzes at http://iprquiz.com/ that show many ways a business can use Intellectual Property Rights (IPR) to protect the creativity and innovation that you have put into your business.
How to Keep A Trade Secret:
Identify, Assign a Value, Protect It
Identify Trade Secrets
What is a trade secret? A widely relied-
Trade secrets are the only intellectual property right (IPR) where ideas can be protected. This is not just true for strategic business ownership methods but is also true for ideas and innovations that are being developed for patenting. It is crucial to protect ideas at this stage to prevent someone else from patenting them and to assure that a public disclosure is not made of the innovation which could bar (prevent) being able to get a patent. There may be no recourse for someone taking your idea unless they legally misappropriated it or unless you reach the conception stage and patent application stage before they do, can prove it and get the patent instead of them. See Avoid Public Disclosure.
Ideas may come from many people and places but the patent goes to the inventor(s) who takes the idea to completion and can describe the invention well enough that someone skilled in the art can build the complete and operable invention without much experimentation. “An inventor may consider and adopt ideas, suggestions and materials derived from many sources: a suggestion from an employee, a hired consultant or a friend even if the adopted material proves to be the key that unlocks the problem so long as the inventor "maintains intellectual domination of the work of making the invention down to the successful testing, selecting or rejecting..." Morse v. Porter, 155 USPQ 280, 283 (Bd. Pat. Inter. 1965).” MPEP 2138.04. Protecting ideas and innovation is essential!
Examples of trade secrets that have been protected through litigation include: customer
lists, price structure methods, accounting methods, secret recipes or formulas, manufacturing
processes, and the content of contracts and agreements. Negative information can
also be a trade secret-
Patented methods, products & processes that have been improved since the patent application are often kept as trade secrets by the patent owner. Patented methods, products & processes of patents whose terms are expired where the methods, products or processes have been improved are often kept as trade secrets by the anyone with the resourcefulness to strategically search patents & harvest the data, implement improvements, and keep the improvements a secret.
What’s the difference between a patent and a trade secret? A trade secret is usually distinguished from a patent either because: it consists of something that cannot be patented; it consists of something in the process of being patented (and still secret); or a decision was made that keeping the product or process as a trade secret because it was more beneficial to keep secret than seek a patent. See Comparison Chart of Trade Secrets v. Patents.
Trade Secret Valuation
In order to claim the benefits of trade secrets as intellectual property or in the event of stolen trade secrets, trade secret owners must have an estimated value for the trade secret to assess value or damages for civil liability or criminal prosecution. One of the these three methods (from the U.S. Department of Justice’s Task Force on Intellectual Property in their Progress Report of the Department of Justice’s Task Force on Intellectual Property) may be used to find an estimated value.
Method
___Cost to Develop the Trade Secret;
___Acquisition Cost (identify date and source of acquisition); or
___Fair Market Value if sold.
The World Intellectual Property Organization (WIPO) has a paper called Intangible Asset & Intellectual Property Valuation: A Multidisciplinary Perspective (pdf), by By Paul Flignor and David Orozco that explains how valuation of intellectual property can be determined in more detail.
If you are a privately-
If you are a publicly-
Trade Secret Protection
The following list of measures was developed from the U.S. Department of Justice’s Task Force on Intellectual Property in their Progress Report of the Department of Justice’s Task Force on Intellectual Property, June 2006.
This is not an all-
General Physical Measures Taken to Protect the Trade Secret
- Physical security precautions such as fencing the perimeter of the premises, visitor
control systems, using alarming or self-
locking doors, or hiring security personnel;
- Establish physical barriers to prevent unauthorized viewing or access to the trade secret, such as “Authorized Personnel Only” signs at access points;
- Require sign in/out procedures for access to and return of trade secret materials;
- Employees required to wear identification badges;
- Written security policy;
- Employees advised of the security policy;
- Employees required to sign a written acknowledgment of the security policy;
- Access to the trade secret limited to a “need to know” basis.
Confidentiality and Non-
- Enter into confidentiality and non-
disclosure agreements with employees and third- parties concerning the trade secret; - Establish and distribute written confidentiality policies to all employees.
Computer-
- Computer source code or other computer-
stored information has access regulated (e.g., are employees given unique user names and passwords)
- Trade secret, if on a computer network, is protected by a firewall;
- Prohibit employees from bringing outside computer programs or storage media to the premises.
Document Control
- Documents clearly marked “CONFIDENTIAL” or “PROPRIETARY”;
- Document control procedures such as limiting access and signing in/out policies;
- Written policy concerning document control procedures and advising employees of the written procedure.
Employee Controls
- Employees subject to a background investigation;
- Hold “exit interviews” to remind departing employees of their obligation not to disclose trade secrets.
One way of determining what type and level of trade secret protection is right for
you is to do a cost/benefit analysis of keeping the information as a trade secret
or a patent (if applicable). If neither a trade secret or patent is viable, consider
using other tools such as branding (a trademark) to protect the market rather than
the information. A high quality product or service that is well trademarked and promoted
may be of higher value than a secret process. If the cost of keeping a trade secret
outweighs the benefit, than it may not be a good business decision to protect the
information. However, don’t wait to lock the barn door until after the horse is gone-
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