session 7 trade secrets & know how

8/9/2019 Session 7 Trade Secrets & Know How

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Trade Secrets & Knowhow


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Points to be covered

What are trade secrets

Protection of trade secrets

Advantages and disadvantages of trade secret

Developing trade secret strategy for business Relevant cases & examples from industry


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What are trade secrets?

Any confidential business information not commonlyknown to the relevant business circles or to the public,

provides an enterprise a competitive edge and

economic benefit,

Development of trade secrets involve cost Anything that is easily and completely disclosed by

mere inspection of a product put on the market

cannot be considered as trade secrets.


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Trade secrets can beinformation related to echnical and !cientific information

"ommercial #nformation

$inancial #nformation %egative #nformation


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Technical & Scientic

Information anufacturing process, techni'ue Dyeing , printing techni'ue, recipe, raw materials,

process routes

Product #nformation echnical specifications, design, features, testing

data on product performance

est data, (aboratory notebook, anual Research & Development related information

"omputer codes


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Commercial Information

Customer list

Business plan

Marketing strategy

Supplier arrangements

Customer buying preferences and

requirements

Consumer profiles

Sales methods


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Financial Information

Internal cost structure

Pricing information

Salary and compensation plans

Price lists


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Negative Information

$ailed R& D efforts

Dead ends in research

)nsuccessful marketing strategy

Pro*ects abandoned


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Factors to determine

information as trade secret

he information known outside the business

+nown to employee and others involved in the

business

easures taken to guard secrecy of the information "ommercial value of the information for the

business and competitors

oney or human efforts invested to develop or

collect information

ase or difficulty with which the information can be

ac'uired or duplicated by others


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!

- Three essential legal requirements.

/0 he information must be secret

10 #t must have commercial value becauseit2s secret

30 4wner must have taken reasonable steps

to keep it secret


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1 The information must be secret

- 5%ot generally known among or readily accessible to persons

within the circles that normally deal with this kind of information6

- Price list on your website is no trade secret


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"

! It must have commercial value because

it"s secret

- "onfers some economic benefit to the holder

- his benefit must derive specifically from the fact that it is not

generally known, not *ust from the value of the information itself

- %ot easy to know exact value of trade secret because it is a secret


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#

# $%ner must have taken reasonable

steps to keep it secret

- )nder most trade secret regimes. trade secret is not deemed to

exist unless its holder takes reasonable steps to maintain its

secrecy

- 7Reasonable2→ case by case

-

#mportance of proper ! management program


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%

- Some people cannot be stopped from

using information under trade secret

la%( 8 People who discover the secret

independently, without using illegal

means or violating agreements or

state law

8 People who discover through reverse

engineering ( aking apart an ob*ect

to see how it works in order to

duplicate or enhance the ob*ect


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nforcementnforcement(()hat can you do if someone steals or improperly discloses your trade secret*)hat can you do if someone steals or improperly discloses your trade secret*

Contract la% - When there is an agreement to protect the !

8 %DA


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,emedies

4rder to stop the misuse Monetary damages

actual damages caused as a result of the misuse 9lost

profits:

amount by which defendant un*ustly benefited fromthe misappropriation 9un*ust enrichment:

Sei-ure order can be obtained in civil actions to search the

defendant>s premises in order to obtain the evidence

to establish the theft of trade secrets at trial Precautionary impoundment

of the articles that include misused trade secrets, orthe products based on the misuse


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To establish violation& the o%ner

must be able to sho% . #nfringement provides competitive

advantage

,easonable steps to maintain secret

#nformation obtained, used or disclosed in

violation of the honest commercial

practices 9misuse:


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(oss of trade secrets ; a growing problem(oss of trade secrets ; a growing problem

- )hy is this occurring*

8 Way we do business today 9increased use of contractors, temporaryworkers, out;sourcing:

8 Declining employee loyalty, more *ob changes

8 4rgani?ed crime . discovered money to be made in

stealing high;tech #P

8 !torage facilities 9"D;R4, floppies, etc:

8 xpanding use of wireless technology


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./amples of outside threats

8 @urglaries by professional criminals targeting specifictechnology

8 Attempted network attacks 9hacks:

8 (aptop computer theft. source code, product designs,

marketing plans, customer lists

8 #nducing employees to reveal !

8 "orporate spies


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./amples of inside threats

8 02 of information crimes 3 employees&

contractors& trusted insiders4

8 alicious destruction


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)hat can be done*)hat can be done*1 basic protection strategies

/0 #dentify trade secrets

10 Develop a protection policy

30 ducate employees

0 Restrict accessB0 ark documents

C0 Physically isolate and protect

0 aintain computer secrecy

E0 Restrict public access to facilities

F0 hird parties

/G0 )nsolicited submissions


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"#

1 Identify trade secrets1 Identify trade secrets

Considerations in determining

%hether information is a TS(

8 #s it known outside the companyH

8 #s it widely known by employees and others involved

within the companyH

8 Iave measures been taken to guard its secrecyH


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"$

Prioriti-e( 8 What is the value of the information for your companyH

8 What is the potential value for your competitorsH

8 Iow much effort


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"%

! 5evelop a protection policy! 5evelop a protection policy

6dvantages of a %ritten policy(

8

"larity 9how to identify and protect:

8 Iow to reveal 9in;house or to outsiders:

8 Demonstrates commitment to protection→ important in

litigation


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"

# .ducate employees# .ducate employees

8 Prevent inadvertent disclosure 9ignorance:

8 7e% employees .- @rief on protection expectations early- %DA


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"'

8 .ducate and train.- "opy of policy, intranet, periodic training & audit,

etc0 ake known that disclosure of a ! mayresult in termination and


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"(

88 ,estrict access,estrict access

to only those persons having

a

need to kno%

the information

→ @oth paper and computer

→ "omputer system should limit each

employee2s access to information actually

re'uired for his *ob


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")

9 Mark documents9 Mark documents

8 :elp employees recogni-e

trade secrets → prevents

inadvertent disclosure

8 ;niform system of marking

documents- paper based

- electronic 9e0g0 7confidential2 button onstandard email screen:

c o n f i d

e n t i a

l


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#


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#"

= Maintain computer secrecy= Maintain computer secrecy

8 !ecure online transactions, intranet, website

8 Authori?ation 9password:, access control

8 ark confidential or secret 9legend pop, or before and after

access to sensitive information: 8 Physically isolate and lock. computer tapes, discs, other

storage media

8 %o external drives and )!@ ports

8 onitor remote access to servers

8 $irewalls, anti;virus software,encryption


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##

0 ,estrict public access to0 ,estrict public access to

facilitiesfacilities

8 (og and visitor2s pass

8 Accompany visitor

8 !ometimes %DA


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#$

> Third parties> Third parties

8 !haring for exploitation

8 "onsultants, financial advisors, computer

programmers, website host, designers,

subcontractors, *oint ventures, etc0

- ?no% the recipient

- 5isclose least amount of info necessary

- Confidentiality agreement& non@disclosure

agreement


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#%

1 ;nsolicited submissions1 ;nsolicited submissions

8 )nsolicited suggestions, inventions, ideas 8 @eware, esp0 if relate to ideas


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T r a d e S e c r e t s

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e x p l o i t i n g t h e i n v e n t i o n

D P o % e r t o o l D

P a t e n t s

session 7 trade secrets & know how

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