place your case in the best possible position
to prevail.
But, and not just because we are lawyers,
do consider using a pro to set up your protective processes. There are two main goals
of a professional audit. The first is to insure
your procedures are strong enough to discourage and/or prevent a trade secret theft
under “real world” attacks; and the second
is to use the documentation of these procedures to provide ammunition in court to
quickly and decisively stop any breach.
We have also discussed what to do in
the event that you have not been as diligent
as perhaps you should have been in setting
up your bastions of trade secret protection.
There are instances in which a high-level departing employee can still be bound to protect your crown jewels even if he/she is not
contractually bound to do so – the Inevitable
Disclosure Doctrine – best explained by the
Rolling Stones song, “You Can’t Always Get
What You Want (but sometimes just sometimes you get what you need)” You might be
able to temporarily prevent someone from
using your trade secrets long enough to establish your market lead, though you would
prefer that prohibition to last forever.
But what about completely careless and
unprotected business relations, and employees to which the law does not extract a
heightened fiduciary duty? We explored the
situation where your trade secrets have been
absconded in the hands of a mid-level employee, only to discover that you have failed
to contractually protect yourself. Where
there is a contract between the parties, to
the extent it is consistent with public policy,
a court will look to the contract to govern
the parties’ intentions. But where there is
no contract, trade secret law can offer protection by operation of law. There may be
independent civil liability under the Uniform
Trade Secrets Act (UTSA). If you do discover
a hole in your prophylactic Wall of Paper,
good business practices under the UTSA
may provide you the protection you need.
And let us not forget that we are chemists,
engineers, scientists, and technical-industry
gurus! WE KNOW lots of tricks of the trade
and in-depth secrets that are important to
protecting our technology. For instance, the
common wisdom is that a mixture of com-
monly-known chemicals will not qualify
as a trade secret. But, specific proportions,
It is also important that we know what
our assets are worth. The law imposes a
“value” standard on trade secrets. A trade
secret is valuable if it gives its owner “an op-
portunity to obtain an advantage over com-
petitors who do not know or use it.” Courts
appear may deny protection to any alleged
trade secret that is deemed to be “value-
less.” “How much are our corporate trade
secrets worth?” thus becomes a very impor-
tant question under a variety of business and
legal scenarios – restraining orders, injunc-
tions, licenses, mergers, and overall company
worth. If you’re ahead of the game (you are
the trade secret owner), stay ahead of the
game (by knowing exactly what your trade
secrets are and what they’re worth).
And, this becomes critical when it is time
to license your trade secret – with the caveat
that you must take care that your licensee
does not intentionally or unintentionally divulge your property. A prospective licensee
will likely want to look under the hood at
your trade secrets prior to opening up their
billfold. All the procedures for maintaining
secrecy should be incorporated into the prenegotiation confidentiality/nondisclosure
and subsequent licensing agreements, as well
as which of your trade secrets will be part
of the agreement(s). The agreement should
clarify the licensee should use reasonable
safeguards to maintain the trade secret’s security in order to maintain its secrecy, and
may include details regarding the security to
be implemented, and rights for the licensor to
inspect the security measures. The real meat
and potatoes value of your intellectual property often is in your trade secret rather than
a patent portfolio, and you should not forget
that in determining the licensing royalties.
Though your patents may cover related ma-
terials, and must include the “best mode” of
practicing an invention as of the date of fil-
ing the patent application (i.e., a previously
held trade secret = the best mode), often after
the patent application’s filing date new trade
secrets such as substantive refinements and
improvements or spin off technologies are
developed. These additional, non-patented
trade secrets often have the most real world
licensing value as part of your trade secret
portfolio. Further, patents must disclose the
best mode, but not the worst mode (please
do not give the patent office any ideas, OK?).
Working know how of what not to do – the
technological dead ends – can be of tremen-
dous competitive edge value in accelerating
development of a technology by showing
a licensee where not to waste resources in
bringing a product to market.
And then we handled the hot potato of
non-competition - the very term seemingly
un-American. And, we admitted that that
pretty much sums up the same attitude that
the American courts have towards non-
competition agreements. So, how you walk
the fine line between protecting your trade
secrets and other confidential information
using a non-competition agreement and
running afoul of the natural disdain with
which courts hold such agreements, is a
dicey process. The drafting and enforce-
ment of non-competition agreements is a
nuanced exercise. One size does not fit all
- but if you do choose to use one, then a
non-competition agreement should be just
one piece of the innovation protection pie,
used in connection with confidentiality, non-
solicitation, anti-raiding and assignment of
invention agreements to comprise a well-
balanced intellectual property program.
And the thieves are getting very, very
good at stealing your trade secrets – hacking
is a worldwide industry in itself. So besides
draining your bank account, what are hackers after? They want your money, your trade
secrets, you customer files. Trade secrets, like
formulations, know-how, branding, internal
codes, employee and customer information,
business strategies and other sensitive information can all be compromised by electronic
theft. Cyber hackers are just thieves, looking
for an easy entry point. You lock your doors
at night; lock your cyber valuables as well.
With proper security, that hacker will likely
move on to some unsuspecting victim. And
then maybe you won’t find out the hard way
about that condo in Singapore you bought
that you will never see. CW
