Session 7 Trade Secrets & Know How
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Transcript of 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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P a t e n t s