Transcript Putting In Place a Trade Secret Protection Program IP and Creative SMEs; IP Reforms – International and Comparative Geneva Perspectives 26 May 2010 Mrs.

Putting In Place a Trade Secret
Protection Program
IP and Creative SMEs; IP Reforms –
International and Comparative
Geneva
Perspectives
26 May 2010
Mrs. Lien Verbauwhede Koglin
Consultant, SMEs Division, WIPO
What are
Trade Secrets?
Do-it-yourself
form of IP
Idea: By keeping valuable information secret,
you can prevent competitors from learning about
and using it and thereby enjoy a competitive
advantage in the marketplace.
General Principles:
Information that has commercial value and
that has been scrupulously kept confidential will
be considered a trade secret (TS).
Owner will be entitled to court relief against
those who have stolen or divulged it in an
illegal manner.
This Presentation
1. What information qualifies as a TS?
2. What makes something a TS?
3. When can you get court relief?
4. How are TS lost or stolen?
5. How to protect your TS?
6. How is TS protection enforced?
Question 1
WHAT KIND OF INFORMATION
QUALIFIES AS A TRADE SECRET ?
TRADE
• Provides
competitive
advantage
• Potential to
make money
SECRET
Kept
confidential
Financial
information
Technical &
scientific
information
TRADE SECRET
Commercial
information
Negative
information
Question 2
WHAT MAKES SOMETHING A
TRADE SECRET ?
When do you have
legal protection?
Three Essential Legal Requirements:
The information must be secret
It must have commercial value because it’s secret
Owner must have taken reasonable steps to keep
it secret
1. Secret
Required that be
known only by
one person?
What if many employees need to know?
What if others need to know?
suppliers, joint development agreement, due
diligence investigation, etc.
What if you want to license technology?
1. Secret
“not generally known among or easily accessible
to persons within the circles that normally deal
with this kind of information”
What is ‘generally known’ ?
matters of common knowledge
information you find at library, online database, trade
journals, patent information, etc
price list on website
graphics & object code of software application you sell
off-the-shelf
1. Secret
Not required that be known only by one
person
If you need to share
If you license technology which has limited distribution
 possible to protect confidential information by
contractual means
2. Commercial value
Must confer some economic benefit
How to demonstrate
benefits derived from use
costs of developing the TS
licensing offers, etc.
actual or potential
3. Reasonable steps
Under most TS regimes, you cannot have a TS
unless you have taken reasonable precautions to
keep the information confidential
‘Reasonable’  case by case
reasonable security procedures
Non-Disclosure Agreements (NDA)
such that the information could be obtained
by others only through improper means
Importance of proper TS management program
Question 3
WHEN CAN YOU GET COURT
RELIEF ?
COURT RELIEF if:
TS + “THEFT”
Only theft if wrongful !
Courts will only grant relief if someone has
improperly acquired, disclosed or used the
information
What is Typically Wrongful?
1. Duty of trust
implied or imposed by law
e.g., employees, directors, lawyers
2. Confidentiality agreement or NDA
e.g., employees, suppliers, consultants, financial
advisors
3. Industrial espionage, theft, bribery, hacking,
eavesdropping
What is Lawful?
1. Independent Creation
Discovery of the TS without using illegal means
or violating agreements or law
 patent
TS protection
provides
no exclusivity !
What is Lawful?
2. Reverse Engineering
Take product apart and see how it works
Common practice among software companies:
studying competitors' products
to make software that can interoperate with the
software being studied
to make a product that will compete with it
E.g. decompile object code to reveal its structure
and figure out the interface specifications for
interoperability purposes
2. Reverse Engineering
Solution: contractually forbid reverse
engineering (in software license agreement)
Technological protection measures
BUT! Legality in question
Inconsistent with copyright or antitrust laws?
Question 4
HOW ARE TRADE SECRETS LOST
OR STOLEN ?
A Growing Problem –
Why Does It Occur?
Way we do business today: increased use of
contractors, temporary workers, out-sourcing
Declining employee loyalty: more job changes
Organized crime: discovered the money to be
made in stealing high tech IP
Storage facilities: external memories, keys
Expanding use of wireless technology:
devices for interception of communication
without consent
Examples
Reverse engineering, independent discovery
Improper licensing
Burglaries by professional criminals targeting
specific technology
Network attacks (hacking)
Laptop computer theft
Inducing employees to reveal TS
80% of trade secret loss
< employees, contractors, trusted insiders!
intentional (disgruntled employees - malicious)
inevitable (departing employees - knowledge acquired)
by ignorance
Question 5
HOW TO PROTECT
YOUR TRADE SECRETS?
1. Identify Trade Secrets
Accurate record keeping is important
2. Develop a Protection Policy
Advantages of a written policy:
Clarity (how to identify and protect)
How to reveal (in-house or to outsiders)
Demonstrates commitment to protection 
important in litigation
Educate and train:
Clear communication and repetition
Copy of policy, intranet, periodic training & audit,
etc.
Make known that disclosure of a TS may result
in termination and/or legal action
Monitor compliance, prosecute violators
3. Restrict Access
to only those persons having a
need to know
the information
 computer system should limit each
employee’s access to data actually
utilized or needed for a transaction
4. Mark Documents
Help employees recognize TS
 prevents inadvertent disclosure
Uniform system of marking
documents
paper based
electronic (e.g. ‘confidential’ button on
standard email screen)
5. Physically Isolate and Protect
Separate locked depository
Authorization
Access control
log of access: person, document reviewed
biometric palm readers
Surveillance of depository/company premises
guards, surveillance cameras
Shredding
6. Restrict Public Access to Facilities
Log and visitor’s pass
Accompany visitor
Sometimes NDA/CA
Visible to anyone walking through a company’s
premises
type of machinery, layout, physical handling of work in
progress, etc
Overheard conversations
Documents left in plain view
Unattended waste baskets
7. Maintain Computer Secrecy
Secure online transactions, intranet, website
Password; access control
Mark confidential or secret (legend pop, or before and after
sensitive information)
Physically isolate and lock: computer tapes, discs,
other storage media
No external drives and USB ports
Firewalls; anti-virus software; encryption
8. Measures for Employees
1. New employees
Brief on protection expectations early
Obligations towards former employer!
Assign all rights to inventions
developed in the course of employment
NDA/CA
•Requirements
Non-compete provision
•Limits
2. Current employees
Prevent inadvertent disclosure
(ignorance)
Train and educate
NDA for particular task
3. Departing employees
further limit access to data
exit interview
letter to new employer
treat fairly & compensate
reasonably for patent work
Non-Competition Clauses
(covenants not to compete) in
Labor Contracts
After employee leaves prior employer:
May he work for competitor?
May he work in related job?
May he open a competing business?
Is covenant not to compete enforceable?
Some jurisdictions: NC covenant binding if
‘reasonable’
limited in time
limited in area
limited in type of industry
special compensation to be paid to employee for
his obligation not to compete
Some jurisdictions: in writing + payment
9. Measures for Third Parties
Sharing for exploitation
Consultants, financial advisors, computer
programmers, website host, designers,
subcontractors, joint ventures, etc.
• Confidentiality agreement, NDA
• Limit access on need-to-know
basis
TRADE SECRETS FOR
BUSINESSES
CONCLUSIONS
(1) TS Protection for Financial, Commercial
and Technical Information :
develop effective internal TS
program to maintain trade secret
status
 restrict access
 impose obligation of confidentiality
to anyone who has access

(2) Certain Aspects of Business/Products
cannot Be Maintained as a TS :





information or technology that must be disclosed
to the public in order to market the product
information or technology which is part of a
product sold to the public and can be reverseengineered
mass-marketed technology or products
where competition is so intense, that very likely to
be independently developed by others within
short time
if great deal of personnel movement between
competitors
(3) Alternative or Additional Protection for TS :




Make reverse engineering difficult (compiled
code)
Technological protection measures
Patents or utility models
Copyright protection
(4) Be careful about signing confidentiality
agreements and non-compete covenants
Putting In Place a Trade Secret
Protection Program
Thank You!
[email protected]
www.wipo.int/sme