1. Putting In Place a Trade Secret Protection Program
IP and Creative SMEs; IP Reforms – International and Comparative Perspectives
Geneva
26 May 2010
Mrs. Lien Verbauwhede Koglin
Consultant, SMEs Division, WIPO

2. Do-it-yourself form of IP
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.

3. 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.

4. 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?

5. Question 1 WHAT KIND OF INFORMATION QUALIFIES AS A TRADE SECRET ?

6. Provides competitive advantage Potential to make money
TRADE
SECRET
Provides competitive advantage
Potential to make money
Kept confidential

7. TRADE SECRET Technical & scientific information Financial information
Negative information
Commercial information

8. Question 2 WHAT MAKES SOMETHING A TRADE SECRET ?
When do you have legal protection?

9. 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

10. Required that be known only by one person?
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?

11. 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

12. Not required that be known only by one person
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

13. Must confer some economic benefit How to demonstrate
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

14. 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

15. Question 3 WHEN CAN YOU GET COURT RELIEF ?

16. COURT RELIEF if: TS + “THEFT”
Courts will only grant relief if someone has improperly acquired, disclosed or used the information
Only theft if wrongful !

17. 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

18. TS protection provides no exclusivity !
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 !

19. 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

20. 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?

21. Question 4 HOW ARE TRADE SECRETS LOST OR STOLEN ?

22. 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

23. 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

24. 80% of trade secret loss
< employees, contractors, trusted insiders!
intentional (disgruntled employees - malicious)
inevitable (departing employees - knowledge acquired)
by ignorance

25. Question 5 HOW TO PROTECT YOUR TRADE SECRETS?

26. 1. Identify Trade Secrets
Accurate record keeping is important

27. 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

28. Monitor compliance, prosecute violators
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

29. to only those persons having a
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

30. 4. Mark Documents Help employees recognize TS
 prevents inadvertent disclosure
Uniform system of marking documents
paper based
electronic (e.g. ‘confidential’ button on standard screen)

31. 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

32. 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

33. 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

34. 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
Non-compete provision
Requirements
Limits

35. 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

36. 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?

37. 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

38. 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

39. TRADE SECRETS FOR BUSINESSES CONCLUSIONS

40. (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

41. (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 reverse-engineered
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

42. (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

43. Putting In Place a Trade Secret Protection Program
Thank You!