1. WIPO - CEDA REGIONAL ROVING SYMPOSIUM ON INTELLECTUAL PROPERTY FOR SMES Paramaribo, Suriname; Castries, St. Lucia; Kingston, Jamaica; and Santo Domingo, Dominican Republic July 2005 Keeping Confidence: Trade Secrets in Business Strategy Christopher M. Kalanje, Consultant, SMEs Division, WIPO

2. Review Objective –Enhancing awareness on the potential of trade secrets as a business tool Road map “WHIR” –What are trade secrets – How can trade secrets be protected –Identify strategic use of trade secrets –Recapitulation of basic points

3. What are trade secrets

4. What are trade secrets contd. Confidential information not generally known Derives independent economic value, actual or potential Gives the holder competitive edge Involves reasonable efforts to maintain its secrecy Psst!

5. What are trade secrets contd. A trade secret can relate to different types of information Technical and scientific information Commercial information Financial information Negative information (depending on the law of a country)

6. What are trade secrets contd. Technical and scientific –Technical composition of a product and blending formulas formula (beverages, detergents, paint) http://www.delagrenade.com/ The_LaGrenade_LiqueurStory. htm La Grenade Liqueur http://www.shoutitout.com/faq.asp

7. What are trade secrets contd. Technical and scientific contd. –Know-how necessary to perform a particular operation how to dye with natural Dyes –Manufacturing methods/specifications and device process, tool (weaving technique, baking clay, metal casting, embroidery) –Designs, drawings, patterns, motifs –Test data, laboratory notebooks –Computer codes

8. What are trade secrets contd. Commercial information –Business strategy/plan marketing strategy, partnership strategy, supplier arrangements, sales methods –List of suppliers and clients consumer profiles –Customer buying preferences and requirements

9. What are trade secrets contd. Financial information –Internal cost structure –Pricing information, salary and compensation plans –Employees agreements

10. What are trade secrets contd. Negative information –Details of failed efforts to remedy problems in the manufacture of certain products –Dead-ends in research –Unsuccessful attempts to interest customers in purchasing a product

11. How can Trade Secrets be Protected Not easy to know exact value of trade secret because it is a secret In US alone loss of proprietary information, trade secrets and critical technologies cost companies between $ 50 - 250 billion per year (sources: Gowlings Technology Seminar Series 2005; D. Degnan and J. Taros) Such valued information must be protected (How?)

12. How can Trade Secrets be Protected contd. Trade secrets can be protected by –Physical and technical measures –Common law/tort law (a civil wrong for which the law provides a remedy) –Contract law (employees, business partners, potential investors or partners, consultants etc.) Non-disclosure / Confidentiality agreements Non-compete clause Non-solicitation clause –Unfair competition law ( Misappropriation by competitors who have no contractual relationship) Theft, espionage, subversion of employees

13. How can Trade Secrets be Protected contd.. –Specific trade secret law –Criminal laws e.g. for an employee to steal trade secrets from a company theft, electronic espionage, invasion of privacy, etc. circumvention of technical protection systems Most Caribbean countries protect trade secrets through Unfair competition Act

14. How can Trade Secrets be Protected contd. IMPORTANTIMPORTANT Trade secrets only give protection against improperly acquisition, disclosing or using People who discover the secret independently cannot be stopped from using it

15. How can Trade Secrets be Protected contd. What should be done? Identify trade secrets owned by your company –Is it known outside the company? –Is it widely known by employees and others involved within the company? –Have measures been taken to guard its secrecy?

16. How can Trade Secrets be Protected contd. Trade Secret Policy AbC Company Create a confidentiality policy Consequences of improper use or disclosure of confidential information Clearly state what information is deemed confidential by company Establish code of conduct in handling confidential information Designate reference point in the event of uncertainty Enforce policy

17. How can Trade Secrets be Protected contd. –Educate employees

18. How can Trade Secrets be Protected contd. Notify employees of their obligations when employment begins (employment agreement) Ensure that exiting employees are aware of their obligations (employment agreement) Regular checks on compliance Respect other people trade secrets

19. How can Trade Secrets be Protected contd. Source of images: http://images.search.yahoo.com/search/images - How trade secrets are lost Outright theft

20. How can Trade Secrets be Protected contd. Take reasonable measures to protect trade secrets Put markers Confidential Top secret Password Use proprietary notices

21. Trade secrets as a strategic business tool

22. Trade secrets as a strategic business tool contd. Keeping secrets: A necessity in IP strategy It works better if not used as a stand alone Need business acumen

23. Trade secrets as a strategic business tool contd. Keeping secrets: A necessity in IP strategy –A business idea –Creative idea with patentability potentials –New song, story etc –New design Keep it a secret before your next move!

24. Trade secrets as a strategic business tool contd. It works better if not used as a stand alone Angostura® Aromatic Bitters Trade Secret (1824) Trademark

25. Trade secrets as a strategic business tool contd. Coca-cola® (drink) Trade secrets (1886) Trademark It works better if not used as a stand alone

26. Trade secrets as a strategic business tool contd. Need business acumen Trade Secrets –No registration (no fees) –No defined duration –Maintenance costs –Non-disclosure (except need to know, contractual binding disclosures) Patents/Industrial designs/ Trademarks* –Registration (fees) –Defined duration –Maintenance fee –Disclosure * If not maintained they lapse

27. Trade secrets as a strategic business tool contd. Licensing cross-licensing negotiations Partnership negotiations ( e.g., Strategic alliances, Joint ventures ) M&A Patent application ( applies to other IP tools too ) what part of invention should be kept a secret Market positioning strategic use of client names and profile

28. Conclusion Essential legal requirements Information must be secret Information must have economic value because it is a secret Owner must take reasonable steps to keep it secret

29. Conclusion contd. Remember Identify them Protect them Use them strategically

30. Finally