Businesses have increasingly realized that the value of their business resides in their intellectual property rights and particularly in their trademarks or service marks. These translate into the “good will” which keeps the customers coming back. In addition, Trademark registrations have become essential to the actual protection of profits from a growing cadre of infringers who find it easier to divert your business than to develop their own. Mirowski & Associates provides: (1) Federal (USPTO), State (all States) and International (WIPO “Madrid Protocol”) trademark and service mark registrations, (2) Advice regarding protecting trademarks from infringement and dilution and (3) Trademark Litigation (Prosecution and Defense) in the Courts and in front of the Trademark Trial and Appeal Board (TTAB).
- WHAT IS “INTELLECTUAL PROPERTY”?
- HOW DOES ONE PROTECT INTELLECTUAL PROPERTY?
- TRADE SECRETS
- EMPLOYEE THEFT OF TRADE SECRETS
“Intellectual Property” are products “of the mind.” The owner of intellectual property owns rights in these products the same as the owner of any other type of property has ownership rights. To reap the benefit of their investment of time and resources, the owner of intellectual property must know and use the tools of our legal system to protect and defend what is rightfully theirs. The first step down this road is for the decision makers to learn the basics of the playing field so that they start protecting their rights.
The mechanisms and types of protection to use are not always obvious. It requires an analysis of the product and the various circumstances in which it is used, licensed or sold. No one legal device protects all aspects of a product under all circumstances. Because of this, key personnel in a company should have sufficient knowledge of the basic legal tools available so that they can identify a problem before it goes ballistic.
These basic legal tools are: Trade Secret Law, Copyrights, Patents, Trademarks, and the too often ignored backbone of business, Contracts. Although most of this writing will be devoted to the computer industry, the concepts are the same for most technologies and businesses wishing to protect their intellectual properties.
The most often used mechanisms of obtaining protection for intellectual property are: 1) TECHNOLOGICAL; 2) CONTRACT and the areas of law generally referred to as, 3) TRADE SECRET; 4) COPYRIGHT; 5) PATENT; and 6) TRADEMARK.
These different forms of protection vary in important ways. Each of them is designed for different purposes. They also function differently, and are limited in their scope. To effectively use these tools requires at least a general understanding of the scope of protection, advantages, requirements, and the limitations that they each offer. The best strategy is to become familiar with these features so that they may be applied to the appropriate situation. It must be remembered that these methods are not exclusive. In other words just because one method is used does not prevent you from utilizing the other methods in combination. Comprehensive protection can only be obtained by understanding the protections and how to employ them.
WHAT IS A TRADE SECRET?
Generally, it can be said that a trade secret is any valuable information, which is valuable, at least in part, simply because it is not commonly known. To put it a more legalistic way, a trade secret can be any information, including a formula, pattern, compilation, program, device method, technique or process, that: (i) derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by other persons who can obtain economic value from its disclosure or use, and (ii) is the subject of efforts that are reasonable under the circumstances to maintain its secrecy. The fact is, no exact definition of a trade secret is possible. A trade secret is only defined within the parameters and nature of the product, service or process as found within the particular business in which it is claimed. A trade secret can be more easily demonstrated by examples rather than vague definitions and accordingly, the following are some categories of information which the courts have recognized as trade secrets:
1. Special Manufacturing Processes. For example, courts have found trade secrets from a process for manufacturing chocolate powder, an extrusion blow molding process and a manufacturing technique for a veterinary vaccine.
2. Marketing Strategies and Pricing Information.
3. Specialized Customer lists if the customer lists are not easily derived from widely available sources.
4. The Sources of Raw Materials.
5. Product Formulas.
6. Product Specifications such as plans, designs and specifications for components of a machine, which are not readily ascertainable from the marketed product.
7. Testing Techniques.
8. A Doctor’s Recall List or the Expiration Dates of Customer Contracts.
9. Proven Modifications or new uses for readily available ingredients or machines.
10. Dead Ends derived from extensive research if it has value by the fact it is not known in the industry because “knowing what not to do often leads automatically to knowing what to do.”
The most important aspect of a trade secret is that it must be and remain a secret. A trade secret is easily lost by violating the requirement of “secrecy.” If valuable information is released in the public domain, other parties are free to take and use the information unless its use is barred by other laws such as copyright, patent or trademark law. Even inadvertent or accidental disclosure of the secret will result in it no longer being protected as a trade secret. Thus, the owner of a trade secret must learn to identify and implement means of protecting the confidentiality of their trade secret information or, lose it.
The most frequently litigated trade secret situation involves an employee or independent contractor who has had access to trade secret information and then accepts employment with a competing company. The similar nature of the employment between the two companies always makes it virtually “inevitable” that the former employer’s trade secrets will be used. As a result, any employer who has developed, or maintains, any valuable information must understand that generally, the California Labor Code does NOT protect:
1. Information obtained by an employee during employment that is not kept confidential. See King v. Pacific Vitamin Corp. (1967) 256 Cal. App.2d 841.
2. Information that the employee himself or herself creates. Williams v. Weisser (1969) 273 Cal. App. 2d 726.
3. Information that the employee creates or develops outside the scope of employment even though relevant to their duties at the workplace. See Cal. Labor Code § 2870 and Cubic Corp. v. Marty (1986) 185 Cal. App. 3d 438.
To the employer’s advantage is the fact that many courts consider the employment situation to be presumptively confidential with reference to trade secret information. YET, TRADE SECRET STATUS CAN BE EASILY LOST. As a result, any employer who has any significant trade secrets should learn to identify and implement means of protecting the confidentiality of their trade secret information or, lose it.
HOW TO KEEP TRADE SECRET INFORMATION:
Development of a Formal Intellectual Property and Trade Secret Program
Inherent in trade secret law is the notion that the owner must employ reasonable effort to maintain the secrecy of the trade secret information as a condition of granting protection under the law. There is no simple “yellow brick road” to achieve this goal. Accordingly, it is ESSENTIAL that any business that owns proprietary or trade secret information must develop a comprehensive Trade Secret Program (a “TSP”). A properly designed TSP institutes appropriate measures and policies for the identification, security, maintenance and protection of confidential information. Although there is no “yellow brick road” to do this, a properly designed TSP will include:
1. CONDUCTING AN INTELLECTUAL PROPERTY REVIEW: Before it can be determined what is the best way to protect your confidential information, it must first be determined what it is that you have to protect.
2. SECURING RIGHTS: This will include:
Copyright Registration of all appropriate creative works (including software).
- Trademark Registration of all trade names, logos and identifying marks used in commerce.
- Patent Filing for any appropriate invention including software.
3. IMPLEMENT EMPLOYMENT AGREEMENTS, which define the rights and responsibilities of employees and independent contractors with regard to confidential information. A confidentiality agreement is often the only effective means of controlling the loss of proprietary information after an employee leaves. In addition:
- It serves as an explicit reminder to the employee to prevent the loss in the first place and specifies the terms of the relationship to avoid the confusion that often arises when duties of confidentiality are “oral.”
- It creates essential evidence if litigation becomes necessary.
- It increases the likelihood that a court will enforce a trade secret.
In summary, keeping and protecting trade secret information requires that the owner conduct a thoughtful and methodical process. This is one area where it pays to plan in advance as the courts seldom help those who complain after they have allowed their trade secrets to “fly the coup” into the public domain.