TRADE SECRETS

Outline of Presentation

What are trade secrets

Keeping them secret
Trade secrets or patents
Legal protection for trade secrets and
remedies for their misappropriation
What are Trade Secrets

Trade secrets are confidential information

that has commercial value by virtue of
being kept secret and reasonable steps
have been taken to keep it secret.
Trade secret audit

Conducting an TS audit is to determine

whether or not you have any trade secret
assets; then to identify them; and final to
take measures to make sure they retain
their status as protectable trade secrets
Should be done periodically
Team – trusted people who know the
company
Why should you conduct a TS audit

Identify assets that would otherwise be

unknown
By identifying and protecting prevent their
loss
A court is more likely to give TS status to
information identified internally as TS
Establish clarity
Potential trade secrets

Technical and scientific information

Financial, legal and HR information
Commercial information
Technical and Scientific Information

product information
technical composition of a product (medicine,
paint, recipe for a sauce), data about product
performance, product design information
manufacture information
manufacturing methods and processes
(weaving technique, device process),
production costs, refinery processes, raw
materials, machinery
know-how necessary to perform a
particular operation
Commercial Information

customer list
business strategies/plans
marketing strategy/research
customer buying preferences and
requirements
consumer profiles
sales methods
Financial, Legal and HR Information

Pricing information
Salary and compensation plans
Employee evaluation
Monday April 9 3:45 AM ET
Fruit of the Loom Sues Competitor

CHICAGO (AP) - Fruit of the Loom is suing

competitor Gildan Activewear Inc., accusing the
Montreal company of stealing trade secrets to grab
a competitive edge in the cutthroat apparel
business.

Fruit of the Loom contends the reports include

production goals for plants in El Salvador,
Honduras and Mexico that would allow Gildan to
estimate production costs. They detail sales to
specific customers, trends in demand and budget
information.
Develop a trade secret protection
policy
HR policy
Restrict access
“Confidential”
Human Resource Policy

Awareness creation/strong enforcement of

breaches
Confidential agreements/clauses
Staff manual
Exit interviews, non compete agreements
Similar expectations vis-à-vis third party
consultants
Restrict Access
 Documents under lock and key
 password protection
 Disclosure on a “need to know”basis
 Registration at reception/visitor logs/escorts
 Use “keep out” “authorized personnel only”signs
 Access controlled photocopiers, scanners,
computers. Use of shredders
 Nothing on the internet
“Confidential”

“This document contains confidential and

proprietary information of [COMPANY] and
is protected by copyright, trade secret and
other national laws. Its receipt or
possession does not convey any rights to
reproduce, disclose its contents, or to
manufacture, use or sell anything it may
describe. Reproduction, disclosure, or use
without specific written authorization of
[COMPANY] is strictly forbidden”
Example – Coca Cola

Said to be the best kept secret

Formula kept in a bank vault
Can only be opened by a resolution of the
company Board of Directors
Only two people know the secret
Their identities are unknown
They cannot travel together
They oversee the production
Patent or Trade Secret Protection

Such information may qualify for patent

protection or trade secret protection. A
company may choose trade secret
protection even for information that qualify
for patent protection.
Trade Secrets or Patents
 No registration  Registration required
(costs/time factor) (cost/time factor)
 Duration is not limited  Limited duration
to specified period of  Disclosure required
time  Limited to claims
 No disclosure  Easier to enforce
 Wider information  Exclusive rights
 Difficult to enforce
 No protection against
independent
discovery or RE
As to whether TS or patent is the more
appropriate protection depends on the
kind of product, nature of the business and
the policies of the company. Some
products have a short commercial life (TS
better), some information may be difficult
to keep secret and some products may be
more easily reverse engineered than
others (patent better).
Protection for Trade Secrets

Often no specific law

Where there is a contract; employees with
express provisions in their contracts or an
implied duty of confidentiality or those who
have signed NDA or CA
Where there is no contract; information
imparted in confidence and used in breach
of that confidence or information obtained
by unlawful or improper means (theft,
industrial espionage, bribery)
Remedies

Civil remedies based on breach of contract

or tort law; damages, injunctions, seizures
and impoundment
Criminal remedies - rarely a criminal
offense in its own right but could attract
criminal liability by committing criminal
offenses for procuring the information
(theft, trespass etc)
Final thought

You may not know that you have valuable

business information recognized by law as
trade secrets till it is too late.
Identify and protect them
They may be the key to your
competitiveness