November 2007 Archives

Jorda on : Initial Patent/Trade Secret Evaluation Guide

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A reoccurring question in intellectual property management involves the initial election between seeking patent protection on a given development and attempting to maintain trade secrecy in that development. To facilitate this initial election and to determine the center of gravity (often patents for products and trade secrets for processes), I developed the following “Initial Patent/Trade Secret Evaluation Questionnaire.” To avoid the implications of “invention” and to cover the wide variety of innovations which may be addressed by this questionnaire, the term “development” is used in a generic sense.

Download the Questionnaire and Considerations

The eleven questions in this questionnaire have been arranged not in the order of perceived importance but by “function,” roughly following the areas of marketing (Questions 1-4), technical (Questions 5-8), and legal (Questions 9-11). Each question would be answered on a scale of 1 to 10. These values are then totaled. With the current number of questions, this sum would range from 11 to 110. If the sum approaches the higher end of the scale (above 75), trade-secret protection would seem favorable; a sum at the lower end (below 45) would suggest that patent protection would be more advantageous. At times, values in the middle range (45–75) will result. Such a score suggests that it doesn’t really matter which approach is followed initially. For example, trade-secret protection might be appropriate for manufacturing-process technology, which competitors might find easier to re-create; patents make sense for products that can be analyzed or reverse engineered. However, there need be no prejudice about resorting to the other strategy to protect collateral aspects and improvements.

At this point I should make it unequivocally clear that my position is not that trade secrets should be embraced in favor of patents, nor is it my intention to denigrate patents in any way by embracing trade secrets over patents. What I have practiced in my career and what I endorse as the best policy and practice is to obtain patents as center of gravity in an intellectual property portfolio and maintain trade secrets as underpinnings for patents to protect unpatentable collateral know-how and show-how. Books, articles and presentations on intellectual property rights almost always, even nowadays, speak to patents, copyrights and trademarks as discreet subjects and with scant coverage of trade secrets. However, doing so overlooks the fact that legal protection of innovation of any kind, especially in high-tech fields, requires the use of more than one intellectual property category. This results in integration of intellectual property rights for dual, triple or multiple protection.

Jorda on : Trade Secrets Have Special Attributes

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From the definitions of trade secrets given earlier, the following salient characteristics of trade secrets can be perceived.

There is no subject matter or term limitation, nor is there a registration requirement and, in fact, there is not even a tangibility requirement. Furthermore, there is no strict novelty requirement, and trade secret protection obtains as long as the subject matter is not generally known or available.

But secrecy is the most important criterion — a sine qua non — without exceptions. Hence, reasonable affirmative measures must be taken to safeguard and maintain trade secrecy. Among such measures are:
• Memorializing a trade secret policy in writing
• Informing employees of the trade secret policy
• Having employees sign Employment Agreements with confidentiality obligations
• Restricting access to trade secrets (on need-to-know basis)
• Restricting public accessibility (escorting visitors)
• Locking gates and cabinets to sites that house trade secrets
• Labeling trade secret documents as proprietary and confidential
• Screening speeches and publications of employees
• Using secrecy contracts in dealing with third parties
• Conducting exit interviews with departing employees, etc.

While sufficient economic value or competitive advantage is also an indispensable requisite, the proper touchstone is not “actual use” but only “value to owner,” which means that negative R&D results can also provide a competitive advantage according to the law of the Unites States.

Misappropriation of trade secrets is actionable if there is acquisition by improper means, or there is use or disclosure of a trade secret that was acquired improperly or in violation of a duty to maintain confidentiality. “Improper means” includes theft, bribery, misrepresentation, breach or inducement of a breach of a duty to maintain secrecy, or espionage through electronic or other means, while “proper means,” which do not support a claim for misappropriation, include independent discovery, reverse engineering, or discovery from observing what has been allowed to enter the public domain.

Remedies for misappropriation of trade secrets include actual and punitive damages, profits, reasonable royalties and injunctions.

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