1. Intellectual Property
• Four (6) Types
– Trade Secrets
– GI
– Trademarks
– Copyrights
– Industrial design
– Patents

2. Trade Secrets
• Definition
– Information that is sufficiently secret to
derive economic value from not being
generally known and is the subject of
reasonable efforts to maintain its secrecy.
– A trade secret can be any information that
derives independent economic value from not
being generally known or readily
ascertainable.

3. What are TS?
• Among the things that can be trade secrets are a
formula, pattern, compilation, program, device,
manuals, method, technique, or process.
• Businesses to consider whether its
– techniques,
– manuals,
– recipes,
– prospect list,
– pricing
can be protected as trade secrets

4. What are TS?
• Among things courts have found to be "trade
secrets" are
– machining processes,
– blueprints,
– stock-picking formulae,
– customer lists,
– pricing information,
– and non-public financial data.
On the other hand, information such as overhead rates
and profit margins that help define a price may be
found to be a trade secret even if the price itself is
known.

5. Trade Secrets
Factors to determine if information amounts
to a TS:
– Is it known outside the company
– Have measures been taken to guard its
secrecy
– How much money was spent developing it
– What is the value of the information for your
company and to your competitor

6. Trade Secrets
• Trade Secret Audit – to establish a trade secret protection
and compliance programme
• Consider appointing a Trade Secret Compliance Officer
• Advantages of a written policy includes:
– Clarity (how to identify and protect) &
– Demonstrates commitment to protection
• Educate and train staff in need to protect Trade Secrets
• Make it known that disclosure of a TS may result in
termination and/or legal action.
• Monitor compliance

7. Trade Secrets (cont’d)
• Protection Available
– Trade Secrets are protected by common
law, state statutes and contract law in the
U.S. and in most other countries.
– No registration is available.
• Term of Protection
– Trade secrets are protectable as long as
secrecy is maintained (perpetual)

8. Trade Secrets (cont’d)
• Notice and Marking
– Documents and visually perceptible
copies of trade secret information should
be clearly marked as “confidential,”
“proprietary,” “secret” or “restricted.”

9. Trade Secrets (cont’d)
• Infringement
– The unauthorized disclosure or use of
trade secrets constitutes misappropriation
and is actionable under state laws.
– Criminal penalties may apply.

10. TRADE SECRETS: BACKGROUND
• Genesis in state common law, unlike other IP
• Grounded in policy of business ethics
• Rights can be perpetual, but are nonexclusive
• All patents begin life as trade secrets

11. Background
• Trade secret protection stems from the
common law and dates back to the 1800's.
Today, every state recognizes some form of
trade secret protection. Most states have
legislation that specifically recognizes trade
secrets, though some still rely solely on
common law principles.

12. Background
• Most of the states that have trade secret laws use
the Uniform Trade Secrets Act, which has helped
create a more uniform body of law from state to
state than if each state had its own unique law. In
sharp contrast to patents, copyrights and
trademarks, which are all Federal-based forms of
intellectual property, trade secret protection
originates and is primarily maintained through
state law.

13. USE OF TRADE SECRET
PROTECTION
• Advantage: long life, no disclosure
• Disadvantage: no exclusivity
• Increasingly chosen over patent
– Cheap self-help vs. expensive registration
– Short lifespan of innovation
– Patent infringement difficult to police

14. THREE TYPES OF AGREEMENTS
• NDA: reinforces obligation to respect
confidence
• Assignment: transfers rights to invention
• Non-compete: temporarily prohibits post-
employment competition

15. NDA => EFFECT ON
BEHAVIOR USUALLY LOW
• Provides notice & proves reasonable efforts
• Standard NDA not controversial
• Prohibiting reverse engineering?

16. EMPLOYEE ASSIGNMENT =>
SOME EFFECT
• Rationale: what the company pays for
• Problem of post-employment restriction

17. NONCOMPETES =>
SUBSTANTIAL EFFECT
• Justification: avoid trade secret battle
• Vague standards (e.g., “reasonable time and
scope”)

18. CRIMINAL
• Criminalization relatively recent
• State laws
• Economic Espionage Act
• Problems of criminalization
– Overreaction of the uninformed prosecutor
– Standards vary (e.g., technical vs. business info)

19. CONCLUSION
• Need clearer standards, more uniform
• Criminalization should be watched &
studied carefully
• Need recognition of value of imperfect
protection
– Some loss inevitable
– Value of mobility: the “leaky bucket”

20. Trade Secrets Patents
no registration costs fees
but: costs to keep secret registration + maintenance
can last longer limited in time
- but: limited to economic life - generally: max 20y
- uncertain lifespan: leak out is irremediable - but: can be invalided
no disclosure disclosure
- but: practical need to disclose - publication 18m after filing
- if leak out: TS lost - if P not allowed: no TS

21. Trade Secrets Patents
Large subject matter Subject matter limited:
Protection of virtually anything - Requirements: new, non obvious, useful
maintained in secret by a business - Scope: patent claim
that gives competitive advantage
Only protection against Right to exclude
improper acquirement/use monopoly to prevent others from
exploiting the invention
More difficult to enforce "Power tool"
- some countries: no laws
- ability to safeguard TS during litigation

22. Business and Marketplace
Considerations

23. 1. Market life of the subject matter
Some products have commercial life of only a few
months
Patent typically takes 25 months to be issued →
Patent protection may not exist until after market life of
the product has expired
↔ TS allows immediate commercial use

24. 2. Difficulty of maintaining the
subject matter secret
– Time, willingness and funds to:
• Develop internal policies
• Implement protection program
• Initiate immediate legal action to protect trade secrets
from disclosure (preliminary injunction)
– Risk of disclosure ∼ number of persons needing
access to the TS
• Employees
• Need for investors
• External contractors

25. 3. Likelihood of subject matter being
reverse engineered
• Easy to control RE?
– Products widely sold to consumers → difficult to prevent RE → P
– Products sold to limited number of persons → control, e.g. license
agreement which forbids RE and requires licensee to maintain the
technology secret → TS
• Difficult/expensive to do RE?
– Secret ∼ manufacturing method or formula → difficult → TS
– Secret embodied in product → easy (e.g. raw material) → P

26. Example no. 1
• Decades ago, Coca-Cola decided to keep its soft drink
formula a secret
• The formula is only known to a few people within the
company
• Kept in the vault of a bank in Atlanta
• Those who know the secret formula have signed non-
disclosure agreements
• It is rumored that they are not allowed to travel
together
• If it had patented its formula, the whole world would
be making Coca-Cola

27. • In the past, you could not buy Coca-Cola
in India, because Indian law required that
trade secret information be disclosed
• In 1991, India changed its laws, and Coca-
Cola can now be sold in the country

28. Examples no. 2
• Secret technique for
jeans washing
• Secret textile
weaving techniques
for saris
• Content of dye
mixtures

29. Example no. 3
• Glamourmom® applied for patent for
breastfeeding bra
• Allows mothers to discretely and
confidently breastfeed
• Built-in soft cup frame and elastic shelf
provides full nursing bra support.
• But unlike any other nursing bra on the
market, it covers the tummy. Looks like
a regular top.

30. 4. Likelihood of subject matter being
independently developed
• Complexity of invention
• Number of competitors working in the field
• Potential payoff for achieving market success
– e.g. drug that cures cancer
• Alternative option: defensive publication

31. 5. Type of subject matter
– New basic technology
• “pioneer patent”
• many licensees: allows to set low licensing fees → competitors have
no incentive to risk patent litigation
– Minor improvement in well-developed field
• P will be narrowly construed
• easy to invent around
• or: competitors likely to use preexisting technology
– Protectable in all countries?
• in some countries not patentable?
• too costly to protect in all countries?

32. Example - Invention for putting a permanent
image on a piece of apparel
• Condé System Inc. produces • The fabric remains soft and
DyeTrans Wearables™ by absorbent with less pile than
using a patented process to cotton or cotton blends and
treat fabric so it captures resists wrinkling and
photographic-quality artwork shrinkage.
and text in the fabric rather
than on the surface of the
fabric.
Source: http://www.corporatelogo.com/articles/031feat3.html

33. • Potential long market life
• Potential many licensees
• Would be difficult to keep secret
– many licensees
– risk for reverse engineering
Patent: only 20y,
but exclusive rights