When most technology leaders think about their company’s intellectual property, patents and trademarks likely come to mind. These are the publicly disclosed assets that make up the majority of your IP portfolio and typically protect the products and branding for which your company is known in the marketplace. But there is another, often neglected type of IP asset – one that may play a more significant role in the overall valuation of your company than you may expect: your proprietary trade secrets.

Trade secrets are a catchall classification for any intellectual property – such as methods, procedures, designs, internal software, recipes, or formulations – that are necessary to the function of your company or the production of your products or services.  They include innovation that is not patentable but nonetheless valuable and important; or they may be critical innovations that are strategically deemed best to not be publicly disclosed. Because these trade secrets are vital to your company’s ability to operate, and may give you a competitive edge in the market, they carry inherent monetary value so long as their particular details or even their complete existence is kept secret outside of their necessary applications within your company.

While your IP counsel will spend much of their effort ensuring the protection of your patents and trademarks, they can also provide aid in helping your company secure this deceptively valuable asset class. Here are three ways in which your IP counsel can help protect your trade secrets and shore up the very foundation upon which your enterprise is built.

Advise stakeholders on how to identify trade secrets.

Some trade secrets are obvious to most who encounter them. Companies whose products rely on a proprietary formula or recipe to produce them, for instance, will want to make sure that safeguards are in place to conceal the details of those formulas from the public.

There are some trade secrets, however, that are more subtle and might evade protection without the proper training in their identification. For example, say your team of engineers develops a workflow that increases their productivity. It may only be a small tweak in their routine, but it results in greater output and therefore higher profits. You would want to keep that improvement classified, insulating it from competitors who are keen on increasing their own profits.

Your IP counsel, in the course of their duties developing ongoing IP awareness curricula, can spend some time focused on training your innovation stakeholders in the identification of potential trade secrets and how to document them. Not only does this training help capture and protect a potentially valuable asset, it also fosters a high level of awareness and attention – a worthwhile intangible asset in itself.

Review contracts and agreements for language protecting trade secrets.

Whereas patents function as legal mechanisms to protect publicly disclosed information and technology, trade secrets work in the opposite direction. Their value comes from their confidentiality, so insulating that proprietary knowledge from the outside requires a different kind of legal instrument.

Most likely, the greatest risk to your company’s trade secrets comes from the people who work closely with them. It is inevitable that certain employees, contractors, and vendors will necessarily have access to your trade secrets in the performance of their work. It stands to reason then that the agreements governing those relationships will need to contain explicit language addressing the handling of trade secrets, both while they work with you and in perpetuity.

As part of your IP counsel’s efforts in drafting, updating, and maintaining the contracts your company uses to define its various relationships, they will need to pay particular attention to the language related to the protection of your trade secrets.  At the top of the list, non-disclosure agreements (NDAs) and non-compete agreements should ensure that your trade secrets are protected beyond the life of their engagement with you. These contractual measures effectively create a perpetual schema of legal protection that never expires as patents or trademarks do.

Work with your security team to create access restrictions to your trade secrets.

Depending on the sensitivity of your trade secrets, and the necessity of their use in regular business operations, it is often wise to restrict access, in part or in whole, to only those individuals whose jobs require it. Depending on the nature of your trade secrets, there are a number of methods you can employ to guarantee their limited access and combat the theft of your assets.

Your IP counsel can consult with your company’s chief security officer and their team to help them identify trade secret assets, assess their levels of sensitivity and vulnerability, and develop protocols around how they’re stored or recorded and who should have access to them.

In the case of digital information assets, your security team may advise limiting access through password-protected documents, directories, or drives; partitioned servers; and digital storage solutions on machines disconnected from the internet. When it comes to tangible assets such as physical documents or files, it will be important to place those items under lock and key, keep a record of who accesses them and when, and work to ensure that the assets cannot be reproduced or smuggled out of the building.

Conclusion

Capturing and protecting your company’s trade secrets can be as or, in some cases, even more important than that of your patentable innovations. As opposed to patents, which traditionally only provide protection for 20 years, trade secret protections can be indefinite, providing particular advantages over other publicly disclosed intellectual property rights. Your IP legal counsel can lead the charge in fostering company-wide awareness, in making certain your contracts are solid, and in collaborating with your security team to ensure the soundness of your company’s digital and physical safeguards. 

             Thomas DeFelice

This article is for informational purposes, is not intended to constitute legal advice, and may be considered advertising under applicable state laws. The opinions expressed in this article are those of the author only and are not necessarily shared by Dilworth IP, its other attorneys, agents, or staff, or its clients.