This newsletter is the third part of a three-part series of articles intended to provide information to general practitioners concerning intellectual property audits. |
IP Audits: Uncovering the Dirty Little Secrets - Part 3
5. Trade Secrets
There are really only two ways to protect a trade secret—through written agreements and by restricting access to the trade secret. There are many different ways to restrict access: computer files can be password-protected, laboratory notebooks can be maintained in locked file cabinets, and formulations can be revealed selectively to certain individuals so that only one or two people have knowledge of the entire formulation.
Without exception, every business should have written confidentiality agreements in place with its employees and those independent contractors who have access to the company’s trade secrets. Examples of trade secrets include customer lists, supply sources and pricing, marketing strategies, business plans, computer source code, and inventions for which the client elects not to pursue a patent application. Depending on the level of security required at the client site, some clients may also want to have visitor confidentiality agreements in place. For example, visitors who have access to the manufacturing floor and who may be in a position to view proprietary manufacturing processes should be
required to sign confidentiality agreements.
In the event of trade secret misappropriation litigation, the party asserting misappropriation of its trade secrets will be required to prove that steps were taken to maintain the confidentiality of the trade secrets. Without written confidentiality agreements in place, it is not likely the client will prevail. Because the client’s employees are often the only people who have access to the trade secrets, the most frequent scenario—and one I have seen in my practice—is an employee leaving an employer and taking the employer’s trade secrets with him.
IP audits often reveal the client’s concern about trade secrets to which its employees have access. We work with clients to ensure that the appropriate agreements are in place and that reasonable steps have been taken to restrict access and prevent misappropriation.
* * *
Although not mentioned above, our IP audits also address infringement issues with respect to all of the above forms of intellectual property law. There can be infringement of a patent, copyright or trademark and misappropriation of a trade secret. The client may be accused of infringement, or the client may want to pursue an infringer. Either way, these issues are addressed in the IP audit as well.