Kurt Kappes and Michael Wexler in Competitive Intelligence Magazine vol.11 n°2 of SCIP.
Competitive intelligence is a necessary business function for any competitive business. It involves gathering and analyzing information about competitors through legitimate and ethical means. The need to protect and respect proprietary information that has risen to the level of a trade secret has become increasingly important.
This article describes factors that determine the existence of a trade secret. It also offers guidance in protecting trade secrets, detecting culprits, and dicussing possible remedies if your trade secrets become misappropriates. Most important, this article provides instructions on how to avoid misappropriating trade secrets and emphasizes that whenever questions arise regarding proprietary information, you should refer them to your lega counsel.
What is a trade secret?
In 2003, the Seventh Circuit Court of Appeals declared that trade secret “is one of the most elusive and difficult concepts in the law to define” (See Learning Curve Toys, Inc. v. Plays Wood Toys, Inc., 342 F.3d 714 (7th Cir. 2003).) Nevertheless, 45 states have adopted at least some version of the Uniform Trade Secrets Act, wich gives substance to the term. The act describes a trade secret information, including a formula, pattern, compilation, program, device, method, technique, or process that meets the following criteria:
- It derives independent economic value, actual or potential.
- It is not generally known to and not really ascertainable by proper means.
- Others can obtain economic value from its disclosure or use.
- It is the subject of efforts that are reasonable under the circumstances to maintain its secrecy (see, e.g., Cal. Civ. Code p 3426.1).
How do I know if information is a trade secret?
The existence of a trade secret depends on several factors, including the following:
-The extent to wich the information is known outside the company’s business.
- The extent to which it is known to employees and others involved in the company business.
- The value of the information to the company and to its competitors.
- The amount of effort or money expended by the company to develop the information.
- The ease or difficulty others would have the properly acquire or duplicate the information.
Protecting trade secrets: who?
Once you have identified a trade secret, the next step is to sufficiently protect it. The main concern is the possibility that former employees, foreign competitors, onsite contractors, and domestic competitors will leak include computer hackers, vendors, suppliers, and current employees.
You often disclose trade secrets in a business setting. Trade secrets, however, are also exposed through the course of mundane activities such as in a dinner conversation, during an airplane trip, or simply through an overhead cell phone conversation.
How are trade secrets misappropriated?
A starting point to guarding proprietary information is identifying individuals and the means by wich they could misappropriate trade secrets. Additionally, you need to know what information they generally seek. These individuals often target custumers lists and related data, strategic plans and roap maps, financial data, and research and development information. They often obtain secrets by copying documents, dowloding information from computers, gathering e-mail information, and memorizing information. Pay attention to these cuses and have a system to report suspicious activities to yours human ressources department, yours supervisors, or other appropriated personnel. [The continuation next time…]
