Protecting the Protectable

Posted: December 14, 2015 by Bill Cunningham in Uncategorized

Robin-miller-BlogIn today’s competitive marketplace, startup companies look to gain an economic advantage however possible. Not everyone plays fairly – so, for those who do, it has become increasingly important to protect proprietary business information.   The law provides two ways to protect this information: patents and trade secrets. While certain types of information can only be protected with patents and other types of information can only be protected as a trade secret, many types of information can be protected by both. A company must choose the best protection under the circumstances. Choose carefully – because patents and trade secrets are not created equally. When safeguarding your confidential information, the cost, the time it takes, the length of the protection must be weighed against the overall reason for protecting the information.

Patent protection. A patent can only be obtained by filing for protection with the US Patent and Trademark Office. The steps required to even attempt to get a patent could be cost prohibitive for smaller companies – a simple patent application and fees can easily cost tens of thousands of dollars. Once you file the application, it can take years before the patent ever issues – if the application is even accepted. In the end, this investment may not be worthwhile because patents are only good a limited number of years. After the patent expires, the information is no longer exclusive to the patent holder and competitors can gain access to it. If the goal is to derive exclusive, indefinite economic benefit from the information, process, or procedure, then trade secret protection may better suit your needs.

Trade Secrets Can Last Forever. Unlike a patent, a trade secret does not expire. For this reason, trade secret laws can provide better protection than a patent. So what’s the catch? A trade secret is any compilation of information that derives independent economic value from not being generally known by the public. In other words, a trade secret is information that provides financial benefit to your company by virtue of the fact that others do not know it. But, in order to be worthy of protection under the law, you must take reasonable steps to keep the confidential information from being discovered by others. One of the best examples of a trade secret is the formula for Coca-Cola. The formula is locked away in Atlanta and only two Coca-Cola executives are permitted to know the formula. This has worked for Coca-Cola since 1886, but you may need to find other ways to protect your secrets if it’s not practical to lock them away.

Protecting your trade secrets. Assume that your company developed a marketing strategy based on years of compiling customer identities, preferences, and demands. Your company invested hundreds of thousands of dollars to engineer this strategy. You want to keep this information out of the hands of your competitors so that they do not have a blueprint of your carefully planned strategy. Most information today is electronic – so consider making it password protected, and limit the individuals who have access to it. If everyone in the company can access your valuable sweat equity, then it is less likely to remain a secret. You can further protect your marketing strategy by marking it “Confidential – Do No Remove From Company Premises.” In addition, it is a good idea to have a policy that employees are not permitted to e-mail the company’s confidential information to non-company e-mail addresses (including an employee’s personal e-mail address). And, some of the best forms of protection are non-compete agreements, non-disclosure agreements, and non-solicitation agreements. These contracts prohibit employees, contractors, vendors, and suppliers from disclosing your company’s trade secrets or otherwise unlawfully competing against you. In most cases, you should use a combination of these protective measures but remember – trade secret protection is not a “one size fits all” undertaking.

You’ve invested time and money into staying competitive in your market but, without taking the proper measures to protect your valuable proprietary business information, it could be time and money down the drain. Evaluate your business information and take the proper steps to protect the protectable. And, if in doubt, consult a professional who can advise you of how to achieve the best level of protection possible.

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