Trade Secret Protection

As a business grows, success in the marketplace may depend on how well the creativity that started that growth is protected. Trade Secret Protection is a valuable form of intellectual property that is often overlooked.

If you are planning on submitting a patent application to the USPTO or other patent agency, it may be critical to keep your patent specifications and application as a trade secret until application, publication, or issue depending on the circumstances. The proper strategy is vital in case your patent application does not issue. Approximately half of all patent applications do not issue into patents. Call us for information on patent/trade secret strategies.

Trade secrets are protected by both state laws (which vary from state-to-state, see Trade Secret Laws-States & Federal) and a federal law known as the Economic Espionage Act of 1996 (See pdf). Most states (46) use a version of the Uniform Trade Secrets Act (UTSA)(See pdf)  as a default set of rules to deal with misappropriation of trade secrets. .

How should you be protecting your business? Trade secrets? Trademarks? Patents? Copyrights?

Intellectual Property is not just patents, trademarks, service marks, copyrights and trade secrets. Intellectual Property also includes brand names, slogans, taglines (tag lines) & logos, domain names, web sites (who really owns what is being developed?), pending patent applications, pending trademark applications, consulting and non-disclosure agreements, research agreements (who really owns what is being developed?), independent contractor agreements, freelance agreements, licensing agreements, assignment agreements, any writings such as books, manuals, advertising slogans, plans, specifications, software, papers, reports; any original art such as photographs (rights and reproduction agreements), paintings, drawings, designs; trade secrets such as process know-how, apparatus know-how, ingredient or component know-how, plus more.

Performing an Intellectual Property audit is a means of finding out what you’ve got and what it’s worth and where it can be improved. Intellectual Property Rights are very fact oriented and what works for one business will be different from another. It depends on what types of innovation you need to protect.

The strategy for protecting your IP assets needs to be tailored to the specific requirements of your business and needs to take into account your company’s relationships to its employees, its suppliers, and its customers. Having your innovation leak out through misappropriation hurts your organization and your bottom line.


How to Keep A Trade Secret:

Identify, Assign a Value, Protect It


Identify Trade Secrets

What is a trade secret? A widely relied-upon definition of a trade secret is a “trade secret may consist of any formula, pattern, device or compilation of information which is used in one's business, and which gives him an opportunity to obtain an advantage over competitors who do not know or use it. It may be a formula for a chemical compound, a process of manufacturing, treating or preserving materials, a pattern for a machine or other device, or a list of customers.” (Restatement of Torts § 757)  

Trade secrets are the only intellectual property right (IPR) where ideas can be protected. This is not just true for strategic business ownership methods but is also true for ideas and innovations that are being developed for patenting. It is crucial to protect ideas at this stage to prevent someone else from patenting them and to assure that a public disclosure is not made of the innovation which could bar (prevent) being able to get a patent. There may be no recourse for someone taking your idea unless they legally misappropriated it or unless you reach the conception stage and patent application stage before they do, can prove it and get the patent instead of them. See Avoid Public Disclosure.

Ideas may come from many people and places but the patent goes to the inventor(s) who takes the idea to completion and can describe the invention well enough that someone skilled in the art can build the complete and operable invention without much experimentation. “An inventor may consider and adopt ideas, suggestions and materials derived from many sources: a suggestion from an employee, a hired consultant or a friend even if the adopted material proves to be the key that unlocks the problem so long as the inventor "maintains intellectual domination of the work of making the invention down to the successful testing, selecting or rejecting..." Morse v. Porter, 155 USPQ 280, 283 (Bd. Pat. Inter. 1965).” MPEP 2138.04. Protecting ideas and innovation is essential!


Examples of trade secrets that have been protected through litigation include: customer lists, price structure methods, accounting methods, secret recipes or formulas, manufacturing processes, and the content of contracts and agreements. Negative information can also be a trade secret--knowing what not to do can be as important as knowing the best or cheapest or highest quality way to do something.

Patented methods, products & processes that have been improved since the patent application are often kept as trade secrets by the patent owner. Patented methods, products & processes of patents whose terms are expired where the methods, products or processes have been improved are often kept as trade secrets by the anyone with the resourcefulness to strategically search patents & harvest the data, implement improvements, and keep the improvements a secret.


What’s the difference between a patent and a trade secret? A trade secret is usually distinguished from a patent either because: it consists of something that cannot be patented; it consists of something in the process of being patented (and still secret); or a decision was made that keeping the product or process as a trade secret because it was more beneficial to keep secret than seek a patent. See Comparison Chart of Trade Secrets v. Patents.


Trade Secret Valuation

In order to claim the benefits of trade secrets as intellectual property or in the event of stolen trade secrets, trade secret owners must have an estimated value for the trade secret to assess value or damages for civil liability or criminal prosecution. One of the these three methods (from the U.S. Department of Justice’s Task Force on Intellectual Property in their Progress Report of the Department of Justice’s Task Force on Intellectual Property) may be used to find an estimated value. (Call us and we can email you a copy of the report.)


Method

___Cost to Develop the Trade Secret;

___Acquisition Cost (identify date and source of acquisition); or

___Fair Market Value if sold.


The World Intellectual Property Organization (WIPO) has a paper called Intangible Asset & Intellectual Property Valuation: A Multidisciplinary Perspective (pdf), by  By Paul Flignor and David Orozco that explains how valuation of intellectual property can be determined in more detail.


If you are a privately-held company, knowing what Intellectual Property Rights you’ve got, what your Rights are worth, how your Rights are protected, and how your Rights could be protected contributes to getting maximum value from your Intellectual Property (IP) assets and should help protect revenues, profits and jobs.


If you are a publicly-held company, you may have compliance requirements under the Sarbane-Oxley Act of 2002 to audit, protect and manage your Intellectual Property Assets. This Act says that publicly-owned businesses have to place internal controls on transactions and dispositions of the assets that can materially affect or are likely to have a material impact on business and financial performance to protect investors by improving the accuracy and reliability of corporate disclosures made pursuant to the securities laws. Since Intellectual Property assets (including trade secrets) often make up substantial portions of business value, this Act may apply to your business. See the text of Sarbanes-Oxley Act of 2002, Public Law 107-24.


Trade Secret Protection

The following list of measures was developed from the U.S. Department of Justice’s Task Force on Intellectual Property in their Progress Report of the Department of Justice’s Task Force on Intellectual Property, June 2006 (call us and we can email you a copy).

This is not an all-inclusive list of measures that could be taken and not every step must be taken by every trade secret owner. Owners must takes whatever steps are ‘reasonable efforts’ under the circumstances. (“Reasonable effort” is a term of art that is interpreted by case law and is factually dependent on the circumstances.)


General Physical Measures Taken to Protect the Trade Secret


Confidentiality and Non-Disclosure Agreements


Computer-Stored Trade Secrets


Document Control


Employee Controls


One way of determining what type and level of trade secret protection is right for you is to do a cost/benefit analysis of keeping the information as a trade secret or a patent (if applicable). If neither a trade secret or patent is viable, consider using other tools such as branding (a trademark) to protect the market rather than the information. A high quality product or service that is well trademarked and promoted may be of higher value than a secret process. If the cost of keeping a trade secret outweighs the benefit, than it may not be a good business decision to protect the information. However, don’t wait to lock the barn door until after the horse is gone--courts reward reasonable efforts to protect trade secrets not disclosure.


A Not Just Patents ® Patent Search or Patent Application is done by a USPTO registered patent agent or registered and licensed patent attorney in the U.S. We will try to match or beat any competitive bid from any other Intellectual Property law firm. See What to Expect from a Not Just Patents Patent Attorney.


Not Just Patents ® Legal Services provide a broad range of services for Intellectual Property Protection. Call us with questions at 1-651-500-7590  . Don’t assume that protecting your legal rights is too expensive if you haven’t even called to see what it would cost. In today’s economy (and for the future), Intellectual Property may be one of the best ways to invest in your business.

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Call 1-651-500-7590 or email WP@NJP.legal for Responses to Office Actions; File or Defend an Opposition or Cancellation; Trademark Searches and Applications; Send or Respond to Cease and Desist Letters.

For more information from Not Just Patents, see our other sites:      

Steps to a Patent    How to Patent An Invention

Should I Get A Trademark or Patent?

Trademark e Search    Strong Trademark     Enforcing Trade Names

Common Law Trademarks  Trademark Goodwill   Abandoned Trademarks

Patentability Evaluation

Chart of Patent vs. Trade Secret

Patent or Trademark Assignments

Trademark Disclaimers   Trademark Dilution     TSDR Status Descriptors

Oppose or Cancel? Examples of Disclaimers  Business Name Cease and Desist

Sample Patent, Trademark & Copyright Inventory Forms

Verify a Trademark  Be First To File    How to Trademark Search

Are You a Content Provider-How to Pick an ID  Specimens: webpages

How to Keep A Trade Secret

State & Federal Trade Secret Laws

Using Slogans (Taglines), Model Numbers as Trademarks

Which format? When Should I  Use Standard Characters?

Shop Rights  What is a Small or Micro Entity?

Patent Drawings

Opposition Pleadings    UDRP Elements    

Oppositions-The Underdog    Misc Changes to TTAB Rules 2017

How To Answer A Trademark Cease and Desist Letter

Converting Provisional to Nonprovisional Patent Application (or claiming benefit of)

Trademark Refusals    Does not Function as a Mark Refusals

Insurance Extension

How to Respond to Office Actions

What is a Compact Patent Prosecution?

Acceptable Specimen       Supplemental Register   $224 Statement of Use

How To Show Acquired Distinctiveness Under 2(f)

Patent search-New invention

Patent Search-Non-Obvious

Trademark Attorney for Overcoming Office Actions Functional Trademarks   How to Trademark     

What Does ‘Use in Commerce’ Mean?    

Grounds for Opposition & Cancellation     Cease and Desist Letter

Trademark Incontestability  TTAB Manual (TBMP)

Valid/Invalid Use of Trademarks     Trademark Searching

TTAB/TBMP Discovery Conferences & Stipulations

TBMP 113 Service of TTAB Documents  TBMP 309 Standing

Examples and General Rules for Likelihood of Confusion

USPTO Search Method for Likelihood of Confusion

Examples of Refusals for Likelihood of Confusion   DuPont Factors

What are Dead or Abandoned Trademarks?

 Can I Use An Abandoned Trademark?

Color as Trade Dress  3D Marks as Trade Dress  

Can I Abandon a Trademark During An Opposition?

Differences between TEAS and TEAS plus  

How do I Know If Someone Has Filed for An Extension of Time to Oppose?

Ornamental Refusal  Standard TTAB Protective Order

SCAM Letters Surname Refusal


What Does Published for Opposition Mean?

What to Discuss in the Discovery Conference

Descriptive Trademarks Trademark2e.com  

Likelihood of Confusion 2d

Acquired Distinctiveness  2(f) or 2(f) in part

Merely Descriptive Trademarks  

Merely Descriptive Refusals

ID of Goods and Services see also Headings (list) of International Trademark Classes

Register a Trademark-Step by Step  

Protect Business Goodwill Extension of Time to Oppose

Geographically Descriptive or Deceptive

Change of Address with the TTAB using ESTTA

Likelihood of confusion-Circuit Court tests

Pseudo Marks    How to Reply to Cease and Desist Letter

Not Just Patents Often Represents the Underdog

 Overcome Merely Descriptive Refusal   Overcome Likelihood Confusion

Protecting Trademark Rights (Common Law)

Steps in a Trademark Opposition Process   

Section 2(d) Refusals   FilingforTrademark.com

Zombie Trademark  

What is the Difference between Principal & Supplemental Register?

Typical Brand Name Refusals  What is a Family of Marks? What If Someone Files An Opposition Against My Trademark?

How to Respond Office Actions  

DIY Overcoming Descriptive Refusals

Trademark Steps Trademark Registration Answers TESS  

Trademark Searching Using TESS  Trademark Search Tips

Trademark Clearance Search   DIY Trademark Strategies

Published for Opposition     What is Discoverable in a TTAB Proceeding?

Counterclaims and Affirmative Defenses


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