Protect Patents and Trade Secrets | DCR Workforce Blog

Protect Patents and Trade Secrets

The patent laws in America are federal in nature, and protect design and utility patents. New, original, and ornamental inventions are protected by design patents (and rarely call for litigation) while new, useful, and “non-obvious” inventions are protected by utility patents. These could be electrical, mechanical or chemical; or cover data transmission, interface, encryption techniques; information processing and retrieval; e-commerce platforms and payment systems and other business methods; and other patentable (by being clearly different from existing technologies) inventions. An inventor gets to enjoy the fruits of the invention for 17 years from the day it gets granted.

Some recent patents worthy of mention include:

  • Amazon’s One-Click Technology (with Amazon winning a suit against Barnesandnoble for using the same method, in a settlement out of court).
  • Netcentive’s frequent-flyer reward system
  • CyberGold’s incentive scheme to subscribers who agree to receive ads online
  • Secure credit card payment system from Open Market

Business entities whose trade secrets provide them with an essential edge against the competition are justifiably anxious to protect them against any infringement, whether by departing employees who plan to start an identical venture by drawing upon the knowledge as we as experience gained or get lured away by competitors for this very purpose.

Some of the essential steps to guard against such an eventuality are discussed here, which may have to be revised or modified according to the advances in uses of technology:

Put the policies in place: Let all employees be aware of the particular information which the business considers to be confidential, what constitutes proper as well improper use of it, where it can or cannot discussed, ways in which it has to be protected and the means provided for the same – which must be used as prescribed, and the consequences of transgressing such restrictions by setting it out in detail and informing every single employee.

  • The first line of defense lies in obtaining patents or copyrights; and restricting the confidential information to a select few, on a need-to-know basis. Ensure that everyone who has access, however circumspect, mandatorily signs the confidentiality/non-disclosure agreement. Other may also sign the same, to protect in case of accidental disclosure.
  • To avoid circumstances where the employee may reveal confidential information due to a lack of awareness rather than malicious intent, create reference points and designate a select few to act as mentors on the subject with the authority to approve or disapprove the sharing of any information. This is important because disclosing a trade secret – even if accidental or inadvertent – destroys secrecy and removes protection. When Kewanee Oil Co. sued Bicron Corp. (1974) over the way its own employees started their own venture and duplicated its proprietary processes to synthesize crystals within 9 months. Kewanee’s unwillingness to pursue its patent application over the process laid it open to losing its trade secret, which took 17 years of research to develop.
  • Train the employees well on the various aspects of the policy, provide them with a hard copy of the policy against written acknowledgement and get them to state in writing against signature that they have understood all of its terms and will put them in practice without violating any of its tenets.
  • Ensure that the policy is easy to follow and implement, and that it remains in force through periodic reviews, spot inspections and regular reminders as failure to follow one’s own rules denies protection. This is demonstrated by CVD, Inc. v. Raytheon Co. (1985) where Raytheon’s ex-employees set up a competitive venture, after consulting a legal expert, who found that Raytheon’s manufacturing process was submitted to federal government agencies, which in turn published it in their reports.
  • If the business makes the mistake of creating the impression that it is not serious about protecting the confidential information, it will lead to  complications subsequently. So, it is important to create a mindset of respect for the need to protect the confidential information without slackening on it at any time.
  • Rockwell Graphic Sys., Inc. v. DEV Industries, Inc. (Cir. 1991) proved that the ability to demonstrate the intent to protect information – even when shared with various licensees, vendors or third parties for limited purposes – provides protection. This was because Rockwell stamped all its piece part drawings of machinery (600 of which were found with DEV) as proprietary information and kept them in a vault and issued them against signatures as well as contractual agreements to maintain secrecy.
  • Pioneer Hi-Bred Int’l v. Holden Found Seeds, (1994) proved that even reasonable efforts at protection ensure the right to the information and Holden was fined $46.7 million for illegally using Pioneer’s germplasm to develop further strains of corn seed.
  • Segregate the zones where confidential work is undertaken, and use permissions, signs, labels and alarms to restrict access to documents, file cabinets, safes; use shredders to destroy unnecessary documents which could reveal the secret; protect databases with passwords and maintain logs for all authorized access points.
  • Use specially designated systems to ensure that confidential information is restricted and contained and can be recovered completely, when attrition occurs. Ensure that the systems provided to execute confidential tasks are handled appropriately to avoid accidental disclosure or possible deliberate misuse.
  • Use exit interviews to ensure that all the necessary precautions are taken to protect confidential information adequately.
  • Ensure that the information cannot be posted online; because downloading information from the internet does not constitute any misconduct and large scale dissemination of information online removes any protection other than charging for damages. In Religious Tech. Center v. Lerma, Inc. (1995), the defendant was absolved of serious wrongdoing and asked to pay $2500 for publishing excerpts of an affidavit and other documents pertaining to the Church of Scientology, which formed an open file in a court.

By incorporating all the above practices and any others that may be specially required to suit the particular needs of the business, an entity will be able to establish its claim to bring a suit against possible violation. This is required because the onus of proof lies with the entity to show that the information incorporates a trade secret, and that it has taken all reasonable and possible precautions to preserve the necessary secrecy, and that the defendant breached a confidential relationship to misappropriate secret information, using improper means.

The content on this blog is for informational purposes only and cannot be construed as specific legal advice or as a substitute for competent legal advice. They reflect the opinions of DCR Workforce and may not reflect the opinions of any individual attorney. Do contact an attorney for advice specific to your issue or problem.
Lalita is a people/project manager with extensive experience in operations, HCM and training and development across industries like banking, education, business consulting, BPO and information technology. She believes in a dynamic approach to life and learning as change is the only constant.