WIPO - TCCIA WORKSHOP ON INTELLECTUAL PROPERTY FOR BUSINESS FOR SMEs

Dar-es-Salaam, Tanzania, May 10 and 11, 2005

Keeping Confidence: Trade Secrets in Business Strategy

Christopher M. Kalanje, Consultant, SMEs Division, WIPO

Review

• Objective– Enhancing awareness on the potential

of trade secrets as a business tool

• Road map “WHIR”– What are trade secrets– How can trade secrets be protected– Identify strategic use of trade secrets

– Recapitulation of basic points

What are trade secrets

What are trade secrets contd.

• Confidential information not generally known

• Derives independent economic value, actual or potential

• Gives the holder competitive edge

• Involves reasonable efforts to maintain its secrecy

Psst!

What are trade secrets contd.

A trade secret can relate to different types of information

Technical and scientific information

Commercial information

Financial information

Negative information

What are trade secrets contd.

• Technical and scientific

– technical composition of a product• formula (paint, beverages)

– manufacturing methods• device process, tool (weaving technique, baking

clay, metal casting, embroidery)

– know-how necessary to perform a particular operation• how to dye with natural Dyes

What are trade secrets contd.• Technical and scientific contd.

– designs, drawings, patterns, motifs

– test data, laboratory notebooks

– computer codes

What are trade secrets contd.

• Commercial information

– Business strategy/plan • marketing strategy, partnership strategy,

supplier arrangements, sales methods

– list of suppliers and clients• consumer profiles

– customer buying preferences and requirements

What are trade secrets contd.

• Financial information

– internal cost structure

– pricing information, salary and compensation plans

– employees agreements

What are trade secrets contd.

• Negative information

– details of failed efforts to remedy problems in the manufacture of certain products

– dead-ends in research

– unsuccessful attempts to interest customers in purchasing a product

How can Trade Secrets be Protected

• Not easy to know exact value of trade secret because it is a secret

• In US alone loss of proprietary information, trade secrets and critical technologies cost companies between $ 50 - 250 billion per year (sources: Gowlings Technology Seminar Series 2005; D. Degnan and J. Taros)

• Such valued information must be protected (How?)

How can Trade Secrets be Protected contd.

• Trade secrets can be protected by– Trade secret law– Unfair competition law?– Material transfer agreements governs the

transfer of one or more materials from the owner (or authorized licensee) to a third party for internal research purposes only

– Non-disclosure and/or Confidentiality agreements• employees, business partners, potential

investors or partners

How can Trade Secrets be Protected contd.

• In Tanzania trade secrets are protected by– Unfair competition law– Contract law– Trade secret law?

How can Trade Secrets be Protected contd.

• What should be done? • Identify trade secrets

owned by your company– Is it known outside the

company?

– Is it widely known by employees and others involved within the company?

– Have measures been taken to guard its secrecy?

How can Trade Secrets be Protected contd.

– Educate employees

How can Trade Secrets be Protected contd.

• Notify employees of their obligations when employment begins (employment agreement)

• Ensure that exiting employees are aware of their obligations (employment agreement)

• Regular checks on compliance

• Respect other people trade secrets

How can Trade Secrets be Protected contd.

Source of images: http://images.search.yahoo.com/search/images

- How trade secrets are lost

Outright theft

How can Trade Secrets be Protected contd.• Take reasonable measures to protect trade

secretsPut markers

ConfidentialTop secret

PasswordUse proprietary notices

Trade secrets as a strategic business tool

Trade secrets as a strategic business tool contd.

• First line of attack

• It works better if not used as a stand alone

• Need business acumen

Trade secrets as a strategic business tool contd.

• First line of attack – A business idea– Creative idea with patentability potentials– New song, story etc– New design

•Keep it a secret before your next move!

Trade secrets as a strategic business tool contd.

Coca-cola®

Trade secrets

Trademark

Industrial design

Patents (for preservatives infruit drinks)

It works better if not used as a stand alone

Trade secrets as a strategic business tool contd.

• Need business acumen

• Trade Secrets– No registration (no fees)

– No defined duration

– Maintenance costs

– Non-disclosure

•This can be done with other IP tools too

• Patents– Registration (fees)

– Defined duration

– Maintenance fee

– Disclosure

Trade secrets as a strategic business tool contd.

• “ LPPM” • Licensing

•cross-licensing negotiations

• Partnership negotiations• Patent application-

•what part of invention should be kept a secret

• Market positioning•tactical use of client names and profile

Conclusion

Essential legal requirements

Information must be secret

Information must have economic value because it is a secret

Owner must take reasonable steps to keep it secret

Conclusion contd.

Remember

Identify them

Protect them

Use them strategically

Finally