Secrets — Trade secret asset management has been steadily rising in importance over the past few years, and 2016 has seen the greatest rise in importance of trade secret assets. Trade secret asset management is an area that has often been neglected in the past by many companies. However, trade secrets are an area which cannot be ignored going forward.
Trade secrets and know-how may be some of the most important assets in the intellectual property portfolio of any organization. They are at least on a par with other forms of intellectual property such as patents and trademarks. Some would argue that trade secrets and know-how are the crown jewels of any intellectual property portfolio.
However, trade secrets and know-how are fragile and only are of value if kept secret.
Trade Secrets
A trade secret is defined as any information that is:
- – Not generally known to the relevant business circles or to the public. The information should also not be readily accessible.
- – Confers some sort of economic benefit on its owner. This benefit must derive specifically from the fact that it is not generally known, and not just from the value of the information itself. It must have commercial value because it is a secret. Commercial value encompasses potential as well as actual value.
- – It must have been subject to reasonable steps by the rightful holder of the information to keep it secret. What is reasonable can vary depending on the specific circumstances.
A trade secret continues for as long as the information is maintained as a trade secret. However, information may no longer be considered to be a trade secret once it becomes easily accessible, is no longer properly protected or has no commercial value.
Broadly speaking, any confidential business information which provides an enterprise a competitive edge may be considered a trade secret.
Trade Secret Asset Management
Trade secret asset management is about the policies and procedure, processes and systems, education and governance defined and taken into use to help manage such assets.
Simply deciding to keep something secret is not sufficient!
I suggest that trade secret asset management consist of a diverse range of elements, such as:
- Having a trade secret policy in place
- Designing, developing and deploying a trade secret process within the organization
- Taking a robust fit for purpose trade secret asset management system into use to underpin that process
- Including a section on trade secrets to the basic IP training for all employees
- Identifying trade secrets across the entire organization
- Identifying any trade secrets shared with 3rd parties
- Identifying any trade secrets belonging to 3rd parties and entrusted to the company
- Putting the appropriate administrative, legal and technical protection mechanisms in place
- Gathering metadata about the trade secrets for management purposes
- Installing a culture of confidentiality within the company as far as trade secrets are concerned
- Putting a governance structure in place
Trade Secret Asset Management is Becoming a Business Critical Issue
The stars are aligning. Things are coming together as far as trade secrets and trade secret asset management is concerned.
In this paper, I have identify seven developments which together I strongly believe mean that trade secret asset management is now becoming a business critical issue, and one which companies must address.
- Legislative developments
- Finance & tax developments
- Network security & cyber-crime
- IP reform
- Corporate governance
- Companies embracing openness
- The nature of modern employment
First, we have seen major changes in trade secret law in key jurisdictions during 2016. Trade secret misappropriation can now be remedied by to the Defend Trade Secrets Act passed in April 2016. This new law adds to the already sizeable numbers state laws regarding trade secret. The EU passed the Directive on Trade Secrets earlier this year.
Second, financial and tax developments in the next few years will impact intangible assets and their management. Such intangible asset clearly include trade secrets as far as the tax authorities are concerned.
Cybercrime is one of the greatest threats facing any company, and has enormous implications for its security, prosperity, and safety. The range of threats and the challenges they present for companies is expanding just as rapidly as technology evolves.
Such criminals are not seeking to steal what is on the menu in the company canteen. They are after the trade secrets of the company.
IP reform, especially patent reform in the USA means that some weaknesses have arisen with patents and patent protection. This has already prompted a number of IP mature and sophisticated companies to revisit their IP strategies and consider all forms of IP including trade secrets.
The proper and professional management of the intangible assets of a company is more and more a corporate governance issue. There is a fiduciary duty by the GC/CIPO /IP Manager to professionally care for all of the intangible assets of the company. I appreciate that some IP Managers believe that only registered forms of IP such as patents and trademarks fall under their remit. However, unless an IP Manager has received explicit instructions from the Board of the company to not manage other forms of IP such as trade secrets, then trade secrets and trade secret asset management is clearly his/her responsibility.
This next development at first glance may seem a strange one to highlight.
Openness or Open Innovation is an overarching concept or philosophy that is characterized by an emphasis on transparency and free, unrestricted access to knowledge and information, as well as collaborative or cooperative management and decision-making rather than a central authority. Openness can be said to be the opposite of secrecy.
Many companies are embracing this spirit of openness. Companies are embracing open innovation, but finding the right balance between opened and closed approaches is crucial. No company wants to be 100% open. Companies which opt to embrace open innovation must also decide what to keep secret and then work to ensure that such secrets are indeed kept secret.
The nature of employment and employee loyalty has changed. Long gone are the days when an employee joined a company after leaving school and stayed with that company until retiring. These days, people expect to move around across numerous companies over their working career. This poses some challenges for trade secrets within companies.
Hazel Helps Companies Identify Rank & Protect Their Trade Secrets
The Hazel Trade Secret Asset Management System may help your company manage its trade secrets and trade secret processes. Hazel can keep track of your corporate trade secrets and help you determine an appropriate level of protection for each trade secret recorded. Hazel can record who in your organization is responsible for a given trade secret, who is responsible for protecting the trade secret, and who has access to the trade secret, among other things. Contact the Hazel Team today to learn more.
For Secrets, I’m Donal O’Connell.
Credits:
Rising sun by Moise Nicu – Own work, CC BY 3.0, Link
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Eavesdropper by Unknown – This file is from the collections of The National Archives (United Kingdom), catalogued under document record INF3/247. For high quality reproductions of any item from The National Archives collection please contact the image library.This tag does not indicate the copyright status of the attached work. A normal copyright tag is still required. See Commons:Licensing for more information., Public Domain, Link
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Donal O'Connell
Donal O’Connell operates Chawton Innovation Services, and was formerly vice president of R&D and a director of IP at Nokia. He enjoyed a long career at Nokia for 21 years and has wide and varied experience in the wireless telecoms industry, having worked for periods in The Netherlands, UK, USA, Finland, and HK. Donal is an Adjunct Professor at Imperial College Business School in London, and teaches some elective courses there on IP management, open innovation and the role of IP, as well as services innovation and IP. He graduated from NIHE Limerick (now The University of Limerick) in Ireland in 1985, with a Degree in Electronic Engineering.
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