Trade Secret Management in an Era of Open Innovation and Employee Mobility

Secrets — Trade secret management requires finesse and flexibility in an era of open innovation and increased employee mobility. The situation resembles the cybersecurity examples that we discussed in a recent post.

Open Innovation

Open innovation is a paradigm for business collaboration that assumes that firms should use external ideas as well as internal ideas, and internal and external paths to market, as firms look to advance their product offerings. In other words, firms should collaborate with other firms.

The open innovation paradigm can provide many benefits to firms. But like all business strategies, the approach calls for extra attention in some areas, such as intellectual property.

Open innovation can impact patent matters and create issues for trade secret protection. A trade secret asset management tool can be useful in determining which corporate trade secrets have been shared with others, which corporate trade secrets have been received from others, and which trade secrets have been co-created with others.

The Hazel team is aware that many companies have no formalized system for tracking the trade secrets that they have received from others. So, for example, we’re aware of a retailer that receives prototypes, plans, etc. from various companies that they expect to be keep secret. This is an area that also has limited visibility to senior management.

There are good reasons for this information to be shared. The junior managers typically know that they need to keep this information secret but they don’t really track it in any formal way, and senior management has almost no visibility into this. The situation could be reversed by application of a trade secret asset management system.

Sharing Information with Manufacturers

Many companies outsource the manufacture of their products to third parties. This makes perfect sense from a business point of view. Of course, such relationships call for the companies to share all sorts of information with their collaborators, and a lot of this information comprises trade secrets.

The Hazel team has learned that some very large multinationals don’t typically track the information they’ve handed over to third parties.

If companies don’t track the information that they share, then it makes it much harder for them to provide any more than general security for these secrets. We suspect that the primary form of security comprises a very broadly worded statement in a contract that describes trade secret protection. We suspect that most companies often doesn’t label information handed over to their manufacturing partners as “secret”, and we suspect that over time the requirement for secrecy will be ignored.

This situation could be easily rectified by the use of a trade secret asset management tool.

Employee Mobility

In the conventional situation, when employee Joe Bloggs leaves his company, the human resource department may give him some very general agreements to sign that relate to a number of matters, including trade secrets.

However, if the company employs a trade secret asset management system, then it may search the system for Joe Bloggs and discover the corporate trade secrets that he is known to have accessed. The company can then provided extra counseling to Joe and/or additional agreements regarding these trade secrets.

If the company knows that Joe Bloggs not only has access to a particular set of trade secrets but is now going to a competitor who would likely be interested in those very trade secrets, then the company knows that it might want to take additional steps, too, such as contacting the new employer as well as counseling Joe.

Hazel Helps Companies Identify Rank & Protect Their Trade Secrets

The Hazel Trade Secret Asset Management System helps you manage your trade secrets and trade secret processes. Hazel can keep track of corporate trade secrets and help you determine an appropriate level of protection for each trade secret recorded. Hazel can record who in an 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. Hazel can also help with various corporate functions such as a tax and human resources. Contact the Hazel Team today to learn more.

For Secrets, I’m Tom Ewing.

Credits:

Cover art: Internet café open by CC BY-SA 2.0, Link

Open door days by Callum Black, CC BY-SA 2.0, Link

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