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