How Can You Protect That Company Secret?

by | Feb 3, 2021 | Contracts

Imagine you invent and build a handy tool. While all the components are relatively common, the specifications and configuration of the apparatus are quite complex and take you a long time to develop. The machine, though not patented, is kept in your office with access given only to a certain employee. But when that employee is let go, he removes the tool and takes it to his home. You immediately call the police to recover it but they don’t get to do so until after the ex-employee had enough time to apparently record all the critical specifications of the components so that he might later reproduce it himself.

What can you do? Is the device a trade secret which can be protected from misappropriation? After all, its composition was not known outside of your company and you took reasonable steps to safeguard your secret. A jury was actually presented with this fact pattern and answered in the affirmative, finding that the ex-employee improperly acquired the special and unique specifications associated with this tool for his own benefit and for the purpose of competing with his former employee. This result, however, may have been simply fortuitous given the current state of the law.

In today’s global markets, the concept of reverse engineering has become quite common place. Competing businesses regularly inspect, dissect and fully analyze others innovative products to develop a “knock off” and market it at a lower price. And to the extent they do so on items not formally patented, they pretty much have free reign to do as they please.

The best way to fend off this sort of appropriation is to register your discovery or invention with the appropriate government agency – the United States Patent and Trademark Office (USPTO). But that is only a first step. You are then left with the important task of policing your patent.

A failure to maintain it by allowing others to infringe on its use could result in its diminished value and possible abandonment. The USPTO doesn’t monitor patents in the public domain; this is for the business owner to perform, and perform regularly. However, you may also protect your trade secret without registration to the extent you meet certain requirements. Your product must truly be secret, meaning it is not generally known or readily accessible to others. It must have commercial value, and you must also have taken reasonable steps to keep it secret.

One of the primary tools in this regard is the regular use of confidentiality agreements with employees, independent contractors and business partners, requiring that anyone who is likely to access or use an item or piece of equipment you want protected actually promises to keep it secret.

The inventor in our example was lucky. Without a patent or any confidentiality agreement in place, he could have easily lost the ability to keep his ex-employee from duplicating his invention. Be vigilant in protecting your secrets; seek the advice of a legal expert, and you’ll be rewarded with the benefits of owning a unique product which no one can legally replicate.

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