This guest blog post comes from Pamela Passman, President and CEO at CREATe.org - The Center for Responsible Enterprise And Trade. CREATe is a non-governmental organization (NGO) helping companies around the globe prevent piracy, counterfeiting, trade secret theft, and corruption.Iron Mountain's Intellectual Property Management business has a strategic alliance with CREATe.org.
So what exactly are trade secrets? How do they differ from patents? Is any piece of confidential corporate information considered a trade secret? For those outside the world of intellectual property, these are common questions. Here is a quick tutorial on the basics of trade secrets.
What are trade secrets?
In short, trade secrets can be divided into two categories:
Technical information
Product formulas
Product designs
Manufacturing processes
Computer code
Business and financial information
Customer lists
Consumer preferences
Pricing information
Marketing and business plans
And to be considered a trade secret, it should provide commercial value to its owner, be information that is undisclosed and importantly, the owner has taken reasonable steps to keep it secret.
For a more official explanation, many reference the definition of trade secret set forth in the U.S. Economic Espionage Act ( EEA ). It is similar to the definition of trade secrets under the Uniform Trade Secrets Act that has been enacted by 47 American states and several U.S. territories, consistent with Article 39 of the World Trade Organization's Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS) and Article 2 of the Japanese Unfair Competition Prevention Act. Under the EEA, trade secrets are:
all forms and types of financial, business, scientific, technical, economic, or engineering information, including patterns, plans, compilations, program devices, formulas, designs, prototypes, methods, techniques, processes, procedures, programs, or codes, whether tangible or intangible, and whether or how stored, compiled, or memorialized physically, electronically, graphically, photographically, or in writing if - (A) the owner thereof has taken reasonable measures to keep such information secret; and (B) the information derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable through proper means by, the public
What are examples of trade secrets?
When talking about trade secrets, many will point to examples including:
Product formulas for Coca Cola or Chartreuse liqueur; or even genetically modified corn
Algorithms and other technical information of companies including Google and Facebook
Know-how and formulation of Michelin rally tires or Gore-Tex material
Production process for products such as Corning's Thin Film Transistor ( TFT ) Liquid Crystal Display ( LCD ) glass
Why are trade secrets important?
Trade secrets can be central to a company's competitive advantage. Proprietary business and technical knowledge can also drive further innovation within a company, help a company secure additional investment and drive profits.
How do trade secrets differ from other forms of intellectual property?
In addition to trade secrets, intellectual property typically resides in the following categories:
Copyright: The legal protection of creative or technical expression. Books, newspapers, photography, software, and music are common examples of copyrighted materials.
Design rights: The new and novel appearance of a product and prevent others from imitating or copying the design with authorization. Design right protection can apply to all aspects of the appearance of a product or its packaging, including their shape, texture, color, contour, and ornamentation.
Patents: Patents protect inventions that can be a new product or a new way of doing something. Patents exclude others from making, using, or selling a protected invention.
Trademarks: Trademarks are any distinctive word, name, symbol, or other marking that identifies and distinguishes the source of good or services of one party from another.
A trade secret is different in that it is first secret' and not legally registered for protection. Many companies will classify important technical and business information internally as a trade secret to avoid the public disclosure associated with the patent process. Additionally, some potential trade secrets, such as customer lists, are not eligible for patent protection.
It can be confusing. Take the example of Google's PageRank: An algorithm that analyzes links and is used to assign a numerical weighting to each element of a hyperlinked set of documents and to measure its relative importance. PageRank is a Google trademark; the PageRank process is patented; and PageRank manipulation tools are among Google's trade secrets.
What are the challenges with trade secrets as a form of intellectual property?
Much of the value of trade secrets is in the secrecy' of the information. As such, if there is a disclosure, the value can be compromised. Numerous actors - competitors, foreign intelligence services, transnational criminal organizations, hacktivists and malicious insiders - can target and steal trade secrets. Secrecy can also be lost through unintended actions by insiders who have knowledge of the trade secrets - case in point: a product prototype left in a bar by a software engineer.
How does Iron Mountain help to protect trade secrets?
Iron Mountain has a solution called the Intellectual Property Development Protection Agreement, or IPDPA, which documents intellectual property development with a date and time-stamped audit trail that is securely held by Iron Mountain. This practical approach provides a demonstration of the types of steps a company can take to manage trade secrets.
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