Even a business’s technical “know-how” can qualify as a trade secret.
Today, when most people think of intellectual property owned by a business, they think of a name, a logo, or branding-related trademarks. Some small- to mid-sized businesses put little emphasis on IP protection, but they may have valuable IP worth protecting.
Leonard Marquez from Wendel Rosen Black & Dean, recently sat down with Inside Counsel to discuss why these types of materials qualify as trade secrets and what smaller businesses can do to ensure their IP is protected.
Most people immediately think in terms of IP and IP rights when dealing with things like trademarks, patents, and published materials. However, there are many types of IP that may not ring a bell in terms of implicating IP related rights and obligations. In fact, some things that qualify as IP include customer lists and data, business information and plans and marketing strategies.
“A business’ customer list can be a trade secret when it contains information with economic value from not being generally known to the rest of a business’ competitors,” he explained. “Any proprietary information that derives economic value from not being generally known can be protectable as a trade secret under California and Federal law.”
Even a business’s technical “know-how” can qualify as a trade secret. The law of trade secret can protect a lot of different things, including formulas, methods, techniques, or processes. Trade secret can go as far as to protect a company’s business plans and marketing strategies, plans, and techniques if those have value from not being generally known in the industry.
Unfortunately, some SMBs don’t put much emphasis on IP protection because they may not realize that it has IP rights to protect. “Legal representation is expensive and SMBs quite often seek to avoid incurring legal fees if possible,” he said. “While understandable at some level, even SMBs need to give careful consideration to the costs-benefits analysis of spending the money to confer proactively with counsel about risks in the form of handling IP before a crisis happens.”
So, how can these smaller businesses know if they have valuable IP worth protecting?
According to Marquez, most IP counsel can conduct what is often referred to as an IP audit. Counsel can work with management to review the company’s operations and spot issues where IP is being generated, but where the company may not have all the protocols and other measures in place that it should to protect that IP. In addition, trade secret can protect almost anything that has value to a business because of its only being known to the company. The law of trademark protects a “mark,” which may be a word, name or symbol, used by a proprietor to identify and distinguish the goods of that proprietor. A copyright is, essentially, the bundle of rights that an author has in an original creative work of expression. Those rights include the right to control the duplication of the work and to sell it for profit.
“A common type of work protected by copyright is a written work such as a novel,” explained Marquez. “However, copyright can protect a broad range of other works, including paintings, movies, music, sculpture, works of architecture and design.”
What can smaller businesses do to ensure their IP is protected?
According to Marquez, once there is a recognition of the need to protect the company’s IP, management should proactively reach out to IP counsel. Each type of IP implicates its own unique set of considerations as far as protecting that IP.
He added, “Many trade secret misappropriation cases are won or lost on that issue alone. Each category of IP being generated and handled has to be considered and the appropriate measures taken to protect that IP.”
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