intellectual property Archives

Trade Secrets Rights and Uses

Intellectual property may be protected in a variety of ways. New inventions may be covered by a patent while your company’s name and logo may be protected with a trademark registration. If your company publishes brochures, then these are covered with a copyright.

However, what if your company has something that they would like to protect, but keep secret? Several famous examples of “trade secrets” exist. These include Kentucky Fried Chicken’s 11 herbs and spices, the secret formula for making Coca-Cola and the search algorithm that Google uses.

Why didn’t these companies decide to patent or otherwise protect their IP via the various mechanisms that are available under U.S. law?

It’s because they wanted to keep their “secret ingredient” a secret. When you file a patent application, for example, it is essential that you disclose everything about the invention so that the United States Patent and Trademark Office can establish that it is non-obvious, novel and eligible for patent protection.

This means that any proprietary information that goes into your invention will eventually become public knowledge. When your patent expires, your technology becomes available for others to use.

However, when you protect something as a trade secret, then you have the potential to keep it a secret in perpetuity.

What Can You Protect with a Trade Secret?

Trade secrets can protect an array of things, from an ingenious idea that gives your firm a competitive edge to the marketing plans for your newest product. Similarly, customer lists can be protected as trade secrets as well as information regarding prices and costs.

Some companies even protect negative know-how as a trade secret. This basically refers to anything that they have learned to not do through extensive research and development. Sometimes, this information is just as valuable as the ingredients that successfully make up your secret.

Essentially, a trade secret can be almost any information that is valuable to your company and generally isn’t known to the rest of the world, especially your competition.

What Rights Does a Trade Secret Grant?

If a company chooses to keep some information as a trade secret, then they have the right to prevent certain people from using or benefiting from that trade secret.

Some of these people are automatically bound by a strict duty of confidentiality. This applies to any employees who work with or are knowledgeable about the trade secret.

Trade secrets also give you legal protections in the event that your proprietary information is illegally obtained via bribery or theft. A company with a trade secret further can prevent people who accidentally discover the secret information from profiting from it as well as those who are asked to sign a non-disclosure agreement before the confidential information is shared with them.

However, a trade secret does not grant a company any rights if another party independently discovers the trade secret. As an example, there is no law that prevents someone from reverse engineering a product that is only protected as a trade secret. This means that theoretically someone could analyze the formula used to make Coca-Cola, discover its precise ingredients and then start making and selling their own version of Coca-Cola. Because Coca-Cola’s formula is only protected as a trade secret, they would have a lot of difficulty stopping the inventor from profiting from his knowledge.

How Does a Company Protect a Trade Secret?

Businesses have to do more than just call a certain piece of information a trade secret. Instead, it is necessary to take affirmative actions that will protect this information and keep it confidential. Many companies will take extreme measures to keep their information strictly private.

This is the case with the makers of Coca-Cola, as the formula is locked in a bank vault that is only able to be opened after a resolution is passed by the board of directors. Only two company employees are ever allowed to know the formula at the same time. These employees are forbidden from flying on the same airplane, and their identities are never made known to the public.

Most companies do not have to go to such extreme lengths to protect their trade secrets. A few reasonable precautions generally are all that is required.

For instance, it is wise to mark any documents with “Confidential” if they contain any trade secret information. All trade secret materials probably should be locked away in a safe or other secure area after hours. Another sensible measure is to beef up any computer security protocols to ensure that hackers and other bad actors can’t gain access to sensitive information.

If you do have trade secrets, then you’ll probably want to limit how many people actually have access to that information. Ensure that your employees are bound by a duty of confidentiality, preferably with a written document, and do the same with anyone who is not an employee but who must be told about the trade secret for any reason. A proper non-disclosure agreement is a simple document that can help to protect proprietary information under just about any circumstances.

Talk to a Lawyer About Protecting Trade Secrets

If you have proprietary information that you believe would be best protected by keeping it as a trade secret, then contact the Law Offices of Jeff Williams. Mr. Williams is an experienced intellectual property attorney who can help you to understand your rights and devise a strategy for protecting proprietary information.

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Fair Use Vs. Intellectual Property

Fair Use

An individual or entity may accordingly use copyrighted material without first obtaining the permission of the owner of the copyright. This means that fair use is an affirmative defense that may be used if an owner makes a claim of infringement.

It also is possible to claim fair use if the new work is somehow transformative. Defining “transformative” in this sense is immensely difficult. In fact, many copyright owners and alleged infringers have gone to court over just what “transformative” use really means.

The answer is that hard-and-fast rules on this topic do not exist. Related court decisions over the years have been varied, and although it seems confusing, this actually demonstrates that the concept of transformative use actually works.

The various lawmakers and judges who took part in drafting the fair use exceptions were deliberately vague on this point because they didn’t want to place unnecessary limits on the definition. Effectively, they wanted it to be open to interpretation and to be defined expansively, much as free speech is.

Fair use doctrine frequently is relied upon to defend commentary and criticism. Whether you are the movie or book reviewer for your local newspaper or have a YouTube channel on which you critique the latest pop album releases, you generally have the right to reproduce some portion of the work that you are reviewing.

The same is true when a news anchor or a reporter provides quotes and a summary of a new medical study. This is considered fair use because the protected material is being used for commentary and criticism purposes.

What makes this type of use acceptable under the law is that the public could reap benefits from reading or listening to the critic’s or reporter’s insights. The review or report is enhanced through the inclusion of some of the copyrighted material.

Fair use also makes it permissible to create parodies. Of course, what actually qualifies as a parody may be up to the discretion of a judge if the creator of the copyrighted material doesn’t agree that the new work is merely a humorous expression of literary criticism or social commentary.

Case Examples

Consider some examples to see how differently things can be viewed by the courts. In one case, Leibovitz v. Paramount Pictures Corp., famed photographer Annie Leibovitz took exception to a parody of the photograph that she took of a naked, pregnant Demi Moore. Leibovitz’s work appeared on the cover of Vanity Fair and caused a sensation at the time. Later, Paramount Pictures published a send-up of the photo showing the head of actor Leslie Nielsen digitally grafted onto the body of a pregnant, naked woman. The pose and lighting were similar to those in Leibovitz’s photo.

In this case, the court decided that the picture by Paramount was clearly parodic in nature.

That was not the case when a court decided Dr. Seuss Enterprises, L.P. vs. Penguin Books USA, Inc. Penguin had published a Dr. Seuss-style book that they claimed was a parody of the O.J. Simpson murders. It was entitled, “The Cat NOT in the Hat!” and was purportedly authored by Dr. Juice. The judge found that this book was not a parody and made a judgment in favor of the plaintiff.

Clearly, not everyone agrees on what constitutes fair use.

Intellectual Property

When determining the purpose and character of the use of the copyrighted material, the court will look at whether the use was commercial or non-commercial. Use that is commercial is less likely to be deemed fair use, but if it is non-commercial, then there is a much better chance that the court may see it as fair use.

Courts also look at the nature of the copyrighted work. Specifically, the judge will examine whether the underlying work can be considered as more factual or more creative. When the copyrighted work is more imaginative or creative, then it is less likely that someone else’s use will be considered fair use. Another critical consideration is whether or not the copyrighted work has been published. It would be very difficult to claim fair use that is based on an unpublished work.

The court will look at how much of the copyrighted material is used in the new work as well. Suppose that the new work uses only small amounts of the copyrighted work, like a quote from a novel or a still image from a film. Such relatively limited use of the copyrighted material is unlikely to be considered infringing. On the other hand, if the new work uses a significant amount of the original work, then the court may decide in favor of infringement.

To demonstrate just how subjective this determination is, it is worth noting that the judge additionally considers whether or not the portion of the copyrighted material that was used was the “heart” of the original work. If the judge feels that the borrowed portion was the heart of the original piece, then using even a small amount of it may be considered infringing.

Determining fair use also may depend upon the effect of the new work on the market. Essentially, the court must decide whether or not the activities of the defendant may cause harm to the market as well as whether or not the new use may harm potential markets that the owner of the copyrighted material might exploit. If the court determines that the use may harm the owner’s current and potential markets, then the judge is likely to conclude that the use was infringing.

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The Basics of Intellectual Property

The most valuable asset that any business owns is its intellectual property. However, many business owners, especially novice entrepreneurs, aren’t clear about what intellectual property is and how to protect it. The clarity they need can be gained by working with an intellectual property attorney.

What Is Intellectual Property?

Intellectual property, or IP, can cover numerous assets. Perhaps it’s a new product or service. Intellectual property also may be a business’ name or logo. The code that goes into software or point-of-sale materials may similarly be intellectual property. Accordingly, IP can be things that are created by the human mind, the design of a new product or a symbol that shows which company makes a product.

How Do You Protect IP?

Several protection methods are available. The method that you use depends upon what you’re protecting and what form of protection you need.

Inventions typically are protected with a patent.
A logo, brand name or slogan is protected with a trademark.
Copyrights are used to protect literature, artwork and other creations that take tangible forms.
Trade secrets defend recipes, formulas, proprietary methods or unique devices.

Patents

When someone invents a new product, they may pursue patent protection. A patent doesn’t give you the right to make or sell that product. Rather, it gives the patent holder the right to prevent others from making, selling or using a product that is covered by the patent. Some of the standards by which a patent application is reviewed include whether or not the claimed item is new, not obvious to a person with skill in the industry and useful.

The typical term for a U.S. patent is 20 years from the date of filing the application. Patent protection additionally may be available in foreign countries if the patent holder will be making or selling their products overseas.

Trademarks

A registered trademark identifies the source of a product. It’s possible to register a trademark for a single word, a phrase or a logo. Logos can include words as well. A trademark tells consumers who made the product. With a registration, it’s possible to stop others from using a confusingly similar mark in the same or a related industry. Trademarks that rely on a fanciful word or a word that does not have a readily apparent connection to the product or service being sold tend to be the strongest. Trademarks that merely describe the product or service may not be entitled to registration.

As with patents, it is possible to pursue trademark protection in other countries. U.S. and foreign registrations typically must be renewed every 10 years, and there is no limit on the number of renewals.

Copyrights

A book, movie, photograph or computer code are all examples of items that can be protected by copyright. The protection is only available to things that can be reduced to tangible media. Accordingly, it is not possible to copyright an idea or a process. Someone who holds a copyright has the exclusive right to reproduce and distribute the protected work, rights which may be licensed to others.

Copyrights on works published after 1977 typically last for the lifetime of the author plus 70 years. If the work was produced within the course of employment, then the term is between 95 to 120 years, depending upon when the work was published.

Trade Secrets

When a patent application is published or a patent is issued, it becomes public knowledge. The patent holder has the right to exclude others from taking advantage of this technology, but only for a limited time period. If a company has a formula, recipe or process that they want to keep private for as long as possible, then they hold it as a trade secret. They must make ongoing, reasonable efforts to maintain the secrecy of this item to prevent it from being exploited by others.

Which Type of IP Protection Is Best?

Any type of protection can be helpful to a business. They can protect their inventions with patents and their logo with a trademark. A proprietary process can be covered by a trade secret while publications related to the business can be protected by copyrights.

The best way to determine which type of IP protection is needed is by working with an intellectual property attorney. Such an attorney can file patent and trademark applications with the U.S. Patent and Trademark Office or a copyright application with the U.S. Copyright Office. Schedule a consultation to learn more.

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