Delving into the fundamentals of confidentiality would not be complete without getting into why it matters to take steps to protect confidential information in the first place. There is no better way to illustrate the “why” than by considering the kind of confidential information that businesses rely on to gain an edge or economic advantage in the marketplace, a.k.a, trade secrets.
Trade secrets represent defined subsets of an enterprise’s confidential information that derive their value, often increasingly so over time, by being kept secret.Identifying a trade secret can be tricky, but they are generally technologically based or the culmination of diligent efforts to collect and manage business intelligence and customer information. A hallmark of a trade secret is not being able to reverse engineer what it is by simply having access to a given product or service offering.
As noted, the value of a trade secret comes from being able to leverage the information while keeping it secret for as long as a business needs that to be the case, even if that means perpetually. To be legally recognized as a trade secret, the confidential information in question needs to be subjected to deliberate and considered measures of secrecy, for your business to benefit from the remedies available if the trade secret is stolen or disclosed without authorization.
For those of you who lived through the ‘80’s, remember the launch of the “New Coke”, the consumer backlash that followed and the return of the original recipe as “Coca-Cola Classic”? While most would agree the decision to change the recipe of the iconic soft drink was a mistake (http://www.cbsnews.com/news/30-years-ago-today-coca-cola-new-coke-failure/), one thing the company did do right was make sure it maintained the strict secrecy of the original recipe to be able to successfully re-introduce its distinctive product amidst fierce competition.
More contemporary examples of trade secrets exist everywhere in our digitized, big data and efficiency driven corporate and consumer world. The litigation between Uber and Google over driverless car technology is one of the more high profile trade secret cases in the news these days (http://www.reuters.com/article/us-alphabet-lawsuit-idUSKBN14A2BX).
Whether your trade secrets are technologically based, or the meticulous accumulation and processing of business intelligence and data, ultimately, the best way to maintain secrecy is to minimize and control access to the trade secrets, possibly going so far as to ensure no one individual has access to all of the key bits that together form the trade secret. This not only entails using physical and electronic means for limiting access (e.g. encryption), but also ensuring that particular attention is given to trade secrets in the confidentiality provisions of your contracts when granting access to them. More often than not trade secret theft or loss happens at the hands of employees (or service providers). Ensuring individuals who work for (and cease to work for) the benefit of your business are frequently reminded of the obligations of confidence, protocols for handling, and restricted uses of trade secrets is critical to your business.
Not all losses of trade secret secrecy are necessarily intentionally driven. Often it is the leakage of bits and pieces over time from a simple lack of awareness that erode the value of a trade secret, particularly where that secret is based on a combination of information, parts of which may not in fact be confidential. Unlike a formula, software code or a process for making a product may include several steps that are quite standard in a given industry, but which, when carried out in a particular order, or with a novel twist can give rise to trade secret.
So, to summarize, trade secrets are almost always present in a business, merit a thoughtful approach to ensure their value can be fully realized, and, regrettably, are often underappreciated, or not even recognized until it is too late to put the genie back in the bottle. The take-aways here are:
i)audit and define the trade secrets developed and being leveraged by your business – if you don’t know what your trade secrets are, you won’t know how to protect them;
ii)design secrecy protocols properly tailored to manage and maintain trade secrets by applying a multi-prong approach to limit access and disclosure, including the use of carefully drafted agreements; and
iii)routinely monitor and update the strategies used to maintain and increase the value trade secrets bring to your business – maintaining awareness and adapting to support the significance of your trade secrets is the key to them working their magic for your business.
Kyma Professional Corporation