Trade secrets: the ‘alternative IP’

10-02-2021

Alex Baldwin

Trade secrets: the ‘alternative IP’

Kenary820 / Shutterstock.com

We spend our lives talking about patents, trademarks, and copyright, but there is something just as important to a company’s identity and competitiveness that can fly under the radar of even the most stringent and secure companies—trade secrets.

In this new era of working remotely, using your own equipment for work and even growing international business partnerships, trade secrets are less secure than ever before and companies should be doing far more to make sure that they don’t lose their competitive edge or face legal action, a WIPR Patents Live session found yesterday.

“Trade secrets are no longer something you can just push over to the side, there is an incentive for lawyers to understand the trade secrets framework and what distinguishes trade secret protection and patents,” Jessica Nall, partner at Baker McKenzie, said in the session moderated by WIPR’s group publisher Peter Scott.

The panel comprised Nall, one of the foremost experts in trade secrets James Pooley, and Hannah Netherton, partner at CMS Cameron McKenna Nabarro Olswang.

Corporate responsibility

Last year saw a complete upending of how we work, almost every white-collar worker transitioned to remote working and many found themselves unemployed or finding new work. These factors have had a massive impact on the security of trade secrets.

Nall explained: “People do not see that it can be criminal to move to a competitor company. They could unintentionally bring trade secrets with them… companies should be making a concerted effort to focus on proper offboarding and hiring procedures to ensure no one is leaving or joining your company with any information or materials that they shouldn’t.”

Netherton added: “Proper offboarding is essential. Companies need to focus on organisational culture and creating an environment where people are incentivised to innovate and protect those values and ensure they follow a proper offboarding procedure.”

Legal recourse

If you do find out some of your company secrets have been leaked, what can you do?

“A lot of US companies’ first recourse is to involve the FBI, take out a civil case and issue a temporary restraining order. If your legal counsel has a good relationship with the government, this can be done quickly,” explained Pooley.

“The downside is that, if you involve the FBI, you will lose a lot of control over the proceedings and will be looking at a years-long legal battle.”

The situation is different for the UK however, Netherton clarified: “We don’t have the same criminal response, you need to move quickly and seek an injunction to stop whatever is happening. It is not a quick process, US clients I have talked to have been amazed at the amount of paperwork it takes.

“There will generally be discussion between the two parties first, it can take weeks before the application is heard and expedition is granted.”

US and China

Staff are not the only danger when it comes to trade secret security. The panel discussed how to handle trade secrets in foreign business relationships, particularly between the US and China.

China is reforming its trade secrets laws as part of the Phase One agreement—a new trade deal to promote business relations between the two countries.

“China is making good headway towards instituting proper trade law,” Pooley explained. “The Phase One agreement is shifting what it takes to get cases like this into court, all you need is preliminary evidence. If you can show that likelihood, you don't need to come into court with your case already made.”

WIPR Patents Live hosts weekly broadcasts from some of the best speakers in the technology sector in the form of virtual panel discussions, roundtables, webinars and presentations.

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