WIPO/NIFT National Seminar on the Importance of IP for the Handicrafts Sector Hyderabad, India, April 5-7, 2005

1. WIPO/NIFTNational Seminar on the Importance of IP for the Handicrafts SectorHyderabad, India, April 5-7, 2005

2. Keeping Confidence: The Role of Trade Secret Protection in Business SuccessLien VerbauwhedeConsultant,SMEs DivisionWorld Intellectual Property Organization (WIPO)

3. This Presentation • PART 1 - Outline • Definition • Legal requirements • Rights • Enforcement • PART 2 - Protection Strategies

4. PART 1WHAT ARE TRADE SECRETS ?

5. What are trade secrets? Broadly speaking • any confidential information • which provides an enterprise with a competitive edge can qualify as a trade secret  entitled to legal protection

6. Metal Mirrors of Aranmula

7. Metal Mirrors of Aranmula • Some undisclosed metals are alloyed with copper and tin to cast the Aranmula kannadi in typical clay moulds. • The exact proportions of the two metals and the techniques of crafting it into an excellent reflecting surface is always kept as a trade secret. • The method is the age-old lost-wax process in traditional style after melting the metals in a furnace fitted with a manual blower. • Today, only five artisan families know the the metallurgical secret of the Aranmula kannadi, the world-famous metal mirrors.

8. Cotton Dyeing Technique • 5th century BC: the Greek historian Herodotus, marveled at the quality of Indian cotton. • Textile trade: cotton, silk, woven textiles. The beauty, brilliance, color range and fastness of Indian fabrics was held in high esteem. • India managed to keep the technique of cotton dyeing a secret from the world until the 17th century.

9. What are trade secrets? A trade secret can relate to different types of information: • technical and scientific • commercial • financial • negative information

10. Examples (1) • Technical and scientific information: • technical composition of a product • paint • manufacturing methods • weaving technique, baking clay, metal casting, embroidery • know-how necessary to perform a particular operation • how to dye with natural Dyes? • designs, drawings, patterns, motifs

11. Examples (2) • Commercial information: • list of clients • customer buying preferences • supplier arrangements • business plan • marketing strategy

12. Examples (3) • Financial information: • internal cost structure • price lists • Negative information: • details of failed efforts to remedy problems in the manufacture of certain products • unsuccessful attempts to interest customers in purchasing a product

13. What qualifies as a trade secret? • Three essential legal requirements: 1. The information must be secret* • wheel technique for pottery is no trade secret 2. It must have commercial value because it’s secret 3. You must have taken reasonable steps to keep it secret *“not generally known among or readily accessible to persons within the circles that normally deal with this kind of information”

14. Only protection against improperly acquiring, disclosing or using: • people who are automatically bound by duty of confidentiality (incl. employees) • people who have signed non-disclosure agreement • people who acquire a trade secret through improper means • theft, industrial espionage, bribery

15. Some people cannot be stopped from using information under trade secret law: • people who discover the secret independently, without using illegal means or violating agreements or state law • people who discover through reverse engineering

16. Independent discovery and reverse engineering : no trade secret protection - bamboo blinds -

17. Reverse engineering - van Eyck’s visual effects -

18. Reverse engineering - van Eyck • van Eyck's methods for achieving his breathtaking visual effects • Washington National Gallery of Art - technical study: • microscopic examination of the surface • technical analysis of the painting • infrared reflectography  underdrawing is visible

19. Procedure - Altarpiece of the Holy Lamb in Ghent: a first layer in grayish blues establishing light and shade; a second solid blue layer to soften the contrast of the first; a final, rich blue glaze of ultramarine in a water-based protein medium such as glue • Composition of paint: linseed oil, no water-based protein admixtures to the oil • Technique: preliminary layer of vermilion, different layers of glaze

20. TRADE SECRET PROTECTION PROVIDES NO EXCLUSIVITY

21. What can you do if someone steals or improperly discloses your trade secret?  Enforcement

22. Enforcement • Remedies 1. Order to stop the misusing 2. Compensation for damages caused as a result of the misuse 3. Recover profits (‘unjust enrichment’) 4. In India: seizure order can be obtained to search the violator's premises in order to obtain the evidence to establish the theft of trade secrets at trial

23. Enforcement • To establish violation, the owner must be able to show : • infringement provides competitive advantage • reasonable steps to maintain secret • information obtained, used or disclosed in violation of the honest commercial practices (misuse)

24. PART 2BUSINESS STRATEGIES TO HANDLE & PROTECT TRADE SECRETS

25. Loss of trade secrets - a growing problem (1) • Why is this occurring? • way we do business today (increased use of contractors, temporary workers, out-sourcing) • declining employee loyalty, more job changes • organized crime : discovered the money to be made in stealing high tech IP • storage facilities (CD-ROM, floppies, etc) • expanding use of wireless technology

26. Loss of trade secrets - a growing problem (2) • Examples ofoutside threats • burglaries by professional criminals targeting specific technology • attempted network attacks (hacks) • laptop computer theft: source code, product designs, marketing plans, customer lists • calls headhunters, presenting themselves as employee • corporate spies

27. Loss of trade secrets - a growing problem (3) • Examples of inside threats • 80% of information crimes < employees, contractors, trusted insiders! • malicious destruction/erasure of R&D data by avenging employee • theft by former employee of business plans • ignorance

28. What can be done?9 basic protection strategies

29. 1. Identify trade secrets Considerations in determining whether information is a trade secret: • Is it known outside your enterprise? • Is it widely known by employees and others involved within your enterprise? • Have measures been taken to guard its secrecy?

30. What is the value of the information for your business? • What is the potential value for your competitors? • How much effort/money spent in collecting or developing it? • How difficult would it be for others to acquire, collect of duplicate it?

31. 2. Develop a protection policy Advantages of a written policy: • Clarity (how to identify and protect) • How to reveal (in-house or to outsiders) • Demonstrates commitment to protection  important in litigation

32. 3. Educate employees • Prevent inadvertent disclosure (ignorance) • Employment contract : • Brief on protection expectations early • NDA/CA/NCA • obligations towards former employer! • Departing employees : • exit interview, letter to new employer, treat fairly & compensate reasonably for patent work, further limit access to data

33. Educate and train: • Copy of policy, periodic training & audit, etc. Make known that disclosure of a trade secret may result in termination and/or legal action • Clear communication and repetition • TS protection must be part of the enterprise culture • Every employee must contribute to maintain the security environment • Monitor compliance, prosecute violators

34. 4. Restrict access to only those persons having a need to know the information 

35. 5. Mark documents • Help employees recognize trade secrets prevents inadvertent disclosure • Uniform system of marking documents • paper based • electronic (e.g. ‘confidential’ button on standard email screen)

36. 6. Physically isolate and protect • Separatelocked depository • Authorization • Access control • log of access: person, document reviewed • Surveillance of premises • guards, surveillance cameras • Shredding

37. 7. Maintain computer secrecy • Secure online transactions, intranet, website • Access control (authorization, password) • Mark confidential or secret (legend pop, or before and after sensitive information) • Physically isolate and lock: computer tapes, discs, other storage media • Monitor remote access to servers • Firewalls; anti-virus software; encryption

38. 8. Restrict public access to facilities • Log and visitor’s pass • Accompany visitor • Sometimes NDA/CA • Visible to anyone walking through a company’s premises • type of machinery, layout, physical handling of work in progress, etc • Overheard conversations • Documents left in plain view • Unattended waste baskets

39. 9. Third parties • Sharing for exploitation • Consultants, financial advisors, computer programmers, website host, designers, subcontractors, joint ventures, etc. • Confidentiality agreement, non-disclosure agreement • Limit access on need-to-know basis

40. Remember • No registration, but 3 requirements for legal protection • No need for absolute secrecy, but ‘reasonable measures’ • Developing and maintaining TS program < good business practice to prevent < legal requirement to enforce TS protection

41. Only legal protection against dishonest acquisition/disclosure/use • Consider alternative protection

42. TRADE SECRET PROTECTION IS LIKE AN INSURANCE …

43. Thank You! WIPO’s website for SMEs : http://www.wipo.int/sme