Leveraging & Protecting Trade Secrets in the 21st Century (Series: Intellectual Property 101 2020)
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The webinar discusses the importance and protection of trade secrets in the 21st century, particularly following the enactment of the Defend Trade Secrets Act of 2016 which provides federal protection against misappropriation. It outlines what constitutes a trade secret, factors influencing its value, and the legal remedies available for misappropriation, including seizure, monetary damages, and protective agreements. The session aims to educate attendees on identifying, protecting, and leveraging their trade secrets through practical strategies designed for professionals in various fields.
Leveraging & Protecting Trade Secrets in the 21st Century (Series: Intellectual Property 101 2020)
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- 2. 2 Practical and entertaining education for attorneys, accountants, business owners and executives, and investors.
- 3. 3 Thank You To Our Sponsor
- 5. Disclaimer The material in this webinar is for informational purposes only. It should not be considered legal, financial or other professional advice. You should consult with an attorney or other appropriate professional to determine what may be best for your individual needs. While Financial Poise™ takes reasonable steps to ensure that information it publishes is accurate, Financial Poise™ makes no guaranty in this regard. 5
- 6. Meet the Faculty MODERATOR: Eugene Goryunov - Haynes and Boone LLP PANELISTS: Mattew Prater - SABIC Sanjay Prasad - Prasad IP, P.C. Ada Nielsen - The Peregrine Maven Group 6
- 7. About This Webinar - Leveraging & Protecting Trade Secrets in the 21st Century Trade secrets are a more important form of an intellectual property asset than ever. Congress recently passed the Defend Trade Secrets Act of 2016, which created new federal laws that allow an owner of a trade secret to sue in federal court when its trade secrets have been misappropriated. And as technology continues to exponentially progress in the digital age of the 21st Century, the need for businesses to protect and limit access to valuable and confidential trade secret information continues to rise. The progress in technology and expansion of information also promotes means for monetizing and leveraging trade secrets. How do you identify your trade secrets, protect them, and leverage them? These are the questions this cutting-edge webinar discusses and seeks to answer. 7
- 8. About This Series Intellectual Property 101 - 2020 Intellectual property (IP) rights constitute an important asset class. Indeed, the “information economy” and high tech have made this asset class go from one that few understood and even fewer invested in to one watched and invested in by millions. IP includes patents, trademarks, copyrights, and trade secrets. How do you create rights in one of these assets? How do you protect those rights? How do you transfer them (or have them transferred to you)? How do the interact with each other? This information-packed webinar series focuses on the intricacies of IP rights as they relate to the specific areas of brand protection, IP transactions, internet marketing, and other IP issues that are critical when representing innovators and inventors. Each Financial Poise Webinar is delivered in Plain English, understandable to investors, business owners, and executives without much background in these areas, yet is of primary value to attorneys, accountants, and other seasoned professionals. Each episode brings you into engaging, sometimes humorous, conversations designed to entertain as it teaches. Each episode in the series is designed to be viewed independently of the other episodes so that participants will enhance their knowledge of this area whether they attend one, some, or all episodes. 8
- 9. Episodes in this Series #1: IP-What Every Lawyer & Every Client Must Understand Premiere date: 1/30/20 #2: Copyrights, Patents, and Trademarks...Oh My! Premiere date: 2/27/20 #3: Leveraging & Protecting Trade Secrets in the 21st Century Premiere date: 3/26/20 9
- 10. Episode #3 Leveraging & Protecting Trade Secrets in the 21st Century 10
- 11. What is a Trade Secret? • General Definition: • A trade secret is any information: That derives economic value from not being readily ascertainable; and Is the subject of reasonable efforts to maintain its confidentiality. 11
- 12. What is a Trade Secret? • Illinois Trade Secret Act Definition: • A trade secret is defined as information, including but not limited to, technical or non- technical data, a formula, pattern, compilation, program, device, method, technique, drawing, process, financial data, or list of actual customers or suppliers that: Is sufficiently secret to derive economic value, actual or potential, from not being generally known to other persons who can obtain economic value from its disclosure or use; and Is the subject of efforts that are reasonable under the circumstances to maintain its secrecy or confidentiality. 765 ILCS 1065/2(d) 12
- 13. What is a Trade Secret? • The Federal Defend Trade Secrets Act of 2016 (“DTSA”) Definition: “All forms and types of financial, business, scientific, technical, economic, or engineering information, including patterns, plans, compilations, program devices, formulas designs, prototypes, methods, techniques, processes, procedures, programs or codes,” where the trade secrets owner "has taken reasonable measures to keep such information secret" and where the information derives economic value from its secrecy. 18 U.S.C. § 1839(3). 13
- 14. Summary of Trade Secret Requirements and Limitations • To receive trade secret protection, information must be. A secret; Protected by reasonable efforts; and Valuable as a secret. • Limitations on trade secret protection include: Prior use; Independent discovery; and Reverse engineering 14
- 15. Factors for Measuring Whether a Trade Secret Exists • The extent to which the information is known outside of a business; The extent to which the information is known by employees and others involved in the business; The extent of measures taken by the business to guard the secrecy of the information; The value of the information to the business and its competitors; The amount of time, effort, and money expended by the business in developing the information; and The ease or difficulty with which the information could be properly acquired or duplicated by others. 15
- 16. Trade Secret Misappropriation • Trade secret misappropriation occurs when there is a wrongful use, disclosure, or acquisition of the trade secret by “improper means.” • Trade secret misappropriation typically occurs in the context of employer-employee relationships, but may also occur when any person or thing is given access to protectable information. • Trade secret misappropriation can also occur via espionage and hacking. 16
- 17. Trade Secret Misappropriation • Under the DTSA, “misappropriation” is generally defined as “an unconsented disclosure or use of a trade secret by one who (i) used improper means to acquire the secret, or, (ii) at the time of disclosure, knew or had reason to know that the trade secret was acquired through improper means, under circumstances giving rise to a duty to maintain the secrecy of the trade secret, or derived from or through a person who owed such a duty.” 18 U.S.C. § 1839(5) 17
- 18. Trade Secret Misappropriation • Improper Means - Misappropriation can manifest in different ways, but according to most statutory definitions, the method of acquisition needs to be “improper”: “theft, bribery, misrepresentation, breach or inducement of a breach of a duty to maintain secrecy, or espionage through electronic or other means.” 18 U.S.C. § 1839(5). The language of Illinois' trade secret statute differs slightly: "theft, bribery, misrepresentation, breach or inducement of a breach of a confidential relationship or other duty to maintain secrecy or limit use, or espionage through electronic or other means." 765 ILCS 1065/2(a). 18
- 19. Trade Secret Misappropriation • Inevitable disclosure - The "inevitable disclosure doctrine" allows a plaintiff to prove a claim of trade secret misappropriation by demonstrating that defendant's new employment will inevitably lead him to rely on the plaintiff's trade secrets. • Under the doctrine courts consider: the level of competition between the former employer and the new employer; whether the employee's position with the new employer is comparable to the position he held with the former employer; and the actions the new employer has taken to prevent the former employee from using or disclosing trade secrets of the former employer. 19
- 20. Trade Secret Misappropriation Remedies • Seizure – Petition a court for an ex parte seizure of property necessary to prevent the propagation or dissemination of trade secrets. Temporary Restraining Order or Preliminary Injunction – Petition a court to restrain a defendant from using or disseminating the trade secrets. 20
- 21. Trade Secret Misappropriation Remedies • Monetary Damages Lost Profits– calculated based upon the difference between the profits which a party could reasonably be expected to make and the profits which it did in fact earn. Unjust Enrichment– the unfair benefit a person earned due to the misappropriation. Reasonable Royalty– hypothetical negotiation between a willing buyer and willing seller. Attorneys’ Fees and Costs and Exemplary Damages– often awarded for willful or malicious misappropriation. 21
- 22. Protecting Trade Secrets • Understanding and Defining Your Valuable Information Implement practices to identify specific valuable information. Create policies and procedures to reduce access and prohibit disclosure to the information. Simply pointing to broad areas of technology and stating an area must be secret is insufficient. 22
- 23. Protecting Trade Secrets • Agreements to protect trade secrets - Non-Disclosure Agreements– a non-disclosure agreement is a general agreement between parties to refrain from disclosing specific information shared between the parties as specified in the agreement. Employment, Consulting, and Joint-Venture or Joint-Research Agreements – consulting agreements may contain non-competition provisions as well as provisions detailing the ownership of intellectual property rights and the requirements to maintain confidentiality of information shared or learned under the agreement. Employee and Corporate Policies – may support an effort by an employer to maintain the secrecy of information. 23
- 24. Protecting Trade Secrets • Agreements to protect trade secrets – • Restrictive Covenants Non-compete agreements– an agreement not to compete in a specific line of business with a party. Non-solicitation agreements– an agreement not to solicit customers in a specific line of business with a party. No-hire agreements– an agreement not to hire employees or contractors away from a prior employer. 24
- 25. Protecting Trade Secrets • Agreements to protect trade secrets – Restrictive covenants are often highly scrutinized by courts and may be rendered unenforceable if not carefully drafted. Typically, courts consider the nature of the business and provision, including the scope, time period, and geographic range of the provision. A restrictive covenant should nevertheless be upheld if it contains a reasonable restraint and the agreement is supported by consideration. 25
- 26. Protecting Trade Secrets • Preventing or Minimizing Access and Dissemination Information Governance o Proactive policies and procedures to structure, control, and organize a company’s information. o For example: Partition networks, hard-drives, etc. to limit access to drives, folders, files, data, etc. Require user credentials or two-factor authentication to access information. Keep certain valuable information in hard-copy or on un-networked computers. 26
- 27. Protecting Trade Secrets • Preventing or Minimizing Access and Dissemination – Data-encryption and Cryptography o File and data encryption methodologies may prevent information from being compromised by malware, hackers, phishing expeditions, etc. o Encryption allows information administrators to restrict access to information on a need-to-know basis. o Use of cryptograph allows agents to share messages and information such as trade secrets securely over a network. 27
- 28. Protecting Trade Secrets • Preventing or Minimizing Access and Dissemination – Retain employees – protect, as best you can, against a disgruntled employee situation; Implement pre and post termination policies to ensure information accessible by former employee is not compromised; Monitor employee access to information; Engage consulting services to identify and protect trade secret information. 28
- 29. Leveraging Trade Secrets • Some of the ways to leverage trade secrets include: Identifying and incorporating trade secrets in your company’s intellectual property portfolio. Making trade secrets a part of your company’s growth strategy. Licensing trade secrets to customers, clients, or even competitors. Selling or acquiring trade secret information. 29
- 31. About The Faculty Eugene Goryunov - eugene@poligenes.com Mr. Goryunov is an experienced trial lawyer that represents clients in complex patent matters involving many diverse technologies. He is deeply involved, as trial counsel, in all aspects of cases pending in Federal courts, at the U.S. International Trade Commission involving Section 337 investigations, and in appeals at the U.S. Court of Appeals for the Federal Circuit. He also regularly serves as first-chair trial counsel in post-grant review trials, on behalf of both Petitioners and Patent Owners, pending at the U.S. Patent & Trademark Office. To date, he has been involved in over one-hundred post-grant review trials. Mr. Goryunov is a regular contributor to intellectual property publications, including the Intellectual Property Magazine, The Patent Lawyer, and the IPO Law Journal. To date, he has published more than sixty articles, many of which discuss post-grant review trial practice. Mr. Goryunov also speaks about diverse issues of patent law and post-grant review trial practice. He also teaches patent law and intellectual property litigation at the Columbia University and previously at the University of Notre Dame. 31
- 32. About The Faculty Sanjay Prasad - sanjay@prasadip.com Sanjay has practiced at the forefront of technology and intellectual property for over twenty years. He is experienced in all business and legal aspects of intellectual property from developing IP strategy for senior management to execution of the strategy, including patent portfolio development, deal development and negotiation and monetization. Sanjay has practiced in law firms in Boston and Silicon Valley, served as chief patent counsel to Oracle Corporation, headed up the India office of IPVALUE Management and served in several senior roles at Intellectual Ventures.Sanjay has been repeatedly recognized byIntellectual Asset Management Magazine as one of the world’s leading IP strategists. He has testified before a U.S. Congressional Subcommittee on patent legislation, is a frequent speaker on topics pertaining to IP law and has served in leadership capacities on several IP association boards. Sanjay is admitted to practice in California, Massachusetts, the U.S. Patent and Trademark Office and various federal courts. Sanjay earned his law degree from Syracuse University College of Law where he was an editor of the Syracuse Law Review. He also earned a Masters in Computer Engineering and a Bachelor in Electrical Engineering, both from Boston University. 32
- 33. About The Faculty Matthew Prater - prater@mac.com Matt is Senior Counsel, Intellectual Property, for SABIC’s Specialties business, which sells a range of engineering thermoplastics including LEXAN™ copolymers, ULTEM™, NORYL™, and LNP™. With a background in mechanical engineering and automotive industry experience Matt is a specialist in applied materials, i.e. things made from SABIC materials, including composites. In addition to managing a patent portfolio covering this space Matt provides transactional support for his team, including negotiating and drafting agreements. Matt lives and works in Houston, TX. 33
- 34. About The Faculty Ada Nielsen - ada@peregrinemaven.com Ms. Ada C. Nielsen is Managing Director of The PeregrineMaven Group. She created The PeregrineMaven Group to commercialize inventions, & improve profitability for new & established businesses, products & services. In addition, she is launching a consulting practice around sustaining the business/technical cultures of creating and protecting trade secrets. She has commercialized dozens of inventions & created new ventures in chemicals, materials & energy – as well as in other market areas. She has been successful working for major companies (such as Amoco, BP, Nalco Chemical Company & Chemical Waste Management) in business development, finance, sales & marketing – measured by commercial success & an improved bottom line. She leads the implementation of virtual chat rooms for Milwaukee Women (where she is also a member). She developed a very successful hands-on 2-day course for current & future directors and business executives for the Private Directors Association in 2019. She served as president of the Licensing Executives Society (USA& Canada) Inc. in 2010, as Wisconsin Chapter Chair for LES, and as president of the Commercial Development & Marketing Association. She served on the board of the Association for Corporate Growth Chicago for 7 years andwas named one of the Top 300 International IP Strategists for 7 years in a row (IAM Magazine). She earned an A.B. in chemistry from Wellesley College, an M.B.A. in finance & marketing from the University of Chicago Booth Graduate School of Business, & studied theoretical physical chemistry in graduate programs at Carnegie- Mellon University, Tulane University & Dartmouth College. She is a Certified Licensing Professional. 34
- 35. Questions or Comments? If you have any questions about this webinar that you did not get to ask during the live premiere, or if you are watching this webinar On Demand, please do not hesitate to email us at info@financialpoise.com with any questions or comments you may have. Please include the name of the webinar in your email and we will do our best to provide a timely response. IMPORTANT NOTE: The material in this presentation is for general educational purposes only. It has been prepared primarily for attorneys and accountants for use in the pursuit of their continuing legal education and continuing professional education. 35
- 36. About Financial Poise 36 Financial Poise™ has one mission: to provide reliable plain English business, financial, and legal education to individual investors, entrepreneurs, business owners and executives. Visit us at www.financialpoise.com Our free weekly newsletter, Financial Poise Weekly, updates you on new articles published on our website and Upcoming Webinars you may be interested in. To join our email list, please visit: https://www.financialpoise.com/subscribe/