Trade Secrets: What’s reasonable?

An awesome view of a sweet craft. I wish I could have gotten a little closer!

Once, I tried to drop by Scaled Composites in Mojave, California. Why? Because Scaled is probably one of the coolest companies in the world. They built the first plane to circumnavigate the globe without landing. They created SpaceShipOne, the first private, manned e spacecraft. SpaceShipTwo is going to rock the world by providing low-cost, consistent suborbital space access. Scaled’s founder, Burt Rutan has the coolest chops ever (I’m pretty partial to mutton chops). In short, Scaled does a lot of really awesome R&D in Mojave and just to be in the same building as that stuff would have been awesome. Unfortunately, the best I could do was watch SpaceShipTwo and WhiteKnightTwo do early morning flight testing because of the incredible security Scaled has. Between the key card locks, basically windowless buildings, “NO VISITORS” signs, and high fences, I was lucky to even see that!

So why all the fuss? Two words: trade secrets. Scaled does a great job protecting its research by taking “reasonable [steps] under the circumstances” to maintain secrecy, as required under trade secret law. A lot of you are doing amazing research too, but perhaps aren’t in the same financial or business position as Scaled and might be wondering “do I lose all hope of trade secret protection if I don’t have an 8 foot fence around my Mojave Desert-based facility?” Fear not!

You can still enjoy trade secret protections if you take reasonable steps to keep your research secret which are appropriate for your situation! Simply because your company is small doesn’t mean you have to break the bank of costly keycard access systems, fingerprint readers, or security cameras. There are three main areas to address, in order to provide reasonable secrecy measures: Workers (employees and contractors), Visitors (including vendors and shipping personnel), and Access (both physical and digital).

For workers, make sure they know what to treat as confidential! It doesn’t hurt for them to lean toward over protection, so if you’re so inclined, simply instruct them to treat everything they work on as confidential! They can talk about what is on the company website, but not what is on their desktop. Visitors are a great opportunity for your company to get the word out about what it’s doing and to attract/keep business but they are also a potential source of leaks, anathema for trade secret protection! It only takes a few moments to have them sign confidentiality agreements, or to limit their access to sensitive areas of your facility. Limiting access is also a good idea if you operate in an industry subject to export control laws, like ITAR.

It’s generally a good idea to have a routine for any time the company takes an action (e.g. shop visits, press releases, hiring new interns) that might expose sensitive information. As an example, let’s think about releasing new marketing materials for a small space company, like a launch services brochure. You want to ensure that the brochure is catchy and useful, while ensuring than every bit of information that is sent outside your company’s physical and digital domain is properly labeled and isn’t revealing more than you would like to! The routine you follow before sending this brochure out into the wild might go a lot like your personal morning routine. First, you make sure you have your wallet, so people know who you are in case they need to know where you belong or where you came from. For our marketing brochure, a copyright notice let’s everyone know who the brochure belongs to and when it was created. Then, you dress yourself. Just as you ensure that you’re presentable to the outside world, putting your best face forward, framing your body in a manner that emphasizes your best qualities while providing some modesty, you want to ensure that your documents are in a presentable manner without revealing the family jewels! For trade secret issues, this is accomplished by ensuring that either trade secret information has been scrubbed from the brochure or, if you have to draw back the kimono a little, the proper confidential/trade secret warnings are in place!

Below are a few low-cost or no-cost ideas for taking steps to protect the secrecy of confidential/trade secret information. I recommend consulting with an intellectual property professional about steps that would be appropriate in your specific situation.

  • Use confidentiality notices on documents and email.
  • Escort visitors on company premises at all times.
  • Have visitors sign confidentiality agreements.
  • Inform employees what is considered confidential prior to commencement of employment and routinely update them and remind them of their duty to maintain secrecy.
  • Restrict access to areas where secret manufacturing processes or sensitive R&D is being conducted.
  • Require employees to document R&D development so that a record of the information they had access to and the discoveries they participated in developing is readily available.
  • Conduct an audit for each departing employee to ensure that he has returned all materials that might contain proprietary or confidential information.
  • Require all consultants to sign nondisclosure agreements.
  • Limit the information consultants have access to.
  • Password protect all computers.

Happy creating!

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  1. Pingback: Trade Secrets Are Not Enough « IPinSpace

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