WIPO - TCCIA WORKSHOP ON INTELLECTUAL PROPERTY FOR BUSINESS FOR SMEs Dar-es-Salaam, Tanzania, May 10 and 11, 2005 Keeping Confidence: Trade Secrets in Business Strategy Christopher M. Kalanje, Consultant, SMEs Division, WIPO

Review •Objective –Enhancing awareness on the potential of trade secrets as a business tool •Road map “WHIR” –What are trade secrets – How can trade secrets be protected –Identify strategic use of trade secrets –Recapitulation of basic points

What are trade secrets

What are trade secrets contd. •Confidential information not generally known • Derives independent economic value, actual or potential • Gives the holder competitive edge • Involves reasonable efforts to maintain its secrecy Psst!

What are trade secrets contd. A trade secret can relate to different types of information Technical and scientific information Commercial information Financial information Negative information

What are trade secrets contd. •Technical and scientific –technical composition of a product •formula (paint, beverages) –manufacturing methods •device process, tool (weaving technique, baking clay, metal casting, embroidery) –know-how necessary to perform a particular operation •how to dye with natural Dyes

What are trade secrets contd. •Technical and scientific contd. –designs, drawings, patterns, motifs –test data, laboratory notebooks –computer codes

What are trade secrets contd. •Commercial information –Business strategy/plan •marketing strategy, partnership strategy, supplier arrangements, sales methods –list of suppliers and clients •consumer profiles –customer buying preferences and requirements

What are trade secrets contd. •Financial information –internal cost structure –pricing information, salary and compensation plans –employees agreements

What are trade secrets contd. •Negative information –details of failed efforts to remedy problems in the manufacture of certain products –dead-ends in research –unsuccessful attempts to interest customers in purchasing a product

How can Trade Secrets be Protected •Not easy to know exact value of trade secret because it is a secret •In US alone loss of proprietary information, trade secrets and critical technologies cost companies between $ billion per year (sources: Gowlings Technology Seminar Series 2005; D. Degnan and J. Taros) •Such valued information must be protected (How?)

How can Trade Secrets be Protected contd. •Trade secrets can be protected by –Trade secret law –Unfair competition law? –Material transfer agreements governs the transfer of one or more materials from the owner (or authorized licensee) to a third party for internal research purposes only –Non-disclosure and/or Confidentiality agreements •employees, business partners, potential investors or partners

How can Trade Secrets be Protected contd. •In Tanzania trade secrets are protected by –Unfair competition law –Contract law –Trade secret law?

How can Trade Secrets be Protected contd. •What should be done? •Identify trade secrets owned by your company –Is it known outside the company? –Is it widely known by employees and others involved within the company? –Have measures been taken to guard its secrecy?

How can Trade Secrets be Protected contd. –Educate employees

How can Trade Secrets be Protected contd. •Notify employees of their obligations when employment begins (employment agreement) •Ensure that exiting employees are aware of their obligations (employment agreement) •Regular checks on compliance •Respect other people trade secrets

How can Trade Secrets be Protected contd. Source of images: - How trade secrets are lost Outright theft

How can Trade Secrets be Protected contd. •Take reasonable measures to protect trade secrets Put markers Confidential Top secret Password Use proprietary notices

Trade secrets as a strategic business tool

Trade secrets as a strategic business tool contd. •First line of attack •It works better if not used as a stand alone •Need business acumen

Trade secrets as a strategic business tool contd. •First line of attack –A business idea –Creative idea with patentability potentials –New song, story etc –New design •Keep it a secret before your next move!

Trade secrets as a strategic business tool contd. Coca-cola® Trade secrets Trademark Industrial design Patents (for preservatives in fruit drinks) It works better if not used as a stand alone

Trade secrets as a strategic business tool contd. •Need business acumen • Trade Secrets –No registration (no fees) –No defined duration –Maintenance costs –Non-disclosure •This can be done with other IP tools too •Patents –Registration (fees) –Defined duration –Maintenance fee –Disclosure

Trade secrets as a strategic business tool contd. •“ LPPM” •Licensing •cross-licensing negotiations •Partnership negotiations •Patent application- •what part of invention should be kept a secret •Market positioning •tactical use of client names and profile

Conclusion Essential legal requirements Information must be secret Information must have economic value because it is a secret Owner must take reasonable steps to keep it secret

Conclusion contd. Remember Identify them Protect them Use them strategically

Finally