Maintaining Trade Secrets in Rhode Island
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Maintaining Trade Secrets in Rhode Island






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    Maintaining Trade Secrets in Rhode Island Maintaining Trade Secrets in Rhode Island Presentation Transcript

    • MAINTAINING TRADE SECRETS FORBUSINESS INVENTIONS Daniel Jon Holmander, Esq. Barlow, Josephs & Holmes, Ltd. 401-273-4446©2012 Barlow, Josephs & Holmes, Ltd.
    • ©2012 Barlow, Josephs & Holmes Ltd.Comparison of Different Types ofIntellectual Protection• IP Law is important because it has been estimated that 45-80% of a company’s value lies in its intangible assets, namely intellectual property rights• The purpose of this course is discuss the following:• 1. patent law – public disclosure• 2. trademark law – “use in commerce”• 3. copyright law - publication• 4. trade secret law – once public, protection is lost forever
    • ©2011 Barlow, Josephs & Holmes Ltd.Types of Intellectual PropertyRights1. Copyrights – protects original works of authorship fixed in a tangible medium of expression.2. Trademarks - indicia affixed to goods or used in connection with the sale or advertising of services to identify the source of the goods or services3. Patents- government grant of the right to exclude others from making, using, selling or importing the patented invention. (note, not right to use the invention)4. Trade Secret – information not generally known to the public that confers some economic benefit to its holder and is the subject of reasonable efforts to maintain its secrecy.
    • Patents - Overview• What is capable of being patented? • Any novel and non-obvious invention • In the US this includes business methods• Rights Awarded • Government grant of the right to exclude others from making, using, selling or importing the patented invention.
    • ©2011 Barlow, Josephs & Holmes Ltd.Types of Patents in the U.S. • Utility Patents • Provisional Applications • Non-Provisional Applications • Design Patents • Plant Patents
    • ©2011 Barlow, Josephs & Holmes Ltd.Patentable Subject Matter • A. Apparatus/Device or Article of Manufacture • B. Composition of Matter • C. Method of Manufacture • D. Method or Process for Using Apparatus/Device/Article • E. Business Method Patents • F. Software – must be tied to a physical structure
    • ©2011 Barlow, Josephs & Holmes Ltd.Not Patentable Subject Matter • A. mathematical formulae • B. algorithms • C. mental processes • D. music • E. basic mathematical and physical relationships • F. phenomena of nature • G. abstract intellectual concepts
    • Benefits of Patents • 1. increase valuation of company • 2. support higher profit margins by offering exclusive features • 3. source of income through a licensing program • 4. defensive measure if accused of violating a patent of competitor
    • ©2012 Barlow, Josephs & Holmes Ltd.Federal Trademark Law• Trademarks are indicia affixed to goods or used in connection with the sale or advertising of services to identify the source of the goods or services• Many forms • word mark • slogan • logo • musical notes • trade dress • scents
    • Trademark Rights• Common Law Trademark Rights TM • Trademark Rights arise out of usage • Rights accrue in geographic territory• Federal Registration ® • Nationwide protection • Significant advantages • Presumption of validity at trial • Incontestability 5-6 years after registration • Sample Federal Registration
    • ©2012 Barlow, Josephs & Holmes Ltd.RI State Trademark• Contents – similar to Federal Registration except no intent-to-use application; must have use • See• Limited Prosecution Phase – granted or refund• Less Expensive Filing - $50• Protection – extends to the boundaries of the state of Rhode Island only(also available in MA, CT, etc.)• No connection between Secretary of State incorporation and RI State Trademark
    • Benefits of Trademarks • 1. maximize product differentiation, advertising and marketing, thus enhancing recognition of your product or service • 2. increase revenues as consumers pay higher prices for branded goods • 3. derive loyalty largely due to consumer’s ability to recognize the product and distinguish it from the products of competitors
    • ©2011 Barlow, Josephs & Holmes Ltd.Copyright Law • What is copyrightable? • Original Works of authorship fixed in a tangible medium of expression – 17 U.S.C.102(a) • What is NOT copyrightable? • Ideas, facts (unless arranged in unique way), procedure, process, system, method, concept, principle, discovery • Examples of copyrightable Works • books • jewelry and sculptures • photos • performance art • website • software
    • Copyrights – Protection forBusiness • Is the work protectable? • Original? • Expression of ideas, not the ideas themselves • non-functional • Types • Textbooks, magazines, newspapers • Sculptures, jewelry designs • Photographs • Music, lyrics • Content on the Internet
    • ©2011 Barlow, Josephs & Holmes Ltd.Copyright - Limitations • First Sale Doctrine – allows purchaser to transfer (sell, lend, or give away) a particular lawfully made copy of the copyrighted work without permission once it has been obtained (CD, book, etc). • Fair Use Doctrine – allows for copying for purposes of criticism, comment, news, reporting, teaching, scholarship, or research. • Purpose and character of the use • Nature of the work • Amount of the work used in relation to the whole • Effect of the use on the value of the work
    • ©2012 Barlow, Josephs & Holmes Ltd.Copyright – Exclusive Rights • Copyright is a bundle of exclusive rights: • 1. reproduce the subject work • 2. prepare derivative subject works • 3. distribute copies of the subject work • 4. perform the subject work publicly • 5. display the subject work publicly
    • ©2012 Barlow, Josephs & Holmes Ltd.Copyright – Benefits of Registration• Under current law, no registration is needed to preserve copyright to an original work. Presumption of validity if registered within 5 years of first publication.• Copyright Registration is prerequisite to filing suit in Federal Court, key to courthouse• Timing of Copyright Registration • Pre-infringement (or within 3 months of publication) all remedies available - statutory damages (up to 30k per infringement), attorneys fees • Post-infringement: Not preferred, remedies such as actual damages of copyright owner and profits -hard to prove and likely less than statutory damages
    • Trade Secrets - Overview• What is a trade secret? – information not generally known to the public, confers some economic benefit on its holder, and is the subject of reasonable efforts to maintain its secrecy.• A trade secret is information that is valuable to the owner a s a s e c re t, and therefore must be protected as such. If the owner’s competitors generally know or could easily discover the secret information, the owner could lose his competitive edge.
    • ©2012 Barlow, Josephs & Holmes Ltd.Examples of Famous TradeSecrets • Kentucky Fried Chicken – recipe • Twinkies - recipe • Coca-Cola – recipe • Krispy Kreme Doughnut - recipe • Listerine – formula • Big Mac Special Sauce - recipe • Mrs. Fields Chocolate Chip Cookies – recipe • NY Times Best-Seller List – methodology • WD-40 - formula
    • ©2011 Barlow, Josephs & Holmes Ltd.Trade Secret – formal definition • Information, including a formula, pattern, compilation, program, device, method, technique, or process that: • (i) derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by, other persons who can obtain economic value from its disclosure or use; and (ii) is the subject of efforts that are reasonable under the circumstances to maintain its secrecy (R.I. Gen. Laws sec. 6-41-1(ii) • Note – a threshold is not required; the only requirement is secrecy of information that derives independent economic value from remaining secret
    • ©2011 Barlow, Josephs & Holmes Ltd.Trade Secret – examples • Formulas • Processes • Devices • Customer Lists • Software (source code) • Pricing Information • Know-How • Negative Information • Compilations • Designs
    • ©2012 Barlow, Josephs & Holmes Ltd.Loss of Trade Secret Protection • 1. Secret is disclosed publicly • 2. Reverse engineering • 3. Independent development or creation
    • KFC – Story of Trade Secret Protection • Colonel Sanders kept the secret recipe in his head -- and the spices in his car -- although he eventually wrote it all down. His original, handwritten copy is hidden in a safe in Kentucky, and only a few select employees, bound by a confidentiality contract, know what the recipe is. • For further protection, two separate companies each blend a portion of the mixture, which is then run through a computer processing system to standardize its blending [source:]. • Employees-in-the-know cant ever travel together by plane or auto to further safeguard the secret, and that once, the recipe was temporarily moved to another secret, secure location via an armored car, which was further guarded by a high-security motorcade [source: DailyFinance].
    • ©2012 Barlow, Josephs & Holmes Ltd.Trade Secret v. Patent • Patent • Invention disclosed in a non-provisional application patent for all of the public to see is protected for 20 years from date of filing upon issuance of patent certificate (not a guarantee) • Trade Secret • In contrast, invention maintained as a trade secret which will remaining secret and a competitive advantage indefinitely so long as its not publicly disclosed
    • ©2012 Barlow, Josephs & Holmes Ltd.Patents – Pros and Cons• In general, patents are more easily enforceable.• Defenses to trade secret misappropriation not available in patent context • independent invention • reverse engineering • public disclosure, sale or publication Con First to File in March 2013 – “race to the patent office”
    • Trade Secret – Cause of Action• Misappropriation – acquisition of a trade secret of another by a person (corporation) who knows or has reason to know that the trade secret was acquired by improper means (R.I. Gen. Laws sec. 6-41-1(2)• Examples – theft, bribery, misrepresentation, breach or inducement of a breach of a duty to maintain secrecy, breach of duty of confidentiality (employees), or espionage through electronic or other means (R.I. Gen. Laws sec. 6-41-1(1)
    • Trade Secret – Potential Relief Trade Secret Misappropriation 1.Injunction –actual or threatened 2.Damages – actual loss/unjust enrichment/reasonable royalty 3.Exemplary Damages – willful/malicious (double damages plus attorneys fees)
    • ©2012 Barlow, Josephs & Holmes Ltd.Factors Used By Courts toDetermine Trade Secret Status• 1. extent known external to business;• 2. extent known internal to business as a trade secret;• 3. reasonable measures taken to guard secrecy• 4. economic value of information• 5. cost of R&D• 6. ease of reverse engineering or independent creation
    • ©2012 Barlow, Josephs & Holmes Ltd.Statute of Limitations - Comparison• R.I. Gen. Laws Sec. 6-41-6 – statute of limitations for brining action for misappropriation is (3) three years after discovery• Patents – (6) six year statute of limitation after discovery of infringement
    • Benefits of Trade Secrets • 1. trade secrets have no registration costs (trademarks $275, patents $533, copyrights $35) • 2. trade secrets go into effect immediately (trademarks – 13 months, patents – 24 month min., copyright – 6-8 weeks) • 3. trade secrets have no maintenance fees (trademarks, patents) • 4. trade secrets have no specific compliance requirements – need to take reasonable measures
    • ©2012 Barlow, Josephs & Holmes Ltd.Maintain and Protect – TradeSecret • Reasonable means to protect trade secret: • I. Contract Law – non-compete, non- disclosure, licensing, employee, policies, work- for-hire, consultant etc. • II. Control access – passwords, encryption, firewalls and network security, restricting physical access, record keeping, exit interviews, security guards, badges, etc. • III. Notice –stamp/legend – “confidential”
    • Conclusion • Identify • Identify property and determine whether it is important to you and your company • Research • Take early action to search inventions, clear trademarks to avoid problems • Protect • File for appropriate patents, registrations • Enforce • Police property, pursue infringers