Protecting the Crown Jewels: Trade Secrets and Non-Disclosure Agreements By John L. Watkins And Thomas L. McLain Contact: [email_address] or [email_address]

Protecting the Crown Jewels:

Trade Secrets and

Non-Disclosure Agreements

Disclaimer This presentation is for informational purposes only. The presentation is based on general principles of Georgia law as of the date the of preparation (March 20, 2009). Georgia law is subject to change, and the law may differ in other jurisdictions. Reviewing or downloading this presentation does not create an attorney/client relationship with the authors or their law firm, Chorey, Taylor & Feil, A Professional Corporation. The authors and their firm provide legal services only pursuant to written engagements. Legal advice must be tailored to the particular circumstances and the applicable law. Those seeking legal advice should consult an experienced attorney licensed in their jurisdiction.

This presentation is for informational purposes only. The presentation is based on general principles of Georgia law as of the date the of preparation (March 20, 2009). Georgia law is subject to change, and the law may differ in other jurisdictions. Reviewing or downloading this presentation does not create an attorney/client relationship with the authors or their law firm, Chorey, Taylor & Feil, A Professional Corporation. The authors and their firm provide legal services only pursuant to written engagements. Legal advice must be tailored to the particular circumstances and the applicable law. Those seeking legal advice should consult an experienced attorney licensed in their jurisdiction.

Part I: Introduction

The Crown Jewels For many businesses, trade secrets are the crown jewels Manufacturing techniques Customer lists Business plans Computer programs Secret formulae or recipes Many others Provide the key competitive edge

For many businesses, trade secrets are the crown jewels

Manufacturing techniques

Customer lists

Business plans

Computer programs

Secret formulae or recipes

Many others

Provide the key competitive edge

The Risk 59 percent of ex-employees admitted stealing confidential company information in 2008 Source: Atlanta Business Chronicle , 2/23/09, http://atlanta.bizjournals.com/atlanta/stories/2009/02/23/daily17.html?surround=etf (reporting on survey conducted by Ponemon Institute and Symantec Corp.)

59 percent of ex-employees admitted stealing confidential company information in 2008

Source: Atlanta Business Chronicle , 2/23/09, http://atlanta.bizjournals.com/atlanta/stories/2009/02/23/daily17.html?surround=etf (reporting on survey conducted by Ponemon Institute and Symantec Corp.)

The Risk Cheap mainstream devices facilitate taking massive quantities of data

Cheap mainstream devices facilitate taking massive quantities of data

The Risk: Competitors Economic espionage does exist

Economic espionage does exist

The Risk: Business Partners There is greater interaction, or “partnering” among businesses than ever Sometimes this requires sharing confidential information The other company may be careless with the information

There is greater interaction, or “partnering” among businesses than ever

Sometimes this requires sharing confidential information

The other company may be careless with the information

The Risk: Employees Many employees need to know trade secrets and confidential information Statistics demonstrate risk of misappropriation

Many employees need to know trade secrets and confidential information

Statistics demonstrate risk of misappropriation

The Solutions Trade secret protection Statutory Non-Disclosure agreements (also called confidentiality agreements) Contractual

Trade secret protection

Statutory

Non-Disclosure agreements (also called confidentiality agreements)

Contractual

What is a Trade Secret? Definition under Georgia Trade Secrets Act is broad Examples of possible trade secrets Customer lists or databases Business plans Secret formulae Computer programs But many others may qualify

Definition under Georgia Trade Secrets Act is broad

Examples of possible trade secrets

Customer lists or databases

Business plans

Secret formulae

Computer programs

But many others may qualify

Trade Secrets: Key Elements The item must be secret The item must derive actual or potential economic value from: not being generally known or readily ascertainable by proper means Must be subject to reasonable efforts to maintain its secrecy

The item must be secret

The item must derive actual or potential economic value from:

not being generally known or readily ascertainable by proper means

Must be subject to reasonable efforts to maintain its secrecy

Trade Secrets: Relationship to NDAs In Georgia, proprietary information that does not qualify as a trade secret may still be protected by contract Typically known as a non-disclosure agreement or “NDA” NDAs may also be important in protecting trade secrets Showing reasonable efforts were made to protect secrecy

In Georgia, proprietary information that does not qualify as a trade secret may still be protected by contract

Typically known as a non-disclosure agreement or “NDA”

NDAs may also be important in protecting trade secrets

Showing reasonable efforts were made to protect secrecy

Other Forms of IP Protection Patents are a very important form of IP Patents grant a statutory monopoly (currently 20 years) for inventions that meet federal statutory requirements Require public disclosure Usually expensive to prosecute and maintain Become part of the public domain after the statutory period

Patents are a very important form of IP

Patents grant a statutory monopoly (currently 20 years) for inventions that meet federal statutory requirements

Require public disclosure

Usually expensive to prosecute and maintain

Become part of the public domain after the statutory period

Other Forms of IP Protection Copyrights are also an important form of IP: Protect writings and other forms of fixed expression ( i.e. , software) Greater protection if material is registered (again, public disclosure) Do not protect ideas

Copyrights are also an important form of IP:

Protect writings and other forms of fixed expression ( i.e. , software)

Greater protection if material is registered (again, public disclosure)

Do not protect ideas

Trade Secrets Are Important The protection is broadly applicable Trade secrets have no time limit Many companies do not have the resources to prosecute patents or manage a patent portfolio Substantial remedies exist for misappropriation

The protection is broadly applicable

Trade secrets have no time limit

Many companies do not have the resources to prosecute patents or manage a patent portfolio

Substantial remedies exist for misappropriation

In the Next Modules We will cover protecting trade secrets and other proprietary information under NDAs We will then cover trade secret litigation and remedies available in litigation

We will cover protecting trade secrets and other proprietary information under NDAs

We will then cover trade secret litigation and remedies available in litigation