A Case Study on Trade Secrets

Imagine this hypothetical case study involving an innovative company headquartered in Europe but with operations in a dozen countries around the world. It employs approximately 2,600 people worldwide. It is a market leader in its industry sector. The Legal & IP function of this company is relatively small, mostly located at corporate headquarters in Europe. The function is however supported by several external Legal & IP Firms. This case study focuses on the activities of this company with respect to trade secret asset management.

In very general terms, a case study is an account of an activity, event, or problem that contains a real or hypothetical situation and includes the complexities one would encounter in the workplace.

The Triggers

During the first meeting with the company, the team asked specifically why they wished to improve their trade secret asset management process and why now. Several issues surfaced during that discussion. The general counsel of the company was aware of the developments with the Defend Trade Secrets Act in the USA and the EU Directive on Trade Secrets. A few key employees had recently left the company and joined competitors, and this had caused some disquiet. The company was embracing more collaborative or open forms of innovation, and this was leading to some concerns about the leakage of IP out of the organization. The IP strategy of the company had recently been reviewed by the Board, and as a result, the general counsel was asked to update the IP strategy and specifically asked to ensure that trade secrets and trade secret management were properly considered. It was obvious that there were several different triggers.

Current state analysis

Following a workshop to assess their current state, it became clear to the team that

  • The company was not properly managing its trade secrets with no clear ownership of the trade secret management process or the secrets themselves.
  • Documentation about the trade secrets was poor.
  • Access to and access control around its trade secrets was very ad hoc.
  • Protection mechanism deployed to safeguard its trade secrets was poor or non-existent.
  • There was a lack of any classification of the trade secrets by the company.
  • Details on whether trade secrets had already been shared with 3rd parties was often missing
  • Information of any trade secrets belonging to 3rd parties but entrusted to the company was scarce.
  • There was no audit trail.
The Change Project

The company took several steps initially:

  • The trade secret policy was updated
  • A top-level trade secret process was defined
  • A trade secret asset management system (proprietary by author) was taken into use to help with the identification and classification of such assets
  • A section on trade secrets was added to the existing basic IP training for all employees with plans to add some bite size videos on trade secrets to their e-learning management system together with some associated employee e-quiz modules.
  • A governance structure was defined
  • An exercise was then conducted to attempt to gather information on the various trade secrets existing within the organisation. A phased approach was adopted:
  1. identifying trade secrets by corporate functions starting initially in R&D and Operations
  2. identifying which trade secrets had been shared with any 3rd party collaboration partners
  3. identifying any trade secrets belonging to others but entrusted to the company

Several workshops were held between the Legal function and other corporate functions to raise awareness of trade secrets within these other functions and to discuss and agree on their role and responsibilities when it comes to trade secret asset management.

For the first time, a report on the company’s trade secrets was presented by general counsel to the Board and was also presented to their Advisory Panel.

A journey

The company only started on their trade secret asset management journey back recently, and they recognize that they still have a long way to travel.

Their stated goal is to

  • Install a confidentiality culture across the organisation
  • Ensure key corporate functions work together to manage these assets going forward
  • Have comprehensive metadata available on their trade secrets
The trade secret asset management process and system

The company now has a well-defined trade secret asset management process in active use, underpinned with a robust fit-for-purpose system.

The company has a much more structured approach in place with their process at the very top level consisting of the following steps – context, identification, analysis, review, protection and monitoring.

The company utilizes a dedicated trade secret asset management tool that serves as a central repository for the company’s trade secrets metadata and allows for that information to be properly ‘sliced and diced’. Its key function is to provide the company with significant information on their trade secrets, thus allowing the company to really understand the nature of their trade secrets…

  • Name
  • Type
  • Classification
  • Owner
  • Date created
  • Access
  • Access control
  • Shared (if applicable)
  • Protection mechanisms
  • Last review date
  • Legal advisor
  • Value
  • Etc.
The benefits

Although very early days yet, the company believes that it has already greatly improved its trade secret asset management.

When the team spoke to the company recently, they highlighted two issues. Firstly, their new approach has improved Board satisfaction and secondly, it has led to more constructive discussions about trade secrets between the Legal & IP function and other parts of the organization.

Conclusion

Trade secret asset management is an area we believe has been somewhat neglected in the past by many companies. However, it is an area that cannot be ignored going forward.

Case studies provide a means for highlighting and extracting practical principles and methods for shaping and accelerating progress in solving real-world problems. We, therefore, trust that this case study is of interest and of value to anyone involved in trade secret asset management. More details on this case study are available on request.

(c) Donal O’Connell, IPEG Consultancy. Donal developed various proprietary trade secret tools. Please contact us via our contact form (under “Contact”) for more information.