In 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 IP Firm in this particular case study is an established and reputable IP Firm with offices in a number of jurisdictions. It employs almost one hundred attorneys and paralegals, and it has clients spread across a diverse range of industry sectors. This IP Firm has received a number of awards and accolades over the years. The IP Firm was anxious to deploy a range of new service offerings to its clients, and trade secret asset management was one selected, as it saw some new business opportunities here.
Trade secrets
A trade secret is defined as any information that is:
- Not generally known
- Confers some sort of economic benefit on its owner.
- It must have been subject to reasonable steps to keep it secret.
Broadly speaking, any confidential business information which provides an enterprise a competitive edge may be considered a trade secret.
Trade secret asset management
Trade secret asset management is about the policies and procedure, processes and systems, education and governance defined and taken into use to help manage such assets. Trade secrets are fragile so they require some TLC. Simply deciding to keep something secret is not sufficient!
Trade secret asset management includes:
- Awareness & education
- Trade secret policy
- Trade secret management process
- Trade secret asset management system
- Metadata
- Access & access controls
- Protection mechanisms
- A culture of confidentiality with respect to trade secrets
- Governance
Forces at play
The IP Firm recognized that there are a number of forces which together mean that trade secret asset management is now becoming a business critical issue, and one which companies must address.
These forces include – legislative developments; finance & tax developments; increased network security & cyber-crime concerns; IP reform in key jurisdictions; the growing importance of corporate governance; more and more companies embracing openness; and the changing nature of employment.
This IP Firm also recognized that almost all of their clients possess trade secrets but many are failing to properly manage such assets.
Trade secret asset management assessment
The IP Firm’s service offering begins with an audit or assessment of their operating company client.
Such an exercise is conducted in order to provide independent assurance that an organisation’s trade secret asset management, governance and internal control processes are robust, fit for purpose and operating effectively.
It is an evidence gathering process. The criteria include policies, procedures and requirements. Evidence includes records, factual statements, and other verifiable information. Findings evaluates evidence and compares and contrasts it against the criteria. Findings show those criteria that are being met (conformity) or those that are not being met (nonconformity). The exercise can also identify best practices or improvement opportunities.
The assessment criteria
The IP Firm developed a comprehensive assessment checklist. At a very top level, it consists of the following:
- Awareness & education
- Definition of trade secret in use
- Qualification
- Classification of trade secrets
- Ownership of trade secret policy and procedures
- Trade secret asset management process
- Access & access controls
- Protection mechanisms
- Sharing trade secrets with 3rd parties
- Entrusted with trade secrets belonging to 3rd parties
- Valuation of trade secrets
- Trade secret asset management system
- Other metadata associated with trade secrets
- Audits / audit trails
- Governance
Much more details sit behind each of the items listed above.
Steps or phases in such an assessment
The IP Firm typically follows a six step process when conducting such an audit or assessment. They recognise that there is not one size fits all, so they are flexible and can adjust to suit the specific needs of the client.
- Scoping of the audit / assessment
- Request for information
- Open meeting(s)
- Field work
- Drafting the report (findings & recommendations)
- Closed meeting
Current status
The IP Firm reached out to a limited number of its operating company clients to inform them about this new service offering at the beginning of the summer of 2016, just after the Defend Trade Secrets Act was passed in the US and the EU Directive on Trade Secrets was passed in Europe.
A number of pilot projects were started with a handful of their clients in order for the IP Firm to stress test the service offering in a small-scale implementation. The IP Firm wished to prove the viability of this new service offering and to gather insights on various things such as their assessment methodology, the project phases, the skills and competencies of their team, the time taken to complete such assessments, the costs involved, their fees and fee structures, etc. etc. plus of course client reactions.
As this particular case study is still in its infancy and only recently been deployed by this particular IP Firm, I do not yet have much real data to share. However, it is a very interesting business development case study in my opinion, at a time when there is tremendous pressures on many IP Firms to be more creative and innovative and bring new service offerings to market.
Donal O’Connell, Intellectual Property Expert Group (Donal is the author of a special software program for managing trade secrets, please send inquiries to info@ipeg.com)