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Frequently Asked Questions about Intellectual Property Trade Secrets

What is meant by"under the circumstances?"

Reasonable measures under the circumstances include all facts and circumstances surrounding the information and its treatment. Happy, loyal employees are more likely to keep information confidential. Certain types of information in a company may "obviously" be secret. Methods of communicating the information may show secrecy (whisper versus speech). The employer needs to make its desires known though oral and written communications, physical barriers, actions, and any other method of communicating. Protection of trade secrets involves creating an environment of confidentiality. Protection is not simply a checklist of protective measures. Employees are people that will generally act in a manner appropriate for their environment.

What is a trade secret audit?

Confidentiality audits are important to conduct at regular intervals. A confidentiality audit is an assessment of the confidentiality procedures in your company and the effectiveness of those procedures. You can begin by preparing an explanation of the procedures in place. From the explanation, counsel will come into your company for a short period of time to gather any remaining information and to physically observe the situation. Based upon all the information from the audit, counsel will prepare a legal opinion and provide you with counsel's thoughts regarding your program. The charge will depend upon the size of the company and the preparation work done before counsel's visit. Larger companies take more effort to analyze than small companies. The legal opinion can be used as persuasive evidence in trial should litigation become necessary.

Why is a trade secret audit important?

In court, the trade secret holder needs to prove it used reasonable measures under the circumstances to protect its information. The trade secret holder stands in a strong position if they consulted with counsel about protection of its information. Is it reasonable to instruct oneself on the law when counsel is readily available?

The trade secret holder's position is greatly enhanced if they have a recent review by counsel, stating that the measures are reasonable under the circumstances. That is, it is unreasonable to require the company to second guess a legal opinion absent a showing that the trade secret holder knew the legal opinion should not be trusted. Such an exception is very difficult to show, making the opinion very powerful evidence.

How does the expense of an attorney impact what is reasonable under the circumstances?

The cost and benefit of using counsel determines what is reasonable. Reasonableness may be judged in view of following the most cost effective alternative.

A company using the information on this web page can greatly minimize the amount of involvement of counsel in arranging the procedures. A well-written explanation of the protection program further minimizes the involvement of counsel. A trade secret holder can be quite organized and minimize the cost of counsel, making the cost quite small.

The benefit lies principally in three areas. First, audits help by preventing problems before they occur, since well protected information is less likely to be misappropriated. Second, audits help minimize litigation when problems arise, since well protected information is less likely to be challenged in court as to whether it is adequately protected. Third, audits ease an attorney's effort needed to prove one's case, since the information used for the audit and resulting opinion is virtually all the evidence that needs to be submitted on perhaps the most costly-to-prove element of a trade secret lawsuit. The cost savings to the trade secret holder alone in one incident will warrant the cost of a hundred or more trade secret audits. Is it reasonable under the circumstances to not have an audit performed, when the costs associated with the decision greatly exceed the cost of having the audit performed?

About the Author:

N. Paul Friederichs, founder, started practice as a patent attorney in 1992 at a major Minneapolis, Minnesota law firm where he was the highest performing associate. In 1993, he started and developed Friederichs Law Firm with his father. Throughout this time Paul�s experience was heavily weighted toward litigation. He served such clients as Tonka Toys, American Harvest and Boston Medical.

He can be reached at http://www.angenehm.com/

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