TRADE SECRETS ARE

12

BUSINESS
GOLD NUGGETS:
WIPO Magazine/April 2002

IP AND
PROTECT THEM
All businesses have trade secrets. Today’s business environment has ership from senior management in
Some are so acutely aware of their increased the importance of trade companies in order that trade se-
importance that they make formal secret protection for business by crets may be propertly identified
statements like the one of Stantec developing and implementing infor- and protected as valuable assets.
below. Many only become aware of mation protection practices that
them when competitors attempt to address the risks associated with a Strategies for Staying
acquire their client lists or market- global marketplace, rapid advances Ahead
ing plans, or to talk to their employ- in technology and telecommunica-
ees and copy the way they do busi- tions, a mobile, highly-skilled work While discussing the issue of em-
ness. Only then does it become force, and networked strategic busi- ployees taking secrets to a competi-
obvious that they have something ness relationships, including exten- tor in his book entitled The Pursuit
valuable to protect. A growing num- sive outsourcing. Technology is of Wow!, Tom Peters suggests that
ber of successful enterprises real- changing so rapidly that trade se- the trick for any sensible company
izes that valuable information or cret protection is, in some cases, to survive and thrive is to keep top-
knowledge is what gives them an the most attractive, effective and ping itself – so that stolen secrets
edge on the competition. Original readily available intellectual prop- are the secrets of yesterday’s suc-
confidential information, knowl- erty right. As with all intellectual cess. Most companies would in-
edge and expertise provide a property, trade secrets can be valu- deed find this a difficult feat to
unique competitive quality that able to a company’s growth and emulate.
helps businesses attract customers. competitive advantage, and some-
times even its survival. Another strategy, ordinarily sui-
Much valuable information may ap- cidal, would be to post business
pear trivial and therefore may not be Trade secret protection also pro- secrets on a website for all to see,
sufficiently appreciated. Many enter- tects a business against tomorrow’s copy and use. Interestingly, a start-
prises are unaware moreover that se- competitors. These may include up software company, Open Cola,
cret information is considered intel- former employees or customers. posted a secret recipe for cola on
lectual property – frequently re- Accordingly, there is need for lead- its website as a marketing strategy
ferred to as trade secrets – and often
protected by legislation. Companies
also face a perpetual struggle be-
tween developing lasting relation-
ships with customers, stakeholders
Courtesy : Stantec Inc.

and suppliers which entails reveal- “The Company relies primarily

ing more and more about their prod- upon trade secret laws to protect
ucts, processes and systems and the
need to safeguard valuable trade
its proprietary rights in its
secrets, key to their continued suc- specialized technologies.”
cess. Finding the right balance re-
quires careful consideration.
This statement accompanied Stantec’s announcement of a record quarter and fiscal year-end
results that mark 48 years of uninterrupted profitability. Stantec, a North American professional
consulting service company, provides knowledge-based solutions for infrastructure and facilities
projects in the form of value-added professional services and technologies. (March 4, 2002)
 13

WIPO Magazine/April 2002

to promote its software. This re- Y Designs, drawings, architectural
sulted in its selling substantial plans, blueprints and maps;
amounts of the ‘open source’ cola Y Algorithms and processes that
drink as an additional product are implemented in computer
through another company which programs, and the programs
advertises ‘OpenCola’ on its themselves;
website. Such examples are excep- Y Instructional methods;
tions to the rule according to which Y Manufacturing or repair pro-
valuable business secrets that pro- cesses, techniques and know-
vide competitive advantage should how;
be properly safeguarded by all pos- Y Document tracking processes;
sible means. Y Formulas for producing products;
Y Data compilations, including
Defining Trade Secrets certain databases;

The Dell logo is a trademark of Dell

Y Business strategies, business
A trade secret is information of any plans, methods of doing busi-
type that is actually or potentially ness, marketing plans;

Computer Corporation
valuable to its owner and not gen- Y Financial information;
erally known or readily Y Personnel records;
Dell, the computer company, has a
ascertainable by the public, and Y Schedules; number of patents and some pending
which the owner has made a rea- Y Manuals; applications in the United States on its
sonable effort to keep secret. A Y Ingredients; unique business models. A patent may
reveal a lot of valuable information, but
trade secret generally has some cost Y Information about research and at the same time, it provides exclusivity in
associated with its development, development activities. the marketplace. In 1999, Dell used its
and is not common knowledge in patent portfolio as collateral in a $16
billion cross-licensing deal with IBM that
the industry. Even negative informa- A trade secret may be made up of a provided Dell with lower cost computer
tion, such as research options that combination of characteristics and components. This freed Dell from having
have been explored and found components, each of which by itself to pay IBM several millions of dollars in
royalties and further reduced Dell’s cost
worthless, can be a trade secret. is in the public domain, but where of doing business.
Practically any type of technical the unified process, design and op-
and business information can be eration of such characteristics or Wal-Mart
protected as a trade secret provided components, in combination, pro-
vides a competitive advantage. Wal-Mart, on the other hand, appears to
that it meets these requirements.
rely more on the protection afforded by
The following are a few sample cat- the law of trade secrets for protection of
egories: Products and processes that are not its business model, regardless of the fact
patentable can be protected under that the law protecting secret information
is often regarded as a relatively
Y Data compilations, for example trade secret law. However, enter- ineffective mechanism for protection
lists of customers (the more in- prises rely on trade secret law, against theft of proprietary information
formation a list contains, the which does not require registration, from past key employees to competitors.
more likely it is to qualify for to safeguard the details of research
trade secret protection); and development, including draft
patent applications and patent ap-
plications before their publication.

>>>
 KOREAN
14

ART EXHIBITION
WIPO Magazine/April 2002

>>>
Even after the grant of a patent, WIPO hosted from March 5 to 15

Photos: Mercedes Martínez Dozal

the associated knowledge may be an exhibition by Korean artist
protected as a trade secret. A Chung Gang Kim Byung-Gon. The
newly developed but as yet un- exhibition, which was inaugurated
published or unused industrial by Ambassador Chung Eui-Yong,
design or even trademark may Permanent Mission of the Republic
also be valuable confidential in- of Korea to the United Nations in
formation. Geneva, and WIPO Deputy Direc-
tor General Roberto Castelo, fea-
Trade secrets can afford an advan- tured a series of oil paintings and
tage over competitors in many works of calligraphic art. The rich
ways; the right to use trade secret landscape of the artist’s homeland
information can also be licensed inspired many of the works. At the
or sold. Although trade secrets inauguration, the artist, who is a
provide no protection against master of calligraphy, provided the
those who independently develop audience with a demonstration of
secret information, trade secrets his art, which features broad brush
never expire as patents, industrial strokes and jet-black ink.
designs and copyright do. Enter-
prises may rely more on one type Mr. Castelo welcomed the artist to
of intellectual property right than WIPO and noted that intellectual
another when using the intellec- property systems encourage cre-
tual property system as part of ativity and innovation. Ambassador
their business strategy. Chung Eui-Yong said the works gave
a taste of the rich and long-stand-
♦ ing tradition that Korea had devel-
oped over many millennia of art
(Top) The artist history. He also noted that the ex-
Chung Gang Kim Byung-Gon hibition provided a golden oppor-
For more information on various demonstrating
practical aspects of the IP system Korean calligraphy
tunity for the Geneva community to
of interest to business and indus- experience Korea’s unique brush
(Bottom) The artist and WIPO
try, please visit the website of the Deputy Director General paintings, and encouraged further
¨ SMEs Division at www.wipo.int/ Roberto Castelo cultural exchanges between East
sme. and West.
The next article in IP and Busi-
ness will discuss policies for the
♦
protection of trade secrets.