Counsel to Counsel - May 2008 - (Page 14)

in the spotlight IPCoNfIDeNTIAl PlanAhead, ActfasttoProtect YourTradeSecrets By Steven Andersen ©iStockphoto.com/kutay tanir T rade secrets are tricky. When managed effectively, they can protect your inventions and processes indefinitely. But if they leak out, they may be gone forever. Unlike other forms of intellectual property law that have gained new currency in recent years, trade secret law remains shrouded in obscurity, often misunderstood and undervalued, even among corporate counsel. Unfortunately, the learning curve can prove costly. “For trade secrets, the level of in-house awareness is often directly proportional to the amount of litigation a company has faced,” says Randall E. Kahnke, a partner at Faegre & Benson LLP “People frequently don’t . understand when trade secrets are at risk.” In the first case, an engineer left IBM Corp. to work for rival Seagate Technology, Inc. IBM sued, contending there was no way this expert could avoid disclosing its trade secrets. The case bounced through the system until the Court of Appeals for the Eighth Circuit ruled IBM had never specified which secrets couldn’t be revealed. “ fyoutrytoprotect I everything,youmayend upprotectingnothing.” “There was intense litigation for 3 1/2 years,” says Kahnke. “It was wildly time-consuming, burdensome and expensive.” In a similar matter, Hutchinson Technology Inc. had a group of five engineers leave simultaneously to form a new company, Applied Kinetics, Inc. After Hutchinson did some research, it learned that this venture had just one client—one of Hutchinson’s main competitors. “Hutchinson had a very aggressive trade secret protection program, which included use of non-compete agreements,” Kahnke recalls. “Even though this was factually a less compelling situation—AKI wasn’t competing directly, after all—Hutchinson, represented by Faegre, was able to win an injunction within a matter of months because the company had laid the groundwork for protecting its secrets ahead of time.” Hutchinson’s strategy was direct, efficient, straightforward and effective. IBM’s was not. Know the risks One key to forming an effective protection strategy is to identify all the ways a trade secret can be compromised. Former employees are just the beginning of that list. Failed mergers are particularly dangerous. Trade secrets are often revealed in the course of necessary due diligence, but if the deal craters, your most prized secrets could be in the hands of a competitor. A similarly messy situation occurs when joint ventures dissolve or expire. wildly Expensive The most common scenario that jeopardizes trade secrets occurs when a key employee goes to work for a competitor. Kahnke cites two contrasting lawsuits to illustrate the crux of the issue. 14 LexisNexis® Martindale-Hubbell® http://www.iStockphoto.com/kutay

Table of Contents Feed for the Digital Edition of Counsel to Counsel - May 2008

Counsel to Counsel - May 2008 Contents Harassment Policies NEC Corporation of America and Duane Morris LLP Lost or Stolen Data: Minimizing Fallout On-Boarding the Board Drafting Fair, Efficient and Enforceable Arbitration Agreements Responding to Counterfeit Products Crafting an English-Only Workplace Policy Distressed Debt: New Players, Global Sophistication Make Restructuring More Complex IP Confidential: Plan Ahead, Act Fast to Protect Your Trade Secrets Adverse Changes: Think Ahead in a Strained M&A Market Optimizing Web 2.0 Technology: Expanding Your Professional Network Union Pacific Railroad Company and Patton Boggs LLP Warming Warning: Develop Your Climate Change Strategy Now Risk Sharing: Expect New Obstacles and Expenses in Syndicated Loans E-Discovery in Action Diversification at the Gate Energy

Counsel to Counsel - May 2008

For optimal viewing of this digital publication, please enable JavaScript and then refresh the page. If you would like to try to load the digital publication without using Flash Player detection, please click here.