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Innovate is a special compendium of articles written by and for AIPLA members. Designed as an online publication, INNOVATE features magazine-like articles of 500-1,500 words in length on a wide variety of topics in IP law today.
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Practical Tips For Protecting Your “Secret Sauce”
By: David M. Fortunato
How do you compete? Certainly, you compete by doing things better, faster and cheaper. You compete by offering goods/services that are superior to your competition. You compete through continuous improvement. Yet asking “How do you compete” begs another question – Are you using every tool, resource, etc. at your disposal to improve your competitive stance? Experience shows the answer is typically no.
Many businesses invest significant time and money in their processes. A business obtains and maintains a competitive advantage by doing things better, faster and cheaper. Expertise, efficiency, etc., are what help lead to such results. These efforts and investments can create “Secret Sauce” of the business – that particular expertise and knowledge that, when implemented in the operation of the business, produces a competitive advantage. While the value of the Secret Sauce may be difficult to quantify, imagine if your competition suddenly knew how you work better, faster and cheaper. Imagine if the competitive advantage you’ve obtained through your investment of time and money, typically over years, if not decades, was suddenly eliminated. Imagine if your most valuable information somehow found its way into your competitor’s hands. These are all possibilities if you fail to identify and protect your IP, specifically, your Trade Secrets or Secret Sauce.
The following 5 simple steps are necessary first steps to securing your valuable IP, for securing the investment you’ve made in your business, and for securing your competitive advantage obtained (at least in part) from your IP. They are simple and relatively inexpensive to implement and should have little to no impact on your day-to-day operations. Yet the piece-of-mind they provide can be invaluable.
- Identify Your Secret Sauce.
Every business has IP, and most businesses have trade secrets, i.e., Secret Sauce. It may be customer lists, vendor/supplier lists, COGs information, machine specs, or various other details about how you run your business. As a first step in securing this valuable asset, you must identify the asset. You must identify your Secret Sauce.
- Locate Your Secret Sauce.
Once you know what it is, you need to know where it is. As important as identifying your Secret Sauce is making sure you take appropriate steps to protect it. As a first step, you need to know where your Secret Sauce is located in your facility. It may be on computers, thumb-drives, etc., in the form of spreadsheets, databases, and other electronic files. It may be at certain locations within your facility, e.g., where certain machines are installed, certain processes carried-out, etc. You just can’t protect it until you know where it is.
- Identify Who Has Access to Your Secret Sauce.
It’s also important to limit access to your Secret Sauce to only those employees who need such knowledge to advance your business’ interests. Not every employee needs to have access to, or to know of your Secret Sauce, and it’s better to limit the universe of employees who do. It is also critically important to restrict access to non-employees, e.g., vendors, service technicians, etc. While it may be necessary to allow non-employees to access areas where you maintain and use your Secret Sauce to install, repair or maintain your equipment, for example, this group of people is not subject to the same confidentiality obligations as your employees. They thus represent a more significant risk that the security and confidentiality of your Secret Sauce may be compromised.
- Secure Your Secret Sauce.
The best way to protect your Secret Sauce and ensure that it continues to bring value to your business is to make sure it’s secure. Having identified the what, where and who, you next need to secure your Secret Sauce by controlling access to it. For example, if it’s a customer list or database, password protection is a simple way to secure your information. If it’s equipment type, configuration, operational specifications, and the like, restricting access to the areas of your plant where the equipment is used is a simple and effective way to secure this type of information. Ideally, a formalized Trade Secret Policy is a best practice and a great place to start. From such a Policy it becomes easier to ensure protection of this valuable asset.
- Continuously and Diligently Monitor Your Practices and Procedures.
On-going diligence is key to maintaining the security and value of your Secret Sauce. Once you realize that it may comprise a substantial investment of time and money by your business, proactively ensuring that you’re doing everything practical to protect your Secret Sauce is a wise, on-going investment. This can be accomplished by creating and implementing policies and best practices to ensure your Secret Sauce is kept secret, thereby maintaining its value to your business.
 Note use of the singular is not intended to imply that a business has only one Secret Sauce. In fact, businesses typically have many trade secrets, each of which may be worth protecting.
David is a seasoned IP attorney with 24 years’ experience in IP law, and a former life as an engineer at AT&T - Bell Labs. David now manages Fortunato IP Law, a nano-boutique that specializes in all aspects of Intellectual Property law. David has pursued a zig-zag approach in his professional life – beginning at AT&T - Bell Labs as an engineer, then a product manager, than to private practice law in New York and New Jersey at small IP boutique law firms and large general practice law firms, then to in-house counsel at one of the world’s largest medical technology companies, and finally to managing his own law firm. This unique combination of experiences enables David to provide strategic guidance and counseling that incorporates legal, business and technical factors in his analysis and decision-making processes.