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The threat of corporate espionageor other misappropriation shouldprod owners of intellectual prop-erty to take measures to protect

their important information and creations. Intellectual property andother laws may not prevent the acts ofunscrupulous persons, but when proper-ly applied, they can function as substan-tial deterrents against such acts and, insome circumstances, can remedy harmresulting from the acts.

While most organisations have welllaid down rules for the audit and protec-tion of their physical possessions, intel-lectual property is sometimes over-looked. So before setting out to imple-ment a strategy for protecting intellectu-al property, it is generally useful to knowwhat intellectual property there is to pro-tect. Many organisations conduct peri-odic audits to identify and classify theirintellectual property as, for example,technical information, production infor-

mation, sales and marketing information,financial information, etc.

No single form of intellectual propertyprotection is appropriate for all informa-tion that an organisation might possess.Most successful protection strategiesuse a variety of approaches tailored tothe nature of the information to be pro-tected.

Patent protection will prevent othersfrom making, using, selling, or offeringfor sale the patented invention, orimporting the patented invention into theUnited States. Patent protection is avail-able for inventions involving new anduseful processes, machines, manufac-tures, or compositions of matter, or anynew and useful improvements thereof.

Rigorous requirements

But that is only true if the inventionsatisfies rigorous requirements such asnovelty and non-obviousness.

Copyright protection will prevent oth-ers from, among other things, unautho-rised copying or making derivativeworks, ie works based upon one or morepre-existing works. Copyright protectionis available for original works of author-ship, but it does not "extend to any idea,procedure, process, system, method ofoperation, concept, principle, or discov-ery, regardless of the form in which it isdescribed, explained, illustrated, orembodied in such work."

Obviously, not all information ispatentable or copyrightable. Informationthat, for whatever reason, cannot be pro-

tected by patent or copyright laws canoften be protected under trade secretslaws. The Uniform Trade Secrets Act,adopted in many states, defines a tradesecret as:

Information, including a formula, pat-tern, compilation, program, device,method, technique or process that:

(1) derives independent economicvalue, actual or potential, from not beinggenerally known to, and not being easilyascertainable by proper means, by otherpersons who can obtain economic valuefrom its disclosure or use; and

(2) is the subject of efforts that arereasonable under the circumstances tomaintain its secrecy.

Factors that are typically consideredin determining whether information is atrade secret include:

• The extent to which the informationis known outside the owner's business;

• The extent to which it is known bythose involved in the owner's business;

• Measures taken to guard the secre-cy of the information;

• The value of the information to theowner or to his/her competitors;

• The amount of time, effort, andmoney expended by the owner in devel-oping the information; and

• The ease or difficulty with which theinformation could be properly acquiredor duplicated by others.

The decision whether to try to protectinformation as a trade secret or whether

Espionage, theft andgreed restate the need for protection

12 MPR March 2005 0026-0657/05 ©2005 Elsevier Ltd. All rights reserved.

HARRY BROWN is a patent attorney withWhite, Redway & Brown LLP, 1217King Street, Alexandria, Virginia, andcan be reached by phone at +1 (703) 299-0953 and by e-mail at

harry@wrb-ip.com. This paper repre-sents the present views of the authorand does not necessarily reflect theviews of any clients of White, Redway& Brown LLP.

The author

A welter of tabloid headlines in Detroit last month broughtgreed, industrial espionage, possible grand larceny and plainold-fashioned theft into the world of powder metallurgy. USpatent attorney Harry Brown says that proper protection of intellectual property rights is an essential start in preventing criminal losses…

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metal-powder.net March 2005 MPR 15

to seek patent or copyright protection isan important one. Patent and copyrightlaws are fundamentally at odds withtrade secret protection, as the aim ofpatent and copyright laws is to encour-age public disclosure of information inexchange for providing the right toexclude others for limited terms. On theother hand, trade secret protection relieson non-disclosure and can last for aslong as secrecy can be maintained. Onceinformation is disclosed in a patent orcopyright, of course, it cannot be main-tained as a secret and, when informationis used but maintained as a secret, a barto patentability may arise. Accordingly,the decision how to protect particularitems of information should ordinarily bemade on an item by item basis.

Creative approaches

Where patent, copyright, and tradesecret laws cannot effectively protectinformation, other creative approacheshave also been used. These approacheshave included contractual approachessuch as "shrink-wrap" or "install-wrap"licenses for computer software, and tech-nological approaches, such as copy-pro-tected CDs and DVDs.

Patents and copyrights only go so farin protecting intellectual property.Restrictions on access to sensitive infor-mation and physical security measures,such as fences, alarms, and securityguards, are another feature of mosteffective intellectual property protectionstrategies. Physical security measuresprovide useful objective evidence ofefforts to maintain secrecy that is impor-tant for purposes of assessing the rea-sonableness of measures taken to pro-tect trade secret information.

Simple and effective

Whether measures taken to protectinformation are reasonable will also ofteninvolve considering whether efforts havebeen undertaken to form suitable con-tracts with persons who will or may haveaccess to intellectual property. Contractualsecurity measures are simple and effectiveand, unfortunately, often overlooked.

Among the various contractual mea-sures, employment contracts are one ofthe most important tools in an intellectu-al property protection program.

It is important to note, however, thatprovisions in employment contracts canbe treated very differently from state tostate. Whether a particular state's lawwill permit enforcement of some or all ofthe terms of an employment agreementshould be investigated before adopting itfor use in a particular state, and changesin the law should be tracked to see if it isnecessary to revise an employmentagreement. However, generally speak-ing, reasonable provisions that do notunduly restrict the ability of an employeeto find work in his or her chosen field willbe enforced by the courts.

US patent law provides that rights toan invention are owned by the inventor.

Entities that employ others who inventpatentable subject matter are oftenunpleasantly surprised to discover that itwould have been a good idea to havehad a signed employment agreementrequiring their employees, contractors,or consultants to assign their rights toinventions made in the course of theiremployment.

For US copyrights, authors own therights to their work. However, in thecase of "works made for hire", theemployer or person for whom a work wasprepared is considered to be the authorand, unless the parties agree otherwisein a signed, written agreement, theauthor owns rights to the work. Trouble

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Patents and copyright can help protect proprietary information, even where the unscrupuloushave access to trade secrets.

16 MPR March 2005 metal-powder.net

can arise, however, when there is uncer-tainty whether a person is an employee,such that an employer will own rights toworks prepared for the employer, or anindependent contractor who may own allrights to a work of authorship.

Employers subject themselves to sig-nificant risk if it is not clear from thestart that employees, contractors, orconsultants are obliged to assign rights to their inventions and works ofauthorship.

Confidentiality policies

Employment agreements ofteninclude provisions requiring employeesto acknowledge that they will maintaininformation that they receive in thecourse of their employment as confiden-tial and will not disclose it withoutauthorisation. Organisations should alsohave written confidentiality policies anddistribute them to all employees.Particularly with respect to more sensi-tive confidential information, "CONFI-DENTIAL" notices should be provided ondocuments and other materials, and

recipients should be notified in writingthat information is proprietary and is notto be disclosed or used without consent.Also, when employment terminates, anexit interview should be conducted toremind the ex-employee of the confiden-tiality obligation.

Many employment agreementsinclude non-compete clauses. Whilethese can be useful, they are generallyconstrued very narrowly against formeremployers or partners. They are usuallysubject to a "reasonableness" testbecause of the inequality of bargainingpower between an employer and anemployee. Courts are reluctant toenforce agreements that might preventpeople from obtaining work in their cho-sen profession. Non-competition agree-ments are more likely to be enforceableif they are limited, particularly in terms ofgeographical scope and duration.

It is often necessary for modernorganisations to exchange informationwith a variety of other entities for a vari-ety of reasons and under a variety of cir-cumstances. While structuring of these

relationships may not fall under theumbrella of what is traditionally viewedas an intellectual property protectionstrategy, knowledge of the law pertainingto these relationships is important tomake sure that valuable intellectualproperty is not unintentionally lost. Real and potential risks associated withseveral types of relationships are dis-cussed below.

Agreement on rights

When entities, such as corporations,agree to collaborate on a project, such asin a joint venture, they should agree atthe outset who will own rights to intellec-tual property developed in the course ofthe collaboration. For example, as previ-ously noted, the rights to a patentableinvention belong to the inventor unlesshe is under some kind of an obligation toassign. Even if an inventor is under anobligation to assign to his employer, theobjectives of another entity collaboratingwith that employer may be frustratedand its contribution of information maybe lost if it is not granted some rights

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under a patent resulting from the collaboration.

Additionally, collaboration agree-ments should address the treatment ofintellectual property that the partieseach independently bring to the collabo-ration. Often, in the course of the agreement, it will be necessary for cer-tain collaborators to use the intellectualproperty of other collaborators.

Agreements with government

Questions for the parties to considerinclude how intellectual property of oth-ers will be treated during the course ofthe collaboration and after the collabora-tion terminates.

US government funding agreementstypically require that the government begranted a nonexclusive, royalty-freelicense to, inter alia, practice patentableinventions developed under a fundingagreement.

For organisations performing govern-ment funded work, to avoid giving awaysubstantial rights, it is imperative thatdetailed records be kept concerning what

activities are performed in connectionwith the government funding, and whatactivities are not.

For similar reasons, organisations col-laborating with other organisations per-forming government funded work shouldinsist that the other organisations main-tain appropriate records.

Non-profit organisations that perform certain government fundedwork, particularly universities perform-ing research, are often not authorised to assign rights to patentable inventions without approval from thegovernment.

This can frustrate the expectations ofan entity that is also providing fundingfor work by the organisation, or that isperforming work in conjunction with thework by the organisation.

It does little good to obtain patentsand copyrights, to maintain informationin secrecy, or to negotiate agreementswith employees, contractors, consul-tants, or other collaborators if there isnot also a willingness to enforce intellec-tual property rights in the courts, usually

through civil, and sometimes criminal,action. Courts have power to awardstatutory and actual damages, awardenhanced damages and/or attorney fees(usually limited to circumstances whereconduct is particularly egregious), issueorders enjoining further infringing or oth-erwise improper activities, and imposecriminal penalties including fines andprison.

Reluctance to act

In spite of the potentially substantialdeterrent effect of penalties such asthese, there is a large measure of reluc-tance in many organisations to resort tolegal action.

But it is an invitation to misappropria-tion for an organisation to be perceivedas being afraid to enforce its rights, ortoo disinterested to incur the expenseand aggravation of enforcement activitiesin the courts. Organisations with reputa-tions for aggressively defending theirrights often find that others quickly learnto have respect for it and are wary ofinterfering with those rights.