Showcasing the power of trade secret metadata

Keeping secrets in business:

Organisations hold business-critical intangible assets that perfectly fit even the strictest definition for a valuable trade secret.

A trade secret is any formula, practice, process, design, instrument, pattern, commercial method, or compilation of information which is not generally known or reasonably ascertainable by others, and by which a business can obtain an economic advantage over competitors or customers. The scope of trade secrets is virtually unlimited, and valuable trade secrets are not limited to technical information. A trade secret continues for as long as the information is maintained as a secret.

Talking about your trade secrets:

There are times when a company may need to discuss one of its trade secrets inside and/or outside the company. For example, the General Counsel may be asked to update C Suite Executives about one of the company’s valuable trade secrets. A key partner may need details about a trade secret as part of a collaborative innovation project. A court may require detailed disclosure of a trade secret during litigation. A mergers and acquisition project might include a comprehensive IP due diligence exercise involving trade secrets. An investor or lender may wish to know about the company’s “secret sauce” or “crown jewels” before handing over any money.

Trade secret metadata:

Metadata comprises a data set that describes and details information about other data. Metadata is simply data that describes other data. Meta is a prefix that in most information technology usages means ‘an underlying definition or description’.

Trade secret metadata summarizes basic information about the trade secret, which can simplify identifying and working with this unique form of IP.

Showcasing the power of trade secret metadata:

Imagine you are the GC of an operating company tasked to update its C suite executives about one of the organisation’s valuable trade secrets.

Your presentation may goes as follows:

“Hello Ladies and Gentlemen,

I am here to update you about one of our most valuable trade secrets.

The trade secret in question is our epoxy coating process. It was developed by our chemical research group headed by Aidan O’Connor at our R&D Centre in Madrid in 2004.

Following a formal review in Sept 2004 involving business, technology and legal experts, the decision was taken to maintain this epoxy coating process as a trade secret rather than filing a patent application on this invention.

Originally this trade secret was documented on paper only and stored in a secure location within the R&D Centre. In 2010, this trade secret was converted to a digital format and it is now stored in encrypted format in a secure part of the network. A number of protection mechanisms are in place to protect this valuable trade secret.

Access to the trade secret is limited to a number of chemical experts in Madrid, plus a few chemical experts in two of our production facilities as this particular trade secret is used in our production process in our factories in Limerick in Ireland and in Manuas in Brazil.

This trade secret enables our production facilities to greatly out-perform our competitors in terms of energy use and environmental impact.

We have inter group licenses in place between the relevant locations. These licenses focus very much on this trade secret, and we’ve utilised our best-of-breed IP license to protect this valuable trade secret.

Trade secret education and protection training is provided to all researchers at our R&D facility in Madrid. Training is also provided to all staff at our two production facilities. Furthermore, trade secrets are included in our entrance and exit interview check-lists.

We classify this trade secret as a ‘process’ trade secret in our register of intangible assets.

This trade secret like all of our valuable intangible assets is reviewed regularly as part of our intellectual asset management (IAM) program. This trade secret was last formally reviewed in March 2016. Details of that review, the list of participants, and the actions agreed are available on request. We plan to conduct a thorough review of all of our trade secrets including this epoxy coating process trade secret during 1H 2018 prior to the enactment of the EU Directive on Trade Secrets on 9 June 2018 to sanity check if we need to react in any way.

This epoxy coating process trade secret has been shared with one of our key collaboration partners, a key supplier, named Kenmaro Inc. located in Fort Worth, Texas. We have a comprehensive legal agreement in place with this supplier. Our trade secret was first shared with Kenmaro in Jan 2010. We review Kenmaro’s trade secret policies and protection schemes as part of our regular supplier audits.

There was a formal valuation of this trade secret together with other intangible assets belonging to the Madrid R&D Centre back in 2012. That valuation exercise was conducted by the IP Valuation Group (IPVG), and was done as part of an investment round. IPVG valued our epoxy coating process trade secret at 120 million USD. A copy of that valuation report is maintained by our Legal Function and is available on request.

Johnson, Mooney and O’Brien is the Law Firm we use to help and support the organisation when it comes to trade secret legal matters. This Firm was already supporting us in 2004 when our engineers first created this valuable trade secret. Our prime contact at that Firm is Peter Higgins based in their London office.

Thanks to Spanish innovation tax laws and in particular the Spanish Patent Box Tax regime which allows trade secrets to qualify as IP, the organisation benefits from a reduction in tax in Spain.

As part of our competitor intelligence activities, we monitor if other organisations have attempted to patent our epoxy coating process. To date, we are not aware of any such patent applications. We believe that our original decision to maintain this process as a trade secret to be the correct one, and we have sufficient evidence gathered to avail of ‘prior user rights’ if necessary.

Thank you for your attention. I trust that this overview of our epoxy coating process trade secret has been of value.

Do you have any comments or questions for me?”

Managing trade secrets without metadata is impossible:

There are a number of forces which together mean that trade secret asset management is now becoming a business critical issue, and one which companies must address.

These forces include - legislative developments worldwide; finance & tax developments worldwide; increased network security & cyber-crime concerns; IP reform in key jurisdictions; the growing importance of corporate governance; more and more companies embracing openness; and the changing nature of employment.

Trade secret metadata is therefore growing in importance. Managing trade secrets without the associated metadata is practically impossible.

With the increased prominence of trade secret protection courts, the world over, are providing protection and relief only when owners are able to demonstrate that their secrets were kept in accord with best practices. It is only by collecting, analysing and curating the metadata associated with one’s trade secrets that one is able to judge whether a company is abiding by best practices in trade secret protection.

By the way, please note that the GC never divulged or even needed to divulge the epoxy coating process trade secret to the C Suite Executives!