Protecting Your Invention: Patent vs. Trade Secret Webinar

Transcript

I think we'll get started and um as people come in uh they can just join us when they join um I wanted to make a quick announcement about our uh Dunlap Bennett and lewig small business and inventor Hub this Hub is a unique initiative that we started several months ago it's focused on simplifying the patent and trademark process for inventors and small businesses with a clear mission to EMP power Innovation um there's a lot of great resources on here there's transparent um fee structures and it allows inventors and entrepreneurs to access highquality legal services without unexpected costs um if you want to check it out you can see the link at the bottom it's www.bl lawyers.com Hub so I just wanted to make that announcement before we get started okay I want to to take a moment to introduce our guest speaker today he's one of our managing Partners Tom Dunlap Tom works with clients to manage protect and enforce their IP rights in private business and government contracts for over 20 years his unique background and I'll tell you a little bit about that in a second has allowed him to apply legal and practical knowledge to benefit clients in business IP and government contracts um con contracts transition transactions and disputes Tom re represents clients in transactional matters and before various state and federal courts his non-law background experience includes founding and selling a software gaming company founding a biotech company called series Nano science running a Vineyard serving on boards and commissions and nine years in the US military where he served as a calvalry officer um so the the last piece that I want to talk a little bit about Tom is that he's got a a lot of um Publications including the Lexus practical guide to trademark portfolio management the 2019 Chambers guide to us trademarks and Essentials of Ip law um he also um teaches as an adjunct uh he's C he has taught at Washington and Lee and George Washington he's currently an Adjunct professor at Lafayette where he teaches the intellectual property for scientists and Engineers course at the School of Engineering so Tom thank you so much for joining us today and being a part of our webinar series you're muted Tom okay I'm here there we go welcome Tom we'll try that again y so so shoot tell me how you want to kick it off today and I'm ready to go yeah so this webinar series is a series of questions that I'll ask you and it's just like a conversation um for the audience if you do have any questions during the presentation feel free to put them in the chat um and our moderators will let me know that there's something in the chat um that Tom can ask a answer a very specific question so to get started Tom today's uh talk is on patents versus trade secrets so let's talk a little bit about what the differences are between patent prosecution and trade secret prosecution sure well so patent prosecution and trade secret prosecution are not really what it issues what's the difference between patent protection and trade secret protection Trade Secrets aren't really prosecuted patents are prosecuted probably get to that in a second and there's one of the big differences so patents have to go through a process at the USPTO where an attorney actually has to Pro file an application and prosecute The Invention um until the patent's granted trade secrets are something the businesses manage themselves by making election to keep something secret and there are whole bunch of things you have to do to make a trade secret effective but they're two different forms of intellectual property that often but not always cover the same types of Ip so patents generally cover inventions or only cover inventions they can cover designs as well but in the context of Trade Secrets we're talking about inventions what patents do is they give the inventor an exclusive right to make use sell or license The Invention technically it's to exclude others and that's a key point that I always tell my students it's not a right to make or sell a patent patented products the right to exclude others uh but I won't get into that now so that that um right lasts for 20 years from the date that you are granted a patent the issue with patents of course is the this for that the reason you get to that legal Monopoly for 20 years is that you're disclosing everything so the big tradeoff is in exchange for being an inventor and telling the world a what the invention is how it works and making sure that a person skilled in the art of whatever it is you're inventing can Rec create that that the patent's enabled you get for 20 years to tell people they can't make your invention if they do make your invention you get to sue them or get a license from them and they have to pay you for it uh so but to get a patent it has to be something that's novel nonobvious useful and enabled um and that's those things aren't true for a trade secret so a trade secret is not disclosed it can last forever um but the value of a trade secret is the opposite instead of disclosing it the value is that you've kept it secret Trade Secrets can protect things that are not patentable so things like uh confidential business lists company lists information formulas processes algorithms which specifically can't be patented on their own all of those things can be protected by Trade Secrets but so too can almost any invention um really famous example which I'll get to in more detail later in this chat I think is Coca-Cola so that formula was a trade secret for um years for hundred and something years I think it was 2011 a journalist got one of the family members to email him a piece of paper that had the Coca-Cola secret formula on it and the cat was out of the bag U but if you think about it if you're a chemical engineer you could take the Coca-Cola trade secret and probably reverse engineer what's in there so that's that's one of the risks of Trade Secrets but that's the main difference is patents are public and give you Monopoly Trade Secrets do not give you a monopoly and they are by their nature they must be the opposite secret okay great so in terms of the advantage advantages and disadvantages of using patents versus trade secrets for protecting advantages or Pro protecting inventions can you tell us just a a a short few sure so patents in general give you first the exclusive right to commercialize an invention or the exclusive right to exclude others from commercializing it but you have the right to do something a monopoly and there are very few legal monopolies left in the US Trade Secrets not so public disclosure of your patent so people an investor a venture capitalist a private equity from whoever they are can look up what patents you have and see what you own and how inventive or interesting they can see inside what you're doing not so with trade secrets so they can decide whether or not to invest without you having to get ndas or without you having to hide things they also have a very clear specific legal framework when it comes to enforcement that has been around for a long time um and that gives you statutory rights Trade Secrets sort of do as well but they're a little bit different advantages of patents like Secrets which can last forever and to WD40 another one patents only last for 20 years so if KFC had patented the chemical formulation for its spices it would have run out after 20 years but instead KFC has had their third which I think have also now been disclosed to the public by somebody from KFC there's an article about that but but setting that aside technically they were secret for over for 80 years or something like that before somebody did that so they can forever right the other thing is once a patent expires The Invention is in the public domain so the whole point of the this for that exchange between an inventor giving information to the USPTO or the public is that you invented something but 20 years later everybody has the right to use that invention and that's again what you're exchanging for the right type of Monopoly so Trade Secrets we said it they can last forever you don't have to register them you don't have to go through a prosecution process you just do it internally in the company and they can be more cost effective now they can be more expensive too depending on what you have to go through to protect your trade secret and what your trade secrets are um huge disadvantage trade secret if somebody sees I decide to trade secret my iPhone or whatever it is or trade secret my mechanical pencil if someone takes it apart and reverse Engineers it they can make it as much as they want so if it's independently discovered um if somebody discloses your trade secret it's hard to prove sometimes that it's stolen an employee leaves they tell their wife their wife tells their cousin their cousin starts a company with the trade secret could be prettyy hard to prove and it's pretty hard to prove misappropriation which is a high standard so there's some disadvantages to trade secrets too are is there any circumstance by which you would tell a client that it's better to file a patent versus a trade secret or vice versa is there ever in a situation where you would advise one over the other yeah so well we just talked about this if you're invention is something that could be reverse engineered okay a patent is going to be better protection for you a trade Secret's going to be almost no protection because if I can take what you have like open source software or a mechanical pencil I can buy it and take it apart I can make my own and sell it you've got no protection as a trade secret but if I have a patent and you buy it and take it apart and make it I can sue you and you owe me a licensing fee so uh but trade secrets on the other hand if you have something like an algorithm that's unpatentable and that you can conceal in your software and people can't access and you can protect from disclosure I would advise do not try to he algorithms themselves can't be patented but um that is something you could keep as a trade secret in fact and I think this is a question for later on as well sometimes you can both patent use patents and trade secrets on the same product for different pieces of the product and they can work together very well um other thing is you know patents require a budget they require maintenance and they require paying an attorney to get it through prosecution and that can take years Trade Secrets you can decide to make something a trade secret and tomorrow it's a trade secret As Long as You Follow the things you have to do to make something a trade secret so so those are those are kind of the big things so things to consider reverse engineering longevity value disclosure requirements cost um legal enforcement statutory uh enforcement of patents is I think technically much easier uh market dynamics too so patents take a long time to secure Trade Secrets might be more practical if you're at The Cutting Edge of the marketplace and you secure a patent three years from the date you file it or three to five years because they take a long time maybe a trade Secret's better because it's outdated by the time you have an issued patent uh right so Pharmaceuticals often use patents um because reverse engineering for pharmaceutical is so easy imagine if um Viagra hadn't been patented and how much money that pharmaceutical company would have lost so yeah I can remember back in my days of MC we were always working against the clock for the you know the drugs that were going off patent and what could we get you know to sort of supplement that Revenue um before the generics came online Y and that happens everybody's heard about generics and so you so you put your your finger on the the issue here which is imagine every single pharmaceutical you can buy now can absolutely be easily reverse engineered and the second it's off patent it is and generics instantly flood the market legally and that's a good thing so the cost comes dropping down from you know hundreds of dollars a pill to $5 a pill if you watch the commercial string football which I noticed this SU um but that's a huge huge thing and so that's where patents would be better obviously but if you're the colonel in your KFC you can't patent your recipe but you can keep it secret and turn it into a marketing thing which they did really well okay so you talked a little bit about this you touched on this but can you tell us a little bit more about the legal requirements for maintaining a trade secret and how does that compare to the patent process sure so Trade Secrets you have to take what most state law call reason able steps so two things to know about Trade Secrets as well until the dtsa which is the defend Trade Secrets act which I think was 2016 until that act passed all Trade Secrets laws were state derived so that means each state had its own version of the uniform Trade Secrets act they're pretty similar with slight differences generally speaking so I'm generalizing for state law and the defend Trade Secrets act pretty much follows the uniform Trade Secrets act which is a uniform set of laws that Most states use to adopt their own version of Trade Secrets laws but pretty much you first have to take reasonable steps to keep the information confidential so using ndas um employment agreements things like that you have to limit access to the information physically and digitally and you have and the information has to have value to your business so you can't say that um your personal shopping list oh I think yeah I think somebody's not muted maybe M pleas tired but okay okay Delicious By the way thank you yeah I got it yeah I got it go ahead thanks Amy no worries so it's funny we even know who that was um yeah anyway so big point was maintaining a trade secret big things are you have to keep it secret it has to have actual value you can patent something that has no value for I don't know why you would but you could and people do uh and you have to secure it physically digitally and legally contractually you have to secure that trade secret um so that's the requirement for a trade secret for a patent you actually have to meet very specific legal requirements which can be hard novelty which means there's no prior art there's nothing that anticipates your patent non obviousness and it has to be something that's useful and you also have to describe the patent in sufficient detail so that it's enabled so a person of ordinary skill in the art can recreate what you're inventing so you go through an application process ultimately the patent becomes public it becomes public during your Monopoly so people can see what you're doing and maybe they can even take what you're doing and figure out way to do it better that doesn't infringe on your patent so draft a good patent and think of everything you every version of your patent that you can do um but that's the you know those are the different main different requirements yep so then you just sort of hit on something what how does the legal enforcement of patents differ from enforcement of Trade Secrets like if someone's trying to steal something for example an idea what what kind of um the legal enforcement how does that differ well so think think about it in really simple terms if somebody's infringing your patent all you have to do is buy their device or download their software whatever it is that you've patented say I've patented my mechanical pencil again I don't know what it does maybe it shoots bullets you can buy my device from me and you can uh and reverse engineer it and make it and I have a patent but as soon as you start selling it I don't have to prove that you bought it that you downloaded or anything you maybe discovered it on your own you maybe thought of it invented it before me but I filed my patent first I can still sue you and I have all rights and I win trade Secret's not so trade secret relies on proving that the information was taken so if somebody takes my mechanical pencil buys it and sorry my mechanical pencil is a bad example because that shouldn't be a trade secret that'd be ridiculous but somebody steals my software algorithm for my company tells their wife who tells their cousin who starts using the same software product or selling a similar software product based on my code I have to prove somehow that that person told his wife and told their cousin if I can't show that and prove that and that's really hard so patents kind of the proof in the infringement is is more concrete it's just comparing um A to B whereas Trade Secrets you can say hey it's the same thing you've stolen my you're you're doing the same thing as me and the I don't care was it stolen from you if it wasn't stolen from you it doesn't matter so that's a huge huge difference okay they would have to there would have to be some sort of evidence that showed hey recipe this or misappropriation you have to prove Mis ration okay so can a company use both patents and trade secrets for different aspects of the same invention you alluded to that earlier and if so how how would that work so generally speaking companies can use patents for I'd call it core inventions or final product so you can keep the processes and knowhow and Manufacturing methods Trade Secrets while the actual product itself that people can buy in reverse engineer can be patented so if you have a secret manufacturing process to make your mechanical pencils that takes one second and involve some special machine keep all of that secret so that the Machinery isn't uh exposed or maybe their mathematical algorithms that you use in that process all of that can be a trade secret but the thing that goes to Market that people combine reverse engineer that core product or core Innovation uh file a patent for that so um can you touch on that for just a minute in some of the other webinars it's been interesting to me to hear um some of our other colleagues talk about how when you do a patent it's very specific I think people think oh it's a patent on this whole thing but can you tell us a little bit about that it's it's really very specific about a component or the way it works or something so it's claims so what you're talking about Amy is when you see a patent and it's this thick or it's 20 Pages or 50 pages or even 10 pages all the person who owns the patent owns is something called the claims and the claims are typically one to five claims at most sometimes they're dependent claims with those but you own what's in the independent and dependent claims you don't own all the stuff that you're talking about in the specification or product and very often that patent claim is one little piece of a product so I wouldn't with my mechanical pencil example own the patent rights to something that that writes in ink or rights in graphite I wouldn't own the rights to the Eraser on the end of it but I might own the rights to the specific mechanism inside that pushes the graphite forward and that's it I only own that little piece and so when you're selling that pencil if that Improvement is valuable economic Al your damages are reduced not for the whole value of the pencil but only for the value of that piece of the Improvement and that gets deep into patent damages and something called the Georgia Pacific test which it's probably beyond the scope of this but absolutely right if you want to know what somebody owns when it comes to a patent go to Google patents type their patent number in and then look for something that says I claim or what is claimed and only that little teeny section is what you own and only the only thing that possibly infringes that or something that reads on all of at least one independent claim in that patent so one the independent claims and I maybe I'm going a little too deep but independent claims usually are the things at the top of the patent that says I claim and then it says a mechanical pencil that has a mechanism that pushes the graphite forward using XYZ and then there's a dependent claim or two or three and you could say the thing in claim one that also does this the thing in claim one that also does y those would be dependent claims but they have to infringe on all of One independent claim uh otherwise if it does everything but what's in that or does what's in that Pat in a different way that's what I was just going to say that's how you end up having I'm assuming different products that sort of give the same outcome but but have a mechanism that why would our law do that our law does that so that encourages Innovation find a different better way to do it now I will caveat all of that there's something called the doctrine of equivalence and again beyond the scope of today but the doctrine of equivalence says if you're achieving the same result uh by doing something that's well known in the industry or known in the art of what you're doing in the art of mechanical pencils in this case then you can still be infringing the patent through the doctrine of equivalence but generally speaking if you make an improvement you you can get around a patent you can design around a patent and that's the whole point of the patent system okay thank you thanks for that clarification okay so let's talk a little bit about how as a lawyer you assess whether sort of long-term protection of a trade secret outweighs the limited time of a patent's exclusivity so it depends on what you're doing so say for example you're in the business of making pencils I think if you come up with a new mechanical way absolutely a patent reverse engineering but also uh you know that pencil is likely to be as relevant as it as it is today 20 years from now right but it's say it's a software system that is patentable in this case for artificial intelligence that's likely to be valuable for maybe six months to a year so if you go through the process of patenting that and and it's not some like core base really Innovative feature of AI it might not be worth patenting it might be worth trying to keep the code or the process as a trade secret instantly and derive value from it now and again you do when you get a patent your patent when it's granted you can go backwards in time up to six years and get damages uh for people who've been infringing your patent prior to the patent's issuance but it's from the data filing and they have to be on notice and you have to mark and there's a whole bunch of things you have to do with a patent but generally speaking speaking um duration of competitive Advantage is a huge thing we talked about likelihood of Discovery if it could be independently discovered or reverse engineered trade secret and Industry Trends so patents can become less relevant and obsolete in certain industries um and we talked about pharmaceutical Industries being a good place for patents but software may be being a good place generally for Trade Secrets because the pace of innovation and the value of what they're protecting um now there are costs of protection so protecting a patent essentially patents are more costly upfront you spend the money Prosecuting the patent responding to office actions and maintenance fees but Trade Secrets require ongoing security um you know cryptool locking your vaults employee agreements confidentiality non-disclosures controlling the secret and that could be an expensive uh Endeavor over the long term depending on how big your business is and how pervasive the trade secret is got it okay so let's go into a little bit of detail of the pro oh so I do have an example for you so this is kind of interesting we talked about Coca-Cola and I just kind of remember so Coca-Cola actually you already talked about this they had a trade secret for their formula which was secret for 130 years until somebody emailed a journalist you know the paper saying what the trade secret was but they have patents on uh their freestyle soda fountain that's that Fountain where you go to and you push the button at McDonald's and you can pick Fanta or bargs or Coke and mix it so they've patented the heck out of that so while the coke that's in the machine is a trade secret the machine itself is subject to a whole bunch of patents and they have patents around their they've patented the design of their Coke bottle they have trade dress on the design of their Coke bottle they protect themselves every way they can they're a really good company to look at if you're like hm how would I protect uh tra Trade Secrets patents trademarks and design patents thanks thank you for that interesting example okay talk to us a little bit about the typical process and timeline for obtaining a patent and how does that compare with a you know establishing a trade secret so patents we talked about longer time to figure out and get done and Trade Secrets shorter time patents involve first usually a prior art search where you are paying a law firm to do a prior art search we return search results you review them once your invention is finalized in light of what prior art exists and prior art is a term that we use in the patent world that means literally since the American vents act in 2011 anything that came before your invention so if somebody in 1964 in Nepal in a journal written in nepales disclosed what you invented even though you couldn't find it ultimately somebody could use that and invalidate your patent prior is everything that came before generally a US patent search covers most things because most things that are valuable have been in that system uh but it depends on what field you're in but prior art next thing is you file the application and the drafting that patent application filing it's involved so it's claims its specifications and its drawings the US PTO then examines that and that can take 2 to 5 years depending on what art unit your patent ends up in every type of patent whether it's software or biotechnology they're all in different art units and they all have different processing times depending on their backlog and those can be very long there is something called track one where you can pay an additional fee to expedite your patent prosecution process um but assuming you don't do that it can take two to five years then you get an office action and when I say that sometimes people are like I paid you to file a patent and I got an office action well 80 to 90% of patents get some kind of office action some kind of initial rejection you have to respond and then there's 6 months to respond to that and then it's you either get a second office action it can go back and forth for years um ultimately if you're successful your patent application uh is granted and your patent is issued uh and then you've got your patent for the next well for 20 years from the date of your initial filing so Tom are you are you protected during that back and forth time you are if you're patent issued ues so as long as your patent actually becomes a granted patent at some point in the future you can go back up to 6 years backwards in time and get damages for whoever's infringing on your patent so that's why you see things like Pat pending printed on consumer products all the time because their patent hasn't been granted yet they're selling their products because they want to be in the space and make money which they can do because they've got a filed patent it's safe to sell it but if somebody's like ah it's only patent pending maybe it's not going to be granted I'm going to infringe well I can go back and you for royalties reasonable royalties um after that after my patent granted okay and one other question because you used a a um an international example of somebody that might have had it is the patent only valid in the United States could someone from another country make that product and what the patent that you hold in the United States protect them so sorry I know this is a little off but I'm curious it wouldn't protect you so patents are territorial the United States uh patent only protects you in the United States we are however treaty signatories to both the Paris convention and PCT and both of those things are ways to protect your patent in other countries now there's no such thing as an international patent but after you file your US Patent you can file something under the PCT that allows you to um that allows you to obtain a patent Grant in other countries ultimately you have to go through the international phase and then a national phase but patents are territorial so it does not protect you there so if I file my US Patent it's granted I do nothing else I don't file in another country and somebody in England wants to make my mechanical pencil with that graphite pushing mechanism that I've just invented on the phone call today uh they can do it as long as they don't sell it in the US if they try to sell it into the US uh then CBP we can file an uh an ITC action against them a section 337 case we can sue them for patent infringement um our federal courts are nice and aggressive about reaching out across the pond to go after infringers that are selling in the US but you don't have any legal protection in countries where you're not granted a patent okay thanks thanks for that clarification okay let's talk a little bit about licensing so what are your options for licensing a patent versus licensing a trade secret to other companies is there such a thing well I mean so so you can license either a trade secret or a patent is exclusive or non-exclusive which means when you license it exclusively only the person you're like or the company you're licensing to has the right to use it if it's non EX exclusive sometimes you're granting multiple licenses uh to use that patent um and same with Trade Secrets trade secrets are a little more tricky because when you license whatever the trade secret is you have this massive obligation to maintain confidentiality and if that person you've licensed to or company you've licens to as subcontractors you have to flow those requirements down or you have to mandate those requirements are flowed down and you have to make sure that that company is doing that so trade secrets are a lot harder because you have to monitor compliance patents if somebody's not complying and you see an infring ing product it's a lot easier to send a ding letter or a breach of agreement letter to whoever's doing that and Trace that back but Trade Secrets it's a lot harder so they're both capable of being licensed but it's in many ways easier to license a patent depending on what it is um so yeah got it okay thanks all right what are the best practices for maintaining and safeguarding Trade Secrets within a company you talked a lot about you know it's it's a lot more work but you have any suggestions for how to do that yeah well I'll tell you how it's a lot more work so that I will share so first you have to identify what a trade secret is and kind of create an inventory like you would with your patents you maintain your patents on some kind of software or internal stocking sheet same thing with Trade Secrets here's all our Trade Secrets then you have to make sure that anyone who has access or may have access has signed a non-disclosure agreement a confidentiality agreement whatever it is that includes employees that includes co-owners that includes any human being or company that includes subcontractors Partners um to that end my advice on that is try to limit access if somebody doesn't need access to the trade secret it should be very specific to the people who are using that trade secret silly example is I had a client that was a chain of restaurants that had a secret sauce and they had a curtain and only certain Secret Sauce makers who were designated to go behind the curtain and make their special sauce um and that was how they physically enforced and they had confidentiality and ndas with the the chefs and I mean these were just people who mixed the I don't want to downplay it was it was a good trade secret protection but they limited access to not every person who worked in the each restaurant had access only their sauce makers had access so using that it should be basically need to know people who have access to trade secrets um and again things obvious things like password protection encrypted databases and physical security measures if you have physical documents which I don't know if anybody does I'm sure some people do the other part of Trade Secrets to prove that you've kept them keep secret is regular training for employees on what trade secrets are at least the employees who are have access to them um you have to probably audit your Trade Secrets processes and then when employees leave think about this you can't erase what's in their brain they've signed an on disclosure agreement and employment agreement but when they leave you should remind the employees of their obligations this is more of a I don't want to say a scare tactic well yeah I do it was more of a scare tactic to remind them because it's really hard again if that employee leaves and tells his wife who tells her cousin who tells the cousin's best friend and that best friend starts a company using the Trade Secrets you've got a really hard time proving misappropriation not giving anyone any ideas but reminding an employee that they signed an NDA and what they're subject to what kind of penalties they're subject to for violating that NDA as kindly as you can isn't a bad idea great the secret sauce reminds me of a restaurant that my husband and I were just in and he really liked the chili oil on the table so he asked the the waitress you know oh you know what's in this and I thought for sure she'd say oh it's our secret recipe or whatever but no she went back and said I can give you what's in it went back and sort of wrote it down I I found that to be really like sort of interesting so remember that and that's why the colonel kept his is it 11 or 13 his herbs and spices secret Coke kept their formula Secret because you can't patent a a recipe you just can't do it you can patent a chemical formula but not a recipe for for food generally it's impossible and they could be reverse engineered so restaurants offering to share them to you look how much more you like that restaurant we back again yeah our oil is secret yeah I won't tell you how we made our oil so it's Trade Secrets a lot of times in that space are marketing tools and they're very effective ones yeah so sure all right let's talk about how does the legal concept of misappropriation apply to trade secrets and what are the consequences so we talked about this a little before so unlike a patent the only way you can get in trouble for using somebody's trade secret is if you misappropriated it so that means you have acquired it through uh nefarious or bad means things like um bribery or theft or conspiring with an employee uh conspiring with your wife's cousin you know or something whatever it is that scenario laid out a second go so it has to be unlawfully obtained just like patents you can get an injunction uh if you can prove that you can get damages um there are also criminal penalties there's something called the economic Espionage Act um and there are cases where companies have been criminally prosecuted in addition to being sued over the um over the uh the theft of Trade Secrets there's this pretty famous case um United States versus sinl wind group I don't know probably not heard of it but there's a company called American superconductor and they had some technology related to turbine manufacturing windmills and sinl was a Chinese company that literally took the IP uh the trade secrets from amsc uh a former employee left downloaded all of the source code and uh amsc um got a I guess uh lost a billion dollars in shareholder equity $100 million in Services 700 jobs 11-day trial in wi in uh Wisconsin a federal jury convicted uh sinl criminally of conspiracy to commit trade secret theft so uh and they were ordered to pay damages so there are a whole bunch of Trade Secrets cases where people not only get sued by the company they stole them from but they're prosecuted so trade secrets are usually if you're infringing a patent pretty much never are you going to get prosecuted by the federal government but if you misappropriate a trade secret depending on what it is especially if it's really important to the energy industry or something in the federal government you can get prosecuted to and it happens um so what should a company do if they suspect that a trade secret has been stolen or disclosed without permission so the big deal because it's a trade secret is you don't want to freak out and start sending accusation Letters Out the first thing you want to do is conduct an internal investigation really quietly and thoroughly grab your lawyers first whoever they are and they will help you do that but it involves interviewing employees uh and you want privileged interview so you want your lawyers to do it you want to figure out whether or not security protocols were followed or missed and if there was a leak or a breach or something find that before you accuse anyone of anything then you want to gather all of that evidence emails computer logs text Chains Don't forget what's app all of those things of anyone who had access to the trade secret so you can see where the leak was and keep that preserve that um and then frankly before sending a demand letter you may want to if you have the evidence that proved all of this happened I might just file an injunction I might file uh for either a trro or preliminary injunction right away to stop a competitor from using these if you don't have the proof and you have to gather it you may have to send a demand letter you may have to do more external investigation and then ultimately you may have to file a lawsuit that alleges all of this still seeking injunction but um it's harder and if it's something that violates the criminal the economic Espionage Act Like theft of of some kind of uh industrial secret that's valuable to the United States and you'll know this if your company does this then you're going to want to inform law enforcement department of justice or whoever uh about the theft so um yeah is if if something is something a trade secret if it's and can people get um criminally prosecuted if it's more on the line of like an additive's been put in something but it's detrimental to you know to people like for example like I'm thinking of cigarettes and then people like sort of whistle BW and said oh we know what they put in it or vaping and we said oh so that's are they protected are they protected in most cases what you're getting into is a little bit different than Trade Secrets versus patents that has to do with whistleblower protection okay so if you're blowing the whistle on a company or a federal contractor or whoever even the federal government you have whistleblower protection but it really has nothing to do with their trade well it does under defend trade secret Act there is whistleblower protection built in that basically says you're not liable for violating your Trade Secrets agreement with the company or and you're not liable to be criminally prosecuted if it's something like that okay that's what I was Wonder you that's a whistleblower exception uh where you won't get in trouble for for selling a trade not selling but using or disclosing a trade secret if if it's in the best interest of you know the citizens okay I was just curious about that okay are there certain industries where patents are more commonly used and others were Trade Secrets or more prevalent yeah so you I mean you hit on the big one Pharmaceuticals they don't keep their formulas Trade Secrets because that'd be ridiculous they' just be reversed engineer Electronics biotech um anything that can be purchased and re-engineered fairly easily those things favor patents um food and beverage companies like the spices and the Cocola formula uh those things tend to be Trade Secrets manufacturing processes that they can keep forever and that aren't seen by the public those are Trade Secrets or should be Trade Secrets often um and software so while certain well software algorithms can be patented in conjunction with other things they can't be patented on their own keeping those trade secrets are source code is trade secrets in fact there is a method at the US copyright office where you can protect your Source Code by making a trade secrets filing we're portions of the source code that our secret is redacted you file the whole source code uh so copyright protections available along with Trade Secrets protection at the same time which seems like it wouldn't make sense but that's why the copyright office has have a circular explaining it as well and we do that all the time got it so if you're a software company you should absolutely be copyrighting your software if you're like God I want to disclose it you don't have to there's a trade secrets process at the copyright office got it okay can you give us some notable examples of companies that have successfully Protected Their Innovations with Trade Secrets versus patents like people like other some could you give us some examples examp of those other than Coca-Cola Coca-Cola CAA the colonel um so Google search algorithm and I don't know I mean you've done SEO Amy that's a little bit in your space but their algorithms protected by a trade secret how they decide who gets at the top of their organic search and they're I know they change it all the time and that's probably part of well interesting it's probably part of their protection process right if they change their algorithm once people figure it out or it leaks and they change how they decide to search rank people that's a trade secret um I mean those are some off the top of my head Pat that's a great example actually fizer MC uh you know fizer had Viagra that was a really good patent for them for a long time uh Tesla has patents um related to electronic vehicle technology they're an early mover they actually have something called an open patent program although uh from what I understand most companies haven't taken advantage but Elon Musk sounds not like him but he basically said you can use my patents to advance EV technology a lot of his patents uh but the risks for companies that do that are are they bound now to the Tesla technology not their own so um I don't know how much uptake there's been on that but they have a lot of patents related to EV technology and they have a design patent on the Cyber truck which I shared with my college class the other night they're like why would anyone patent that ugly thing I mean I don't know some people every time we pass one I always say to my husband do you like that yeah I mean I don't know not not my thing either but it's interesting it's definitely different so with evolving Technologies like Ai and software you've talked a little bit about the algorithms but would that affect the decision to patent an invention versus keeping it a trade secret yeah we talked about it before so especially with software and AI it's fast moving the industry is changing all the time it can be reverse engineered maybe uh reverse coded um so trade secrets are good there there's also a huge open source movement in the software industry and you will see that there are like 20 different kinds of open- source licenses and often client software has Snippets of Open Source license they don't even realize that they're obligated to give away some of their software anyway so it probably couldn't be protected um and then software patents also since the Alice versus CLS Bank in 2014 that case where the Supreme Court sort of said people interpret it this way it's not true that you can't patent any software which is not true at all but that's the Alice case said that it's basically made it uh harder and a little bit more clear as to how you could patent sofware what kind of software was patentable uh but a lot of software gets kicked to the curb now even software that was patented after the State Street Bank decision between Alison State Street Bank in particular um between 1998 and 2014 uh because software is really hard to patent because it's considered abstract uh under Section 101 of the patent act so yeah those are some examples thank you all right how do you think recent changes in intellectual property law have affected the decision for a company to either patent or trade or use a patent or a trade uh the trade secret protection well so and I won't say these are recent recent I guess they're recent for us I was thinking about my college class the other day the textbook we have says the recent change in the American vents act that was 2011 so I'm sitting here I was like that was 13 years ago um but in the patent world it's sort of recent so the AIA changed us from a first to invent which means you were an inventor even if you filed your Pat later and somebody filed ahead of you if you were the first to invent you could prove it with your little inventor journal and all that stuff you still owned the patent we changed in 2011 we gotten lock step with the rest of the earth except for the Philippines I think they were the last ones before us or after us uh but now we're first to invent so um it's definitely changed the need to file patents quickly and the requirement to do so and if you're unable to do so maybe trade secret uh but it's honestly led to more patents being filed more quickly and more provisional applications um defend Trade Secrets Act of 2016 was a huge Boom for Trade Secrets now you have to have certain language in your employment agreements but it changed us from having to uh bring any suit under a state Trade Secrets act claim in a state court which are sometimes varied and how they enforce things and judges are varied uh it allows you now to bring that claim in federal court as long as you have a disclosure in your employment agreement that employees signed or whoever signed this Trade Secrets agreement with you so dtsa was a huge change it basically federalized Trade Secrets and everybody kind of thinks that's a good thing it makes businesses more confident in using Trade Secrets as a way to protect IP because they've got federal legal recourse which gives them more jurisdictional choices and federal courts are uh more uniform than state courts are across the country so uh patent eligibility we just talked about Alice versus CLS bank so software since 2014 has been harder to protect uh than it was between 1998 and 2014 so that has led people at least in the software space to perhaps file fewer patents or not even file fewer patents but to less rely on patents I still think they're filing them and they're still trying to get them granted but things that are really really valuable they're going to keep secret um and not file those and and then there's also something called the global patent Highway and harmonization of Ip laws um where other countries are adopting protection similar to dtsa and if you think about it if you have a trade secret you don't have to file anything in another country to obtain trade secret protection you just have to manage it internally with patents I've got a file in the UK I've got a file in France I've got a file in ch wherever I'm worried about infringers making and selling and using my technology or where I want to exclude them I've got to file a patent but Trade Secrets you don't um but in the software and AI space uh I think that people are leaning towards Trade Secrets again because the pace of development and how hard it is to protect those things so when you talk about that um what do what advice would you give to business businesses to protect patent and trade secrets in sort of the digital age where information is so easily shared accessed what what advice would you give to businesses so I'm not a tech person I'm I know encrypting things controlling access to systems um non-disclosure agreements digital agreements auditing and monitoring your employees access and use I know our firm for example logs every single action taken inside of our practice management software so we can trace who opened a matter and who created it and who did what to each thing who entered billing time so that monitoring that kind of stuff and having software that does that is probably the best way and making sure that it's digitally secure and then secure communication channels remember Technically when you send an email on the Internet it's bouncing through multiple uh points in cyberspace and it's not completely secure I have certain clients in the intelligence community that won't use email for important Communications they'll only use signal which is a an app uh because it's because of the end to-end encryption involved and how it passes through the internet um so so those kinds of things I think are really important great and last question um what trends do you feel are emerging in terms of how companies are using patents and trade secrets to protect protect their Innovation are you seeing anything on the on the horizon so to close this out big things hybrid strategies talked about this before Trade Secrets and patent at the same time um depending on what the product is we talked about how to do that but keeping the underlying process secret if you're going to patent the thing that goes to Market and then trade secrets for how you're doing it um increasing Reliance on trade secrets for digital assets and the fact that technology evolves so fast particularly in Ai and then enhanced digital security and IP protection so communication protocols I mean I don't want to talk about like uh a political subject but um I'm not I'm not going to get into that but enhanced data security and IP protection and you know crossb so the globe has become a place where anyone can find out anything in five minutes so if I find an I'm in the UK and I I don't know why I'm picking in the UK I'm in Australia and I see a new product in the US that's amazing and they don't have a patent in Australia and they have a granted patent in the US I mean I might be like that's great I mean you can't get a patent in Australia because that patent in the US is now prior art to whatever you file in Australia you can't own it exclusively but you can certainly make it and sell it if it's a great product so crossb IP protection is a huge Trend where our clients who in the past smaller clients maybe a you know a uson Cosmetics company is like okay we need protection in France England and um you know UK and Germany or whatever so we're seeing a lot more uh Global IP protection strategies which makes sense and then collaborations we're seeing a lot more licensing so where people can't get to Germany or France or the UK to sell their product but they want protection there they'll get protection but in order to obtain to hold trademark protection for example in a lot of countries you have to be using it so they'll enter into collaboration agreements with a local supplier or distributor so that they can meet their requirements for supplying or Distributing whatever it is uh they're selling so things like that great okay so if anyone has any specific questions for Tom now is your time to put it um in the chat um and also I just want to make uh one last reminder announcement about our small business and adventor hub you can certainly go and check out the free resources that are on the Hub um and access that uh directly from DBL lawyers.com um slub does anyone have any questions uh for Tom while we have him here looks like no okay well thank you Tom this been really informative we will be sending out um a link to this webinar um uh right after um and if you have any questions uh you can feel free to email the team thank you so much for joining and we'll see you next time