Are the Crown Jewels Really Safe? Considerations for Building a Strong Trade Secret Portfolio in Today's Market

• Author: Mareesa A. Frederick - Clara N. Jiménez
• Position: Mareesa A. Frederick is a partner with Finnegan, Henderson, Farabow, Garrett & Dunner LLP, with extensive experience on client counseling, opinion work, and intellectual property litigation on a broad number of technologies. She is a former investigative attorney at the International Trade Commission. She can be reached at mareesa.frederick...
• Pages: 16-21

Published in Landslide® magazine, Volume 9, Number 4 , a publication of the ABA Section of Intellectual Property Law (ABA-IPL), ©2017 by the American Bar Association. Reproduced with permission. All rights reserved. This

information or any portion thereof may not be copied or disseminated in any form or by any means or stored in an electronic database or retrieval system without the express written consent of the American Bar Association.

In the past year, the passage of the Defend Trade Secrets

Act in the United States and the Trade Secrets Directive

in the European Union, coupled with the perceived uncer-

tainty surrounding patent procurement and enforcement, have

increased the attractiveness of trade secrets as tools to protect

intellectual property. Yet, at the same time, increased aware-

ness and sensitivity to cybersecurity risks have also prompted

trade secret owners and their counsel to revisit the way their

most valuable intangible assets—almost all kept in digi-

tal format now—are protected from the physical and virtual

threats faced on a daily basis across the globe. With this in

mind, it should come as no surprise that determining the ade-

quate amount and type of resources to dedicate to trade secret

protection has become a critical focus of many companies.

That determination depends heavily on the level of risk

that a company can tolerate. In assessing the risk, understand-

ing what a trade secret is (and what it is not) is a necessary

rst step in determining the amount of resources a company

should dedicate to trade secret protection. While the actual

denition of what constitutes a trade secret may vary by juris-

diction, the term generally refers to information that derives

independent economic value—actual or potential—from not

being generally known to other persons or being ascertain-

able by proper means by other persons, and is the subject of

efforts that are reasonable under the circumstances to main-

tain its secrecy.1 This denition begs the question—what are

“reasonable efforts” to maintain secrecy?

The answer has become somewhat of a moving target in

light of new technologies for disseminating information to

larger audiences and the ability to make information acces-

sible from remote locations.2 Proof of “reasonable efforts,”

however, is a frequent focal point in most trade secret mis-

appropriation cases and one that trade secret owners are

expected to address readily from the outset of the case.3

Courts have denied trade secret protection where the trade

secret owner failed to take reasonable precautions to preserve

secrecy.4 Failing to have written condentiality agreements

or nondisclosure agreements with key employees (or third

parties), forgetting to mark information condential or pro-

prietary, or neglecting to remind employees that certain

information is condential could lead a court to readily grant

summary judgment in favor of the alleged misappropriating

party.5 Thus, implementing appropriate measures to safeguard

trade secrets is not merely a good business practice to main-

tain a competitive edge; it is a critical requirement to prevail

in a trade secret misappropriation action.

This article explores some of the steps that trade secret

owners should consider to ensure their trade secrets are ade-

quately protected in today’s market in an era of digitalization,

global markets, and mobile workers.

Step 1: Enlist the Right People

Protection of trade secrets must be done in an organized,

methodical fashion. Thus, having decided that protecting

trade secrets is important, the company must develop a trade

secret protection program. An effective program will take

Are the

Crown Jewels

Really Safe?

Considerations for Building a Strong

Trade Secret Portfolio in Today’s Market

By Mareesa A. Frederick and Clara N. Jiménez

Mareesa A. Frederick is a partner with Finnegan, Henderson, Farabow, Garrett & Dunner LLP, with extensive experience on client

counseling, opinion work, and intellectual property litigation on a broad number of technologies. She is a former investigative attorney at the

International Trade Commission. She can be reached at mareesa.frederick@nnegan.com. Clara N. Jiménez is an associate with Finnegan

in Washington, D.C . She specializes in counseling, patent prosecution, and intellectual property litigation in the chemical industry. She can be

reached at clara.jimenez@nnegan.com