Locking up intellectual property: Keep your secrets from walking out the door.

• Author: Brewer, F.S.
• Position: Small Business Advisor

Keep your secrets from walking out the door

In the late 1990s, three engineers employed by Novell developed the technology for a new computer clustering system. The three eventually decided to leave Novell and form their own software company called Timpanogos Research Group (TRG). TRG's product? It was the very same clustering system they had worked on at Novell, a technology TRG immediately began peddling to Novell's main competitor, Microsoft.

Novell sued in 1998, pleading unlawful disclosure, misappropriation and trafficking of company trade secrets. Novell won the case, and the judge issued an injunction against TRG that prohibited the company from using the technology the engineers had developed while at Novell.

"It's the most common way a company trade secret walks out the door," says John Morris, an attorney with the Salt Lake law firm Snell and Wilmer. "An employee moves from one company to another. And a little while later, the first company sees the second selling a product that looks suspiciously like the one it had been developing."

What helped Novell win its case were the confidentiality agreements it had its former engineers sign, forbidding them from disclosing Novell's trade secrets outside the company during and after their employment. These agreements were part of the company's larger trade secret protection plan.

"A trade secret protection plan is absolutely crucial to protecting a company's technology," says Lee Saber of Wilson Sonsini Goodrich and Rosati, the nation's biggest technology law firm, which opened an office in Salt Lake last year. "Employers usually lose their trade secrets because they're too relaxed about keeping their information inside the company."

What constitutes a trade secret, and what is involved in the plan to protect it?

A trade secret can be any information--be it a formula, program, device, technique or process--from which a company derives or could potentially derive economic value, information that gives a company an edge over its competitors. In Utah, dozens of information and high-tech companies depend on such information to survive in the market, and if a secret is leaked or stolen, a company could easily find itself without a uniquely viable product. A trade secret protection program that is written, monitored and enforced helps prevent companies from finding themselves in that position.

First and foremost in the program is to assign trade secret status to the information that warrants...