Managing your patents, trade secrets, know-how, copyrights and trademarks can make the difference between fortune and failure.
Protecting valuable expertise as a trade secret can sometimes be a better choice than seeking patent protection.
Following a trade secret protection program prevents competitors from using your information, or know-how, and allows you to own it perpetually.
Steps You Can Take
- Identify Your Trade Secrets
- Establish In-House Procedures for Handling Trade Secrets
- Prepare Appropriate Employment and Confidentiality Agreements
How We Can Help
To enhance the return on your investment in trade secrets, we can help you negotiate the sale or license of your commercially marketable trade secrets under favorable terms.
Protecting your business against claims of trade secret misappropriation is an important aspect of our expertise. To protect you, we can:
- Analyze the potential for adverse claims of trade secret misappropriation
- Advise you on appropriate courses of action
- Possibly encourage you to develop parallel technology using “clean room” techniques
- Negotiate a license to use competing technology
- Use public domain technology to avoid trade secret claims
Consider the case of Hallmark’s PowerPoint Trade Secret Win Over Competitors
Court Affirms $31 Million Hallmark Trade Secrets Verdict
The Eighth Circuit Court of Appeals affirmed a $31 million jury verdict for Hallmark Cards, Inc. in a case against a private equity firm that Hallmark said misappropriated its confidential information.
The court said that the jury could properly conclude that Hallmark’s PowerPoint presentations were trade secrets.
Hallmark, the greeting card manufacturer, retained Monitor, a consulting firm, to research consumer behavior in the greeting card business. Monitor created a series of PowerPoint presentations containing its findings.
Confidentiality agreements between Hallmark and Monitor prohibited the consulting firm from sharing its findings with anyone else.
Monitor was associated with Clipper, a private equity firm. Clipper’s investment strategy was “explicitly predicated on harnessing Monitor’s network of consulting clients.”
Shortly after Hallmark hired Monitor, Clipper became interested in acquiring RPG, another greeting card company. Clipper asked several Monitor consultants to provide the research on the greeting card market that Monitor had compiled for Hallmark.
The consultants provided five of the PowerPoint presentations, and Clipper used that information to price its bid for RPG and to finance its bid.
Clipper told investors:
[T]hrough [Monitor’s] unparalleled experience in the greeting cards industry including the work they have done with Hallmark, [Clipper] can derive growth and produce high cash flow from RPG that others cannot.
After Clipper bought RPG, Hallmark became suspicious that Monitor had disclosed the proprietary research. Hallmark then initiated arbitration.
Because Monitor and Clipper had taken pains to cover their tracks, there was only limited evidence available of how they had shared information.
The arbitrator initially found that Monitor had used Hallmark’s information “carelessly, although without bad motive” and awarded Hallmark $4.1 million in damages. (This amount was the $3.2 million fee Hallmark had paid Monitor for its work, plus $900,000 to account for the risk that Hallmark’s other trade secrets might be compromised in future due to Monitor’s breach of the NDA.)
The arbitrator also ordered Monitor to hire an independent forensic investigator to search its computer logs for Hallmark’s proprietary information.
This search turned up emails containing five of the PowerPoint presentations, and this showed that Monitor had willfully provided the information to Clipper.
The court re-opened the arbitration. Hallmark and Monitor eventually settled for $16.6 million.
Hallmark then sued Clipper in federal court. A jury awarded it $21.3 million in compensatory damages and $10 million in punitive damages.
Clipper argued on appeal that the PowerPoints did not meet the Missouri definition of trade secrets, but the Eighth Circuit disagreed.
If you have questions about what types of information can be considered trade secrets, contact our office for a free initial consultation.
Leech Tishman’s Intellectual Property attorneys are dedicated to the protection and monetization of your ideas and innovations. Many of our registered patent attorneys have advanced degrees enabling them to truly understand the complex technical details of your idea. Several bring engineering expertise, others molecular biology, manufacturing and business acumen to your trademark, copyright, patent prosecution and litigation and trade secret issues, both domestic and international.
Our clients range from individual inventors, authors and owners of creative works to entrepreneurial enterprises, government entities, mid-sized corporations and Global 500 companies with operations throughout North and Central America, Europe, South Asia, the Far East and Australia.
We have serviced a vast array of industries including automotive, cosmetics, e-commerce, electronics, entertainment, fashion, food and beverage, furniture, internet, manufacturing, networks, optics, publishing, software, technology, toys, and wireless.
We are committed to providing you with strategic counseling and personal attention throughout the entire life cycle of your project.
We are proud of our longstanding relationships with local innovation communities and enjoy working with entrepreneurs and businesses who wish to protect their ideas and good names.
Please contact us today for a free consultation at (855) UR- IDEAS or (626) 796-4000.
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Photo Attribution: “Hallmark Cards logo” by Andrew Szoeke is in the Public Domain.