Remember Mr. Murphy When it Comes to Protecting Intellectual Property
One of my favorite instructors, Barry Boardman of The Fighting Fit, invariably gave this instruction following the introduction and explanation of a self-defense technique, “Remember Mr. Murphy!”
Barry’s maxim was shorthand for Murphy’s law, i.e., if anything can go wrong, it will. The point of remembering Mr. Murphy was that in a physical confrontation, you must be prepared for a “worst case scenario” regardless of how perfectly a technique is executed.
Barry’s next favorite maxim was that you have to have a “Plan B” which must be simpler than “Plan A.” In self-defense terms, Plan B probably involved an eye-gouge, a knee strike to the groin, or an introduction of your elbow to someone’s nose. Ahhh … if only things were so straightforward for the Business Leader. But alas, they aren’t.
But what the Business Leader can take away – without fear of being charged with a battery – from Barry’s maxims, is that Mr. Murphy should be factored into business critical operations.
In this regard, there is no serious dispute that innovation, “business know-how,” or intellectual property (“IP”) qualifies as a business critical operation. In fact, this past presidential election saw both candidates pinning economic growth to innovation: John McCain proposed a $300 million prize for the creator of a better car battery. Barack Obama called for spending $150 billion over the next 10 years on clean energy technologies. Following these campaign promises and in the context of an economy in free fall, BusinessWeek asked in a piece by Michael Mandel, Can America Invent Its Way Back? Regardless of the answer or your politics, the bottom line is IP will be a cornerstone of a successful company’s bottom line and provides a significant competitive and financial edge over competitors in a key market (one may recall Amazon.com’s suit against rival Barnes and Noble over Amazon’s patented 1-Click online checkout shopping patent, which prevented Barnes and Noble from using its comparable checkout feature for two Christmas seasons. Talk about the legal equivalent of a knee strike to the groin!).
So returning to Mr. Murphy, if anything can go wrong with your intellectual property, it will and probably already has. In this regard, the FBI estimates that billions of U.S. dollars are lost to theft by foreign competitors on a yearly basis. Domestically, there has been an increase in trade secret and noncompetition litigation as Business Leaders are trying to protect their companies during the economic downturn.
What is a Business Leader to do? There are number of legal strategies for protecting IP, generally falling into the category of patents, trademarks, copyright, and trade secrets. And selecting the strategy or strategies that makes the most sense for your situation should be done in consultation with a competent attorney. But regardless of the particular innovation or idea that will be protected and the strategy that is ultimately chosen for this protection, the first goal of an IP protection strategy is taking steps to protect the seeds of innovation until the conditions are suitable for exploiting that innovation. Or in a less long winded explanation, until you are prepared to take your idea or innovation to market, keep it a secret. Accordingly, the fundamental element of all IP protection strategies is that the information to be protected should start out as a business secret so it does not become known in the market place before you can exploit it. So with this in mind, the following points are taken from repeat story lines in IP/trade secret theft claims and, therefore, are definitely worth considering:
Remember Mr. Murphy: The Business Leader needs to plan for the worst, while hoping for the best when it comes to protecting IP. In this regard, assume that the equivalent of your Coca-Cola formula will be stolen or inadvertently end up in the public domain.
- Prior to this worst case scenario happening, do you know — and, more importantly, do your employees know — what IP should be protected?
- Have you documented and followed an IP protection plan with respect to that information?
- Are employees (especially new hires) educated about the importance of protecting the company’s IP?
- Are new hires confirming in writing that they have not brought any such information from their former employer (nothing like hiring a blue-chip employee that lands you in federal court)?
- Are there enforceable agreements in place providing a level of IP protection, e.g., non-compete agreements, non-disclosure agreements, licensing agreements, agreements for the assignment of inventions to the company?
- Are exit interviews being conducted to remind departing employees of their obligations as to protecting the confidentiality of IP they may have accessed to?
- Are Business Leaders safeguarding their organization’s information by securing physical files or computer files with passwords?
- Is access to IP limited or does anyone in the business organization have access to it (and does everyone need access)?
These are just some of the more important points that a Business Leader should consider in protecting the business organization’s IP.
Moving From Plan A to B: It is my experience that most companies could significantly improve upon the protection of their IP. Don’t feel bad, it happens to the best of companies. For example, it was recently reported that secret information belonging to NASA, Boeing, and Lockheed Martin had been compromised for years. See The Taking of Nasa’s Secrets, BusinessWeek. Dec. 2008 (noting in one instance, the equivalent of 30 million pages were routed from Houston’s Johnson Space Center, a/k/a Mission Control, to Taiwan. Apparently in this instance no one at Houston realized they had a problem).So the moral of that story is that even if you have an IP protection plan, it doesn’t take a rocket scientist to tell you that need to enforce it and have a Plan B if it is compromised.
The cornerstone of Plan B should be “preserving the crime scene.” In today’s technology dependent business world, this means maintaining the digital status quo. So instead of putting a departing/discharged employee’s laptop or PC back into circulation (either before or after wiping it), first confirm that business sensitive information was not downloaded, the hard drive was not already forensically wiped (a tell-tale sign that someone was trying to hide their digital tracks), or that no external storage devices were used by the departing employee to remove digital information. The same goes for confirming nothing was sent outside of the company through e-mail. Such digital evidence may tip you off that the equivalent of your Coca-Cola formula has not walked out the door into the hands of your competitor. See Lessons from Intel’s Trade-Secret Case (A low-level engineer at Intel, recently made off with information, valued by Intel at more than $1 billion, on his way to Intel’s competitor, AMD).
Failing to preserve this evidence may also undercut your company’s misappropriation claim against a competitor. For example, in a misappropriation claim filed against a former client and its newly hired manager, we argued in a summary judgment motion that the plaintiff’s lack of digital evidence spoke volumes as to the merits of Plaintiff’s claims. That is to say, if my client and its new employee had improperly accessed, downloaded, or e-mailed the plaintiff’s trade secrets, direct evidence of such acts would likely exist. No such evidence was provided and shortly after filing the summary judgment motion on this issue, the case settled on very favorable terms. Also, certain claims that may be available to employers – the federal Computer Fraud and Abuse Act – will almost always rely upon preserving digital information and computer hardware. See Adding to the Playbook.
There is much more that the Business Leader should consider in implementing a plan for protecting the business organization’s IP. But the points discussed in this post offer a good conversation starter for guiding the business organization in navigating the laws (Mr. Murphy’s or otherwise) that converge on protecting its intellectual assets.