In any type of business or sector, it is imperative that a company take certain steps to protect its intellectual property. Theft and unauthorized use of a company’s IP can significantly damage a company’s brand and cause a substantial loss in revenue. As such, a company should outline a plan to protect itself from harm.
Protecting intellectual property
Intellectual property includes trademarks, copyrights, patents and trade secrets. Intellectual property can take many different forms, including software code, slogans, images, song, lyrics, and customer lists. Owning and protecting these forms is a key element to the success of a business.
Planning is key to ensure that a company’s intellectual property is properly protected. Planning includes registration, tax planning and compliance, entity selection and formation, drafting IP agreements, and monitoring unauthorized IP use. An experienced intellectual property attorney can help guide a business through this process.
Overview of trade secrets
One type of intellectual property that a company needs to protect is a trade secret. Trade secrets are defined as information (such as a formula, compilation, method, or device) that derives independent economic value from not being generally known to or readily ascertainable through appropriate means by other persons who might obtain economic value from its disclosure or use.
Under California law, actual or threatened misappropriation of trade secrets may be enjoined and a plaintiff may sue for damages caused by the misappropriation. Examples of trade secrets include customer lists, marketing strategies, recipes, computer algorithms, or manufacturing techniques.
Customer and contact lists as trade secrets
Companies often claim that customers and contact lists are trade secrets. Companies claim that these lists are proprietary lists that companies expend significant time and money to develop. The determination of whether a certain list is a trade secret is often a fact-intensive inquiry, which may necessitate expensive litigation efforts. A recent example of this issue is being litigated in the case of Cellular Accessories for Less, Inc. v. Trinitas, LLC.
LinkedIn contacts as trade secrets
In this case, a sales agent for a cell phone company retained a company’s contacts in his LinkedIn social networking account while employed. The employee executed a confidentiality agreement not to disclose the company’s proprietary information. The sales agent was eventually terminated and the sales agent started a competing business.
The cell phone company sued the former employee to prevent him from using his LinkedIn contacts in his new business. The company claimed these contacts were trade secrets. The former employee, however, claimed that his LinkedIn contacts could have been viewable to anyone. On the other hand, the company claimed that the contacts were not necessarily visible to the public because the user controls the degree to which the information is shared.
On summary judgment, the court declined to rule on whether the LinkedIn contacts were trade secrets because there was a genuine issue of material fact regarding whether the former employee’s contacts were viewable to the public.
This case shows that a California court may consider that LinkedIn contacts are trade secrets. The issue will depend on to what extent the information is known to the public. A company should be careful to the extent that it encourages its employees to use customer and contact lists outside of the direct control of the company. If a company fails to take reasonable efforts to maintain the secrecy of a list, then a court may hold that the information is not a trade secret. This can hurt a company’s competitive advantage in the marketplace.
Contact an intellectual property attorney
If you have any questions regarding what your business needs to do to protect its trade secrets or its other intellectual property rights, contact the law firm of Janathan L. Allen, APC. Our experienced California intellectual property attorneys have substantial experience advising businesses in the United States, Europe, and Asia on how to manage and to protect intellectual property rights. Contact us today for a free case consultation.
