Overview of How to Protect Proprietary Information

Every business owner will need to consider the different ways that the proprietary information of the business can be protected.  Most everyone knows that, depending on the type of business, protection under patent, trademark or copyright law may be necessary.  But further issues involving confidentiality and trade secrets are important as well.

One of the initial considerations is whether or not to file and apply for any type of formal protection at all.  For example, obtaining a patent is very costly and time consuming.  As a result, the business owner may decide that the time and cost is not worth investing or that it is better to get to market sooner rather than later.  And because a patent is considered a public disclosure of the invention in exchange for a form of monopoly on that invention, if the invention is something that is not easily reverse engineered or otherwise not readily evident, one may instead want to keep the invention as a trade secret.  Another example where registration may not be necessary is a company manual containing proprietary procedures or formulas.  If such manual were registered under the copyright law it would be disclosed to the public by virtue of such registration.

The basic types of protection of intellectual property include patent, trademark and copyright.  Patent protection is provided under federal law and is intended generally to protect functional inventions.  Because patent is a complicated and specialized area of law, it is always best to consult with a qualified patent attorney to learn about the feasibility and desirability of patent protection.  Trademark laws protect a word, name or symbol used by a business (e.g. a logo) to identify and distinguish its services and products.  Trademarks can be registered under federal or state statutory law or can exist under common law.  Registered trademarks must first be applied for and granted before the right to such trademark can be claimed.  A common law trademark (unregistered) does not need any type of fling before the business can claim it.  Finally, copyright protects a wide range of works of authorship.  Such works can include written or recorded works that are fixed onto a medium.  There is no need to register or file for copyright protection but there are significant advantages to registeromg the work in the event that an infringement claim must be made.

Another way that a business’s proprietary rights are protected is through the “work-for-hire” doctrine.  This doctrine generally applies to employees and protects, for the benefit of the employer, a work created by an employee within the scope of such employee’s employment.  If the work is determined to not be a work for hire, the employee, and not the employer, maintains the rights of authorship.  If the person creating the work for a company is not an employee, but a contractor, for example, then the work-for-hire protection may not be available to the company and a license must be used to assign the author’s rights to the company.

Any type of intellectual property or other information that is not made public, through patent or trademark or copyright filing or registration, for example, can be considered a trade secret that is protected as proprietary to the business.  The main thing is that a trade secret must be kept confidential through active measures of the business.  Of course, a business may have a need to disclose its trade secrets to various parties from time-to-time.  For example, key employees who must deal with the subject of the trade secret will have access to the secret.  Or perhaps the business is in discussions with another business for acquisition or other business arrangements that will necessitate disclosing trade secrets.  A company may need to make certain disclosures to potential customers of its products and services.  In such situations the company must take measures to maintain the proprietary information secret and to limit to whom the secrets are disclosed.  Confidentiality and nondisclosure agreements, for employees, and others, are advisable in such situations and limiting access to the proprietary information only to those with a need to know is also advisable.  Another way to protect proprietary information is for employees to enter into an invention assignment agreement so that any inventions they create during the scope of their employment belong to the employer.  There are several other measures that a business can take to protect its proprietary information and trade secrets.

This discussion is not legal advice, a solicitation of you as a client, nor the engaging in the practice of law in any jurisdiction.  This discussion is merely for information/education and should not be relied upon for legal advice by anyone because the facts discussed may be different from your own situation.  If you need legal advice, consult a qualified attorney.  For more information please visit my website at http://www.palacioslawoffice.com.

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About Elio Palacios, Jr.

Attorney Elio Palacios, Jr., represents individuals, corporations, entrepreneurs, small businesses, startups and early stage businesses, physicians, dentists, and healthcare businesses in corporate, business and commercial transactions and litigation. He also counsels employers and individuals on visa, immigration and naturalization matters. Visit www.PalaciosLawOffice.com to learn more.
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