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Brad VanAuken Brand Management Brand Protection

Branding And Trade Secrets

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Trade secrets are an often overlooked form of brand protection.  Trade secrets are simply information, techniques, procedures, codes, patterns, plans, processes, formula, prototypes, etc., that are developed confidentially and that are kept confidential.  This even includes customer lists and instructional methods.  The Coca-Cola syrup formulation is an example of a trade secret. (The added value of this approach from a brand perspective is that it often creates a mystique that has its own cache.)

Sometimes it is better to keep something a trade secret than to patent it.  In some industries, companies routinely watch for competitors' new patents and then try to design around them.  Non-compete and nondisclosure agreements are important, but not infallible, in protecting trade secrets.  The Economic Espionage Act of 1996 protects trade secrets against theft.  Information is legally considered to be a trade secret if an organization can show that it took reasonable measure to keep the information secret and that there is economic value to the information not being made public.

A business can protect its trade secrets in the following ways:

•Share confidential information only on a “need to know” basis.
•Limit the number of employees exposed to trade secrets. Always inform employees exposed to those trade secrets that (a) they are being exposed to secrets and (b) the importance of keeping the secrets secret.
•Mark all confidential documents “confidential – no copies allowed.”   For added security, number each copy and keep a log of which numbered copy was given to which employee.
•Use access logs for trade secrets.
•Require anyone (employees, suppliers, customers, consultants and other business partners) who might come in contact with trade secrets to sign confidentiality and non-disclosure agreements before the relationship begins.

•In consultant contracts, be clear about what intellectual property the consultant is to assign to your company during his or her assignment.
•Require employees to sign non-compete agreements, prohibiting them from working for competitors for a period of time after their employment with you.  If this is done within an employment contract, present this to the prospective employee well before he or she commences his or her employment with you so that the “consideration” is employment.
•Employment contracts can also prohibit moonlighting or consulting for companies in similar lines of business while employed at your company.  It can also prohibit moonlighting while on company time or using company equipment (including computers).
•Educate employees about the treatment of proprietary information during and after their employment with you.
•Carefully orchestrate employee terminations so that the employee is not able to take proprietary information with him or her.
•Schedule exit interviews with departing employees.  Use those interviews to remind departing employees of their confidentiality obligations.
•Develop, communicate, and enforce security processes – from building security to paper document and computer security.  Secure confidential information, with electronic and mechanical locks.  (Passwords or codes should be changed regularly.)
•Never store or allow transfer of confidential information outside of your company's firewall.
•Make extensive use of shredders.
•Be especially careful of contract workers.  Provide them with a company computer so they don't have to use their own on the job.
•Conduct trade secret audits.
•Most importantly, identify all trade secrets and develop formal protection plans for those secrets.

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  1. Anonymous - February 13, 2007

    Branding Strategy Insider: Branding and Trade Secrets

    Trade secrets are an often overlooked form of brand protection.

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