Intellectual Property: Protecting your company's secrets

Several years ago, a 16-year employee of Wendt Corp., which manufactures metal shredding equipment for businesses worldwide, quit.

Before leaving, however, he downloaded thousands of closely held trade secrets involving the engineering drawings and data that Wendt had developed for its business.

After the company discovered the incident, it reported the theft to the U.S. Department of Justice. In turn, the Justice Department charged and prosecuted the employee for theft of intellectual property/trade secrets, under the Economic Espionage Act.

That same summer, the Justice Department also charged two former Boeing Co. managers with conspiring to steal information from Lockheed Martin involving a multibillion-dollar rocket program for the United States military. According to the criminal complaint, one of Boeing's managers lured a Lockheed Martin engineer to work at Boeing and, in the process, bring proprietary Lockheed documents with him.

After an investigation by the military, the employees' work spaces at Boeing revealed many Lockheed Martin documents, some of which were labeled “Lockheed Martin proprietary competition sensitive,” and other documents containing manufacturing costs of Lockheed Martin's bid.

The employees were charged with conspiracy, theft of trade secrets and violation of the Procurement Integrity Act. (Boeing fired the two employees, and their lawsuits against Boeing for wrongful termination were dismissed.)

Aside from these - after the fact - federal protections, how can an employer protect its intellectual property and trade secrets?

Intellectual property generally refers to the entire bundle of rights conferred by each of the following fields of law:

l Patent

l Copyright

l Trade secret

l Trademark and unfair competition law.

Intellectual property is best thought of as creations of the mind that are given the legal rights and protections often associated with real and personal property.

Trade secrets are valuable business information that is not generally known to the public and is subject to reasonable efforts to preserve its confidentiality. Because a trade secret exists only so long as it remains a secret, an employer or inventor in Iowa must take particular precautions to preserve all information relating to the trade secret or invention.

Those who are trying to steal your information may not merely hire an ex-employee and pump them for information or your customer list. A competitor might use strategies such as “competitive intelligence” researchers, or even spies, or a foreign government trying to pry into your proprietary information.

Sound paranoid? Maybe.

But in this area a little paranoia is helpful. Today's work world is much more of a knowledge economy in which technology and information are the main products.

Accordingly, theft of your trade secrets could even occur innocently. Ex-employees that keep in touch with and meet your current employees for lunch and gossip may learn about pending work projects.

Your sales department could be bragging about your upcoming products at a trade show. Your HR department over-reports technical requirements in a job description posted on line.

An ounce of prevention is worth a pound of cure. Once your intellectual property is stolen, getting it back is expensive and often impossible.

Now the good news: Although this will vary based depending on your industry, extreme or expensive protection procedures are generally not required.

In a nutshell, all an Iowa employer must do is limit your confidential information to those on a need-to-know basis and take several protective measures. In a future edition, this column will provide tips in protecting your valuable intellectual-property rights concerning trade secrets.