Trade secret theft: Beware of new age pickpockets

12 August 2010
A former engineer of General Motors (GM) was recently charged with conspiring to steal trade secrets about GM's hybrid technology.

Apparently, the engineer (and her husband) had intented to sell this information to one of GM’s competitors in China. This case highlights the problem that exists with trade secret theft around the world. 

The GM case is not the first instance where charges have been laid for industrial espionage and misuse of confidential information involving cleantech.  A few years back, Tesla Motors and Fisker Automotive ended up in a dispute over trade secret information.

A common misconception held by company owners is that it won’t happen to their company. This misconception seems to be based on the idea that companies will not be spied on unless they are holding something like the ‘Colonel’s secret recipe’ or the formula for Coca-Cola. Sure, these are incredibly valuable pieces of information but, for smaller companies that need every competitive advantage they can get, being lax about trade secrets can be lethal.  Consider what your competitors could do with your client lists, financial data, machine set-up specifications, treatment processes, embedded software code, and so on.

Economic and industrial espionage is most commonly associated with technology-focused industries but national rugby teams may also be targets.  Industries most at risk include computer software and hardware, biotechnology, aerospace, telecommunications, transportation and engine technology, automobiles, machine tools, energy and cleantech.

Industrial espionage may not just happen at corporate level but also at government level. Especially in high growth technologies such as cleantech where getting a marketing advantage can translate into billions of dollars and an economic edge for cash-strapped governments.

Trade secrets are not protected by intellectual property law the same way that trademarks or patents are. Protection for trade secrets is achieved by conduct. Conceptually, a trade secret is more like the the ‘cone of silence’ you place around the information inside the cone rather than the information itself.  If someone arrives at the same information as yours, and does so independently, you can not stop them using that information. But if they breach the cone of silence, then you may be able to prevent misuse of the information.   A cone of silence is always vulnerable to being opened—by both external and internal parties.

There are also other forms of protection to consider.   Before you take the next step, ask yourself some important questions.

  • Can your technology be reverse engineered?
  • How important is the development of your technology?
  • How big is the market for your technology?
  • What were your R&D costs?
  • How likely is independent development?
  • How detrimental could it be if others got exclusive rights?
  • When is the value of the invention greatest?
  • How strong might patent protection be?
  • Would disclosure in a patent specification be detrimental?
  • What is your budget for protection?
  • Can information be controlled in the organisation?
  • Will a patent help you to attract investment or funding?
  • Is a defensive publication an option?
A qualified patent attorney can talk you through your options.

Anton specialises in all aspects of patent and related intellectual property law in particular for mechanical and manufacturing patents.  Anton is also a copyright and designs specialist.

  • IPNews