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Trade Secrets at Risk in Increasingly Global Economy

Trade secret thefts cost multinational companies untold amounts of money. Any company with valuable commercial information, processes or intellectual property is at risk. Global companies from all sectors continue to be hit with economic losses from trade secret theft, piracy, counterfeit products, and corruption. Foreign competitors, suppliers, joint venture partners and even customers are increasingly targeting the trade secrets of American companies. Although the greatest threat of loss of trade secrets continues to be from disgruntled or dishonest employees, relationships with suppliers, partners, and customers are also risks if a company does not take adequate precautions. For example, the globalization of trade and interconnected nature of supply chains and the rise of overseas markets as a major source of production and economic opportunity are trends that have escalated the risk and prevalence of trade secret theft. Additionally, the improvement of technological advances has made it easier for cyber thieves, who now have new ways to steal corporate data.

Many countries, such as India, Singapore, Malaysia and Hong Kong, do not provide protection for trade secrets or confidential information. Mix that with weaker rule of law in many other countries, and there are vulnerabilities for the protection of trade secrets for American companies operating in the global market. Despite these dangers, global sourcing is a necessity for some companies and the question is not whether to do business on a global scale, but how to take advantage of the global marketplace while still protecting trade secrets and intellectual property.

There are a few rays of hope. Under a recent decision by the Federal Circuit Court of Appeals, American companies may file actions in the United States International Trade Commission to prevent the importation of goods produced with the benefit of stolen trade secrets (but such actions do not prevent foreign firms from benefitting from sales in other countries outside the U.S.). But, most companies must take their own preventative measures, as this is an area where the court system is not always a viable option.

First, companies are evaluating what trade secrets they have and may have in the future and identifying the persons both inside and outside of the company who may have access to them. Then, they make plans based on the laws of the specific countries in which the trade secrets are located and persons known to have access to them reside. Additionally, companies are writing trade secret policies and educating employees about them. Second, before contracting with suppliers, partners and customers that may be given access to trade secrets, companies are placing serious emphasis on due diligence to make sure the other party is taking appropriate measures to protect the trade secret and contracts are being carefully drafted in that regard. Finally, network security measures are being enhanced so that items such as personal cell phones or computers that may access confidential information contain appropriate passwords or wiping software in the even that devices are lost or compromised.

Such tactics can help mitigate the risk of trade secret theft in global operations, but this issue should still be continually addressed with governments in order to generate new approaches to protect intellectual property rights and encourage global business collaboration.

Source: http://www.forbes.com/sites/ciocentral/2012/05/24/trade-secret-theft-businesses-need-to-beware-and-prepare/

For more information, please visit our trade secret litigation service page.

Klemchuk LLP is an Intellectual Property (IP), Technology, Internet, and Business law firm located in Dallas, TX.  The firm offers comprehensive legal services including litigation and enforcement of all forms of IP as well as registration and licensing of patents, trademarks, trade dress, and copyrights.  The firm also provides a wide range of technology, Internet, e-commerce, and business services including business planning, formation, and financing, mergers and acquisitions, business litigation, data privacy, and domain name dispute resolution.  Additional information about the IP law firm and its IP law attorneys may be found at www.klemchuk.com.

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