Trade secrets give tech companies a competitive edge in a rapidly evolving landscape, where success depends on the ability to innovate. The unauthorized acquisition, use, or disclosure of trade secrets can result in significant loss and disruption, making it essential for organizations to have robust safeguards in place to protect their trade secrets. Here, we explore clear steps organizations can take to manage and mitigate risks with a focus on trade secret identification and the role of employees in trade secret protection.
Mission Critical: Protecting Tech Trade Secrets
Fast-paced developments
The technology sector continues to experience huge transformation with emerging technologies and advancements in AI. Companies are investing heavily in developing capabilities, and new services and products. Rapid innovation and desire to be first to market, has caused trade secrets to become an increasingly preferred method of protection over other types of intellectual property regimes, such as applying for a patent, which can be costly and raise complex timing considerations. Trade secrets can protect algorithms, processes, datasets, customer lists, and more. The trade secrets of companies at the forefront of AI and other tech innovation are highly valuable.
Expanding threat landscape
Threat actors are leveraging tech advancements to steal vast amounts of company information through more sophisticated and efficient attacks. Heightened internet usage increases hacking risks from competitors, foreign governments and hacktivist groups.
AI developments currently require high computational power, concentrating progress in large tech companies. However, the competitor landscape is changing, with many start-ups and established companies building applications within the AI technology stack, alongside new players entering the AI frontier race. The demand for tech talent with the skills to drive innovation is at all-time high, making trade secret protection critical.
In the past few years, tech companies have also been especially susceptible to the public disclosure of confidential internal documents by employee activists motivated by non-monetary factors.
Legal remedies
Legal frameworks for protecting trade secrets have become more robust and varied across jurisdictions. Injunctive relief (to prevent use of trade secrets and reclaim them) is an essential tool in trade secret breach cases. Victims may also pursue financial remedies, such as damages.
Organizations should lay the groundwork to maximize their options in the event of breach. Penalties for trade secret theft include fines and imprisonment for criminal offences, and even economic sanctions. These penalties broaden the options available to victims, provide an avenue that avoids some of the practicalities of enforcement from a business point of view, and serve as a powerful deterrent.
“One factor making effective action against employee trade secret theft more difficult is that employees increasingly use personal devices or personal messaging apps to capture or transmit work-related information; companies’ ability to access employees’ personal devices and communications through personal messaging apps is limited.
Jonathan Isaacs, Head of China Employment Practice, Hong Kong
“As tech firms compete to attract and retain tech talent while adjusting their workforces for future business growth, employee movement has increased, making the protection of trade secrets from competitors more crucial than ever. Baker McKenzie’s international depth in handling these complex competitor trade secret disputes around the globe allow us to better advise our clients and allow them to leverage our worldwide industry experience in this field.
Continue Reading Top Strategies to Safeguard Tech Trade Secrets
Bradford Newman, Chair of North America Trade Secrets Practice, Palo Alto