Tag Archives: trade secret

The value of corporate secrets

Forrester Consulting just put out a report that I found interesting. According to Forrester, chief information security officers (CISOs) face increasing demands from their business units, regulators, and business partners to safeguard their information assets. Security programs protect two types of data: secrets that confer long-term competitive advantage and custodial data assets that they are compelled to protect. Secrets include product plans, earnings forecasts, and trade secrets; custodial data includes customer, medical, and payment card information that becomes “toxic” when spilled or stolen. Forrester found that enterprises are overly focused on compliance and not focused enough on protecting their secrets. Forrester’s key findings are the following:

  • Secrets comprise two-thirds of the value of firms’ information portfolios.
  • Compliance, not security, drives security budgets. 
  • Firms focus on preventing accidents, but theft is where the money is.
  • The more valuable a firm’s information, the more incidents it will have.
  • CISOs do not know how effective their security controls actually are.

Download the report to report to get the details.

Interesting software IP cases of 2009

Here is my list of the most interesting software IP cases of 2009,
in chronological order:

SAFE Corporation is looking for great ideas

There are a lot of unanswered questions about source code, and we want to work with you to figure them out. We realize that currently accepted algorithms for analyzing, comparing, and measuring source code leave a lot to be desired in many cases. Also, there are a lot of techniques that have never been studied on large bodies of modern code. For example, measurement techniques developed in the 1970s were probably tested on assembly languages and older programming languages like BASIC, FORTRAN, and COBOL. Do they still hold on modern object oriented languages like Java and C#?

If you have a research idea relating to code analysis, and you can use the SAFE tools, let us know. Email Larry Melling, VP of Sales and Marketing with your ideas. If they pass our review process you’ll get free licenses to our tools, free support, and help getting your results published. This could be the beginning of a beautiful friendship.

Trade secrets vs. patents

When you have a useful invention should you file for a patent or maintain it as a trade secret? A comparison of the advantages and disadvantages of patents and trade secrets are given in the table below.

Characteristic

Patents

Trade secrets

Public or private?

Public. A patent can be kept secret for 18 months after it is filed, after which it must be published.

Private. Trade secrets must never be made publicly available.

Owner’s legal action

Easier. The government has put its stamp of approval on the invention.

Harder. The owner must prove that the invention qualifies as a trade secret and that the defendant did not independently invent it.

Cost

High. There is a significant cost to “prosecute” a patent, which includes the attorney costs, filing costs, and costs to address all patent office rejections and actions.

None.

Protection from theft

Harder. The invention is described in detail to the public.

Easier. The invention is kept secret.

Time

Limited. The government grants rights for 17 to 20 years after which anyone can produce the invention.

Unlimited. As long as the invention is kept secret.

Ownership

Restricted. The owners are only the patent holders who are on record with the patent office.

Unrestricted. If the invention is created independently, any number of inventors and owners can exist.

Software trade secrets

The precise language that legally defines a trade secret varies by jurisdiction, as do the particular types of information that are subject to trade secret protection. In the United States, different states have different trade secret laws. Most states have adopted the Uniform Trade Secrets Act, and those that don’t, have laws that only differ by subtle differences.

There are three factors that are common to all definitions; a trade secret always has these three specific characteristics:

  1. It is not generally known to the public.
  2. It confers some sort of economic benefit on its holder, where the benefit is due to the fact that it is not known to the public.
  3. The owner of the trade secret makes reasonable efforts to maintain its secrecy.

With regard to software trade secrets, algorithms that are known to the public usually cannot be trade secrets, though some jurisdictions require not only that the information be public but that it be “readily ascertainable,” meaning easily to find. For example, a sorting algorithm found in a well known textbook or in an application note on a high traffic website is, or can be, known to the public and easily ascertained.

There must be an economic benefit, so a sorting algorithm that can be easily replaced with a well-known sorting algorithm with comparable results is not a trade secret. Similarly if your company develops a program, perhaps as a side project, but does not sell it or incorporate it in any products, then it’s not a trade secret.

If the owner of the source code allows programmers to share code, or does not put notices of confidentiality in the source code, or does not take reasonable steps to insure that employees do not take the code home with them, then that source code cannot be a trade secret. This third point is a particularly important reason to take precautions to ensure your software does not go somewhere it shouldn’t. Make sure your employees, investors, and partners sign nondisclosure agreements (NDAs). Make sure you have written policies about how to handle source code. And make sure you treat all individuals and companies equally. You don’t want to be in court, defending a trade secret, and have to explain why one “trusted employee” or “trusted friend” was allowed to take home source code while others were not. That doesn’t look like “reasonable efforts to maintain secrecy.”