By Emma Brunel
Specifying that an email is “confidential” is not enough to make sure its content will stay undisclosed
With the increasing rate at which online communication grows and how stringent disclosure requirements are being imposed on companies, it can get hard for individuals to know how to protect sensitive content. Companies may spend hours collecting information, creating content, or elaborating plans to be more competitive than others. As a result, companies may create economically valuable content that they likely do not want competitors to benefit from. So, the following questions may ensue: How does one protect its information from disclosure? Is claiming information confidential enough for it to be protected? Or are there other steps that a company should take to protect its valuable information? What boundaries do they have to set when sharing sensitive information to a certain number of people only? In this article, we go over certain steps a company must take to protect its trade secrets.
IP law protects areas ranging from patent to trade secrets and secures owner’s intellectual property in a wide variety of subjects. A trade secret is considered information economically valuable if it is undisclosed and that the owner intends to keep it secret. It suggests that a creator who does not use reasonable efforts to keep the information secret could lose the benefit of protection. Some may think that individuals can merely enclose their secrets in a sealed envelope to keep them confidential, but it gets a bit more complicated than that.
In 2020, different court decisions helped shed light on the kind of efforts required to allow individuals to protect their trade secrets. In Amgen v California Correctional, a pharmaceutical manufacturer emailed a notice of price increase of their drugs to registered purchasers, as required by the Health and Safety Code. The email was sent to 170 purchasers and contained, in both its subject line and at the beginning of its content, the mention “confidential.” A couple weeks after the email was sent, the pharmaceutical company received notice that one of the purchasers wanted to share the information with a news reporter. The drug manufacturer directly sought an injunctive relief against the purchaser to protect information about its price change. The court, however, denied Amgen’s request. First, the court found that Amgen did not use reasonable efforts to protect its information since it gave no indication about who had access to the information to the purchasers. Without this information, purchasers were in a better position to argue that they did not know with whom they could share the new price range. Second, the court held that Amgen failed to show how its alleged trade secret retained its value when it was shared to 170 purchasers. The decision in Amgen v California Correctional showed the importance for companies to set clear boundaries when sharing sensitive information to a certain number of people.
Another 2020 case elaborated on proper steps to take to protect valuable information, but this time using a recently infamous platform: Zoom. In Smash Franchise Partners v. Kanda, a new mobile trash compaction company was sued for misappropriation of trade secrets because it used information shared by another company that conducted similar activities. The latter, called Smash Franchise Partners, was also selling franchises to entrepreneurs and sharing online content to guide whoever was interested. The defendants used that information virtually shared and accessed an informational Zoom call organized by the plaintiffs about their franchises. The court ruled that plaintiffs had not taken reasonable steps to keep their information secret. They regularly held informational Zoom meetings, which were open to anyone in possession of a one-time meeting code, and they did not require a password or to wait for acceptance in a room.
While this decision might raise fear and discourage some creators, in a more recent case, the court showed that nothing heroic was demanded. In Ultimate Timing v Simms, the court drew a distinguishing line between simply mentioning the information as confidential and actively emailing a request to treat the information as such. In this case, sending a request was enough to show a reasonable attempt at keeping the information secret, which would preserve its economic value.
In comparison to other types of intellectual property, trade secrets stay valuable strictly by being kept confidential. It is therefore in companies’ utmost interest to make it clear that the information they are sharing is of secretive value. Companies could create automated emails that do not disclose information before a recipient has approved to keep it secret. This would be a safe and costless way for companies to protect their trade secrets so that they can retain the economic value intrinsic to their intellectual property.
https://www.leagle.com/decision/indeco20200813041
https://www.leagle.com/decision/incaco20200409015
https://www.uspto.gov/ip-policy/trade-secret-policy
https://www.linkedin.com/pulse/trade-secrets-its-all-conversations-dave-stevens/