The different approaches by Patent & Trademark Firms to Trade Secrets

Trade Secrets:

Trade secrets protection is a timely topic.

Over the past few years the relevant laws and business landscape have changed dramatically.

The US Defend Trade Secrets act was enacted in 2016 – and on paper has provided a very powerful set of tools to trade secret owners - though how the act will work in practice is still an open question.

Similarly, in Europe the EU Directive on Trade Secrets is due to be implemented across all member states by June 2018.

From an accounting perspective the OECD instituted new rules for transfer pricing, base erosion and profit shifting which could significantly impact the accounting for trade secrets and increase the pressure for companies to have up-to-date trade secret protection policies and processes.

From a business perspective, with the weakening of patent rights in the US and globally, I believe that the future of innovation with rely much more heavily on trade secret protection.

The different approaches by Patent & Trademark Firms:

How should Patent & Trademark Firms react to this change, particular those Firms who claim to be full service IP Firms offering a ‘one stop shop for all your IP needs'?

This short paper outlines the different approaches being taken by Patent & Trademark Firms. It describes the four approaches that I see Firms adopting.

I have given these different approaches the following names:

· The 'No No No' approach

· The 'Let Me Introduce You to the Family' approach

· The 'Let's Work Together' approach

· The 'Yes Yes Yes' approach

Let’s now explore each approach in turn.

The 'No No No' approach:

Some Patent & Trademark Firms, particularly some boutique Firms have determined that they will not get involved in helping their clients with trade secrets.

They may feel that adding trade secrets to their service offering means that they might lack focus. They may not have the resources to expand their service offering to include trade secrets. They may lack the knowledge and experience, skills and competencies to get involved in trade secrets and trade secret asset management. They may (mistakenly in my opinion) believe that because trade secrets are not registered, that it is impossible to generate any revenue from such a service offering.

The pervasive idea that “the client is always right” makes it hard for any Patent & Trademark Firm to figure out how to say no to a client. It is okay to say no, as long as it puts the Patent & Trademark Firm ahead instead of behind.

The 'Let Me Introduce You To The Family' approach:

Some Patent & Trademark Firms when faced with trade secret questions from the clients reach out to other entities who do possess knowledge and experience, skills and competencies in the area of trade secrets and trade secret asset management, and make introductions between their clients and such entities.

Such Patent & Trademark Firms have determined that they themselves do not wish to get involved with trade secrets for whatever reason but at the same time the Firm wishes to try and help their clients resolve their trade secret challenges.

Such Patent & Trademark Firms then step away once the introduction is made.

Saying no to a client can be a difficult thing to do for any Patent & Trademark Firm. On one hand, the Firm can’t promise something that it can’t deliver, but on the other, the word “no” can feel harsh. While the Patent & Trademark Firm can’t always avoid saying no, what the Firm here in essence is doing is proposing a yes, by introducing the client to an entity who can assist the client with their trade secret issues and concerns.

The 'Let's Work Together' approach:

However, such Firms then stay engaged, participating in meetings between their clients and the trade secret entity. Such Firms are using such meetings as an opportunity to learn about trade secret asset management.

Saying no to a client has the potential to do long-term damage, and as a result the Patent & Trademark Firm must do extra work to make sure that the Firm can retain the client. This particular approach allows the Patent & Trademark Firm to continue to build a meaningful relationship with the client, focused on providing continued support by leveraging this 3rd party trade secret entity.

The 'Yes Yes Yes' approach:

Some Patent & Trademark Firms have determined to design, develop and deploy a trade secret service offering to take to their clients. Such a service offering is in parallel to their established patent and trademark offering. Such a service offering should complement rather than cannibalize their other services.

Such Firms may still reply on some 3rd parties to assist them with specific aspects of their trade secret offering but these entities do not as such interact directly with the clients of the Firm.

Such Firms have been encourage to design, develop and deploy such a trade secret service offering as they recognize that almost all of their existing clients possess trade secrets yet many of these clients face challenges properly managing such assets, at a time when trade secrets are growing in importance.

One of the best and easiest ways for any Patent & Trademark Firm to increase its revenue and profitability is to sell more to its existing clients. Many clients only know about the IP products or services they have already bought from the Firm. Simply telling its clients about this new trade secret service offering can bring in more business.

A Patent & Trademark Firm should never underestimate the importance of its existing satisfied customers. It costs less to sell to them than it does to find new business. What's more, they are loyal, they tell the Firm what it is doing right and wrong, they recommend the Firm to their friends and, compared to new customers, they are less price-sensitive.

Final thoughts:

I thought to highlight these four different approaches described above to showcase that there are indeed different options available to Patent & Trademark Firms when facing trade secret questions from their operating company clients.

Of course, a Patent & Trademark Firm may progress through the different approaches over time to end up as a ‘Yes Yes Yes’, when their skills and competences have improved.

Trade secrets have in the past been the neglected step-child of IP, and could perhaps be ignored by most Patent & Trademark Firms without too much difficulty, but that is no longer the case.

Patent & Trademark Firms now need to have an answer ready for their operating company clients.

Donal O'Connell is the Managing Director of Chawton Innovation Services Ltd. His company offers trade secret management tools to companies as well as to Legal & IP Firms and to Finance & Tax Firms to help with the management of these important assets. More details are available on request.