Michael D. Moberly October 11, 2023
For every trade secret claimed by a business, we are obliged to recognize, starts life in – as various forms, contexts, applications, combinations, collaborations, and/or collections, of specific…
- intellectual capital (knowledge, knowhow).
- structural capital (unique processes, procedures), and
- relationship capital (associations, connections, and/or alliances)
which has been proprietarily developed, held, and introduced at the right time, in the right way, at the right place, at the right cost.
This perspective, which I still hold and practice, emerges from…
- my longstanding research, work, writing, engagements, and university teaching on matters related to lucratively-competitively-proprietarily developing, applying, safeguarding, and mitigating risk to business things intangible.
- a ruling by the USDC Northern District of California, in Form-Factor, Inc. v. Micro-Probe, Inc., (No. C 10-3095 PJH) wherein the court delineated ‘evidence necessary to support an allegation of trade secret theft’.
I encourage business leaders, management teams, boards, investors information asset management, safeguards, and risk mitigation specialists, IP counsel, and information asset management, safeguards, and risk mitigation specialists to frame their obligations to examine all agreements, policies, procedures, practices, and transactions in which ‘proprietary – mission essential’ intangible assets and/or trade secrets will, inevitably, be in play and likely at some (reputational) risk to being undermined, misappropriated, and/or otherwise, devalued.
In Form-Factor, Inc. v. Micro-Probe, Inc., the court noted that any party seeking to recover under California’s Uniform Trade Secret Act, for misappropriation, (in this instance, Form-Factor), must…
- demonstrate the existence of a protectable trade secret.
- describe the subject matter of each trade secret.
- distinguish – designate each as a trade secret.
- describe where-how-why each exists as a trade secret and is applied.
- explain the benefits of each (trade secret) being held as a trade secret.
- establish that each trade secret holds – contributes to economic value.
- demonstrate how each trade secret is consistently treated, regarded, and safeguarded as a trade secret.
- demonstrate signed – current – relevant restrictive covenants, including non-competes, confidentiality/non-disclosures, or non-solicitation agreements.
The above should not be construed as (a.) disclosing trade secrets, or (b.) deterring trade secret holders from pursuing trade secrecy claims, rather as relevant – supporting evidence if-when a challenge materialize versus a ‘mere presumption’.
Specifically, businesses which claim trade secret reliance – dependence, ala R&D, etc., are obliged to establish specific connections between (a.) the valuation of their trade secrets, and (b.) contested – challenged trade secrets in terms of origin and/or misappropriation, theft, improper acquisition, and/or economic espionage, etc.
Respecting the growth of intellectual, structural, and relationship capital (intangible asset) intensive, dependent, and reliant businesses, wherein 80+/-% of valuation, sources of revenue, competitiveness, and ‘building blocks’ for growth and sustainability reside in intangible assets,
Leaders, management teams, boards, and investors in businesses, across sectors, irrespective of stage, sales, products, services, or standing are obliged to consider these ‘requisites of trade secrecy’ relevant.
The ‘Business Intangible Asset Blog’ is experientially researched, written, and produced by Michael D. Moberly to provide readers (business leaders, management teams, boards, and investors) with reliable perspectives and nuanced insights to distinguish, value, and safeguard particular – business things intangible designated as mission essential.