Overview

But unless unpatented information legally qualifies as a trade secret, there is no legal proscription against its use by anyone for any purpose. Unlike patents, copyrights and trademarks, which are issued by the United States government, no infrastructure exists for the issuance of trade secrets. It is therefore currently impossible to state with any certainty whether information that a company has developed and relies upon will withstand a future court challenge to its trade secret protected status. Where there is no protection, there is no asset.

The value of the information developed within companies is growing very rapidly, driving valuation and increasing the gap between market capitalization and book value. As information replaces capital equipment as a company's major asset, information technology has also made this information more portable and easier to steal. Increased outsourcing, strategic partnerships, the use of temporary employees, and employee mobility all contribute to the problem of information mobility. It is estimated that $40 billion in trade secret intellectual property is now stolen from United States companies every year, and it is growing rapidly.

In response, trade secret litigation is growing at greater than a 10% compounded annual rate, doubling every six to seven years. These suits are expensive, averaging $1 million in plaintiff's costs per case across the United States, and significantly greater than $1 million per case in high-technology centers. Claims for damages are usually in the $1 million to $10 million range, but one in five is for over $10 million in damages. Many of these suits are unsuccessful due to improper establishment of trade secret rights in the appropriated information. The court rules that no protected asset exists.

At the present time, the only methods for establishing trade secret rights are manual, time-consuming, and expensive. It is no surprise that this task is often not performed prior to embarking on litigation. But the identification of alleged trade secrets during litigation is often a haphazard task, conducted after the fact and based upon inadequate information and faded memories. Under these circumstances, many trade secrets cannot be identified with particularity, resulting in dismissal of the trade secret claim. Also, the courts often find that inadequate measures have been taken to protect the alleged trade secrets.

The creation of trade secret intellectual property rights has been the stumbling block to resolving this problem. Even as information technology has made the creation of trade secret information easier, the establishment of intellectual property rights in these trade secrets has resisted automation. The problem has been considered too difficult to yield to automation, by both computer professionals and the legal profession. Now, with the partnership of a nationally-known trade secret litigator and a software litigation expert, The Trade Secret Office, Inc. has formulated a breakthrough technology that resolves these issues. This patent-pending technology makes the automation of the establishment of trade secret intellectual property rights possible. For the first time, it is possible to turn corporate information into valuable and protected assets without litigation.

The technology developed by The Trade Secret Office, Inc. (the TSO) provides a mechanism to establish the existence of trade secrets similar to that of the Patent & Trademark Office (the PTO). When a patent application is filed, a patent examiner reviews the patent application in an ex parte proceeding and, applying U.S. law regarding patents, the patent examiner issues either an allowance or rejection of the patent. If the patent is allowed, an official patent certificate, with a unique registration number, is issued. All the issued patents are docketed and recorded at the PTO. The same type of process is used to issue trademark and copyright certificates.

The Trade Secret Office^® technology does the same thing for trade secrets. Applying U.S. law regarding trade secrets, the Trade Secret Examiner^® software reviews the Trade Secret Application, and electronically issues a Trade Secret Certificate^® registration if the application passes the appropriate legal tests. The Trade Secret Certificate^® registration will have a unique registration number and will be stored electronically in the Trade Secret Directory.

The Trade Secret Office^® technology for the identification and protection of trade secret rights is revolutionary and will provide immediate solutions to longstanding problems of asset valuation faced by the accounting, banking, insurance, licensing and legal professions.

The Trade Secret Office^® technology will enable the accounting profession to track and accurately account for trade secret assets. The banking industry will now have a tangible asset upon which to make loans and other banking decisions. The insurance industry will now be able to make underwriting decisions and offer insurance products because the asset value and insurance risks will be known. The licensing profession will be able to develop trade secret licenses because the property rights can now be identified with specificity.

The Trade Secret Office^® technology will also benefit the legal profession in numerous ways. The proprietary system will provide "fingerprint" evidence of ownership rights. There will be much greater certainty in the litigation process, and trade secrets law will develop much more uniformly, because trade secret rights will be identified with specificity and particularity with the issuance of Trade Secret Certificate^® registrations. The per-case cost of trade secrets litigation will be reduced because there will be much less uncertainty about the proof of the existence and ownership of trade secrets. Likewise, proof of misappropriation by the defendant will also be easier to establish. Reduction in per-case costs and easier proof will result in an increase in trade secrets litigation as companies find litigation more profitable and effective at protecting their information.

The corporate ramifications are just as dramatic. As the importance and value of information continues to increase, officers and directors will be charged with a fiduciary duty to protect the company's trade secret assets. The Trade Secret Office^® technology provides detailed management information regarding the identification of trade secrets and the security measures being taken by the company to protect trade secrets. Trade secret administrators can see the origin and history of a single trade secret or entire classifications of trade secrets sorted by internal organization and company location. For the first time, companies will have the necessary analytical tools to make accurate, strategic business decisions involving trade secret rights. Companies will also have data about trade secret rights, accessible on a real-time basis, to calculate the contribution of trade secret assets to the company's bottom line and to make accurate financial decisions relating to the cost and value of trade secret assets for taxation and accounting purposes.

The Trade Secret Office^® technology will revolutionize the law of trade secrets, making trade secrets easier to create, easier to defend in court, and more valuable to the corporations that create them. In the information economy, that's the whole ball game.