Preventing the Trade Secrets Kiss-and-Tell

Collaborations are an important part of your company’s strategy for acquiring new technology, generating revenue streams, and risk sharing. Collaborations are more complicated than vendor-and-supplier or service-provider-and-client relationships, where the roles, responsibilities, and rights are typically well established.

Virtually all successful collaborations require sharing of confidential information, including trade secrets, with another company. And the collaborations themselves generate new information and intellectual property, including trade secrets. Yet, collaborations are entered into by separate entities with separate agendas, sometimes even between competitors—and collaborations end.

How do you take advantage of the benefits of collaboration, while protecting your company’s trade secrets during and after the business relationship? The key is to address some of the most common issues on the front end to minimize disputes down the road and keep the collaborators focused on the business objectives of the relationship.

Strategy 1: As Your Relationship Evolves, So Should Your Agreement

Once the proverbial cat is out of the bag, the only limits on your collaboration partner’s disclosure and use of that confidential information are the restraints imposed by contract. Thus, the purpose of a disclosure at any given moment in a collaborative relationship should correlate to the scope of the disclosure of confidential or trade secret information, as well as the scope of the license to the receiving party to disclose and use that trade secret information.

For example, non-disclosure agreements (NDAs) are important to protect IP during exploratory discussions, but the information is often only needed insofar as permitting the potential partners to assess the feasibility and desirability of moving forward is concerned. Therefore, confidential information need only be shared with individuals involved in making a partnering decision, and only for the limited purpose of assessing feasibility.

If the relationship continues beyond this early stage, progress to another agreement—such as one directed to a feasibility study, material transfer or full-scale collaboration, or partnering agreement—and expand the disclosure and use provisions, as well as the scope of information exchange as necessary to fulfill the goal of the relationship.

Strategy 2: Clearly Define and Identify Trade Secrets