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Saturday, January 26, 2013

Protecting your trade

Tecmo Super Bowl is the best video game of all time.  Admittedly, I do not consider myself a “gamer” or an otherwise great connoisseur of electronic games and gadgets.  It was released in 1991 and was the first football video game to use complete NFL players and NFL teams simultaneously.   It was the perfect Christmas gift for my football obsessed nine-year-old son.  Unlike the video games of today, which require mastery of sophisticated controllers with myriad buttons and triggers, Tecmo Bowl’s scaled down features and limited options make it incredibly easy to play. My son had no problem picking up the slightly used original NES controller and winning football games.  That is, of course, until he played me. 

These battles often end in tears and destruction of property, subjecting my nine-year-old to discipline from the commissioner (mom – who does not always share my enthusiasm for the greatest game of all time and its effect on my son).  Although the game is simple to play (which is part of its charm) there are certain trade secrets I acquired from having honed my skills in my youth.  These methods are valuable to me in keeping the upper hand with my son.

In Idaho a trade secret is defined as, “information, including a formula, pattern, compilation, program, computer program, device, method, technique, or process that:  (a) Derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by, other persons who can obtain economic value from its disclosure and use; and (b) Is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.”  Idaho Code § 48-801(5).  Translating the legalese, a trade secret is any valuable information or knowledge that someone makes efforts to keep secret.

The information you want to protect could be a recipe, a customer list, a business plan, or a method of doing business.  Many employers spend extensive time, energy, and resources perfecting the information and end up giving it away for free when employees go elsewhere.  An employer may be under the mistaken belief that because the process is simple it is not protectable.  Anybody can play Tecmo Super Bowl.  However, playing Tecmo Super Bowl at a championship level requires certain methods.  The value comes from how these methods are employed and not the physical act of employing them. 

Take a business that has repeat customers, for example.  Over time the business learns the customer’s buying preferences and practices.  Anybody can locate the customer, but not anybody knows exactly what the customer wants, when the customer wants it, how the customer wants it, or what would make the customer more likely to want it.  This is protectable information.  However, no matter how valuable this information is, if the business owner is doing nothing to protect it, it is not a trade secret.  Nothing prevents an employee from learning the information and then using it to his or her advantage to leave and compete.  If I tell my son all of my methods, it will not be long before he is trouncing me due to his younger reflexes, smaller hands, and better vision.

Consultation with a good business attorney will allow a business owner to protect his or her valuable information.  This may be accomplished with a combination of various agreements between the business and its employees and consultation on what efforts the business owner should make to adequately protect the information.  A business owner’s failure to protect his or her business information may result in “game over” for the business.  Unlike the virtual world, failure in real life has much longer lasting negative effects, and unfortunately, these negative effects cannot be overcome by merely hitting the reset button.

Jeff Brunson is an attorney and shareholder at Beard St. Clair Gaffney PA.  The opinions contained are his own and nothing written should be construed as legal advice.  Jeff's practice involves litigation, business disputes, and estate disputes.  He can be reached at his Rexburg office, 520 First American Circle, (208) 359-5883, jeff@beardstclair.com or follow him on Twitter @jeffbrunson.

Staff at 3:31 PM
Business Law
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