Because it's easy for things to slip through the cracks, you should conduct regular audits of the intellectual property (IP) belonging to your business.

In an IP audit, you determine whether your business does in fact own the IP you believe it owns and whether you are properly protecting your IP rights, as well as correct any problems you find.

Without the benefit of such audits, you may find that there is a problem that it is too late to correct. For instance, you may find that the independent contractors hired by your company have not signed over intellectual property rights to work they created, and that they are free to compete against you using work you paid them to create. Perhaps you will discover that someone is infringing your copyrighted work but, because you did not register the copyright in that work, you have no opportunity to have the attorneys' fees spent on a lawsuit against the infringer reimbursed by that infringer. Or you may find that it is too late to file for a patent on a process you developed.

If you have any questions about how to conduct an IP audit, how to protect your IP rights or how to correct any problems you've found, please feel free to contact us.

November 6, 2009

Protecting Your Company's Trade Secrets

Most businesses have formulas, know-how, customer lists, supplier lists and other data which the business considers to be the foundation of its worth. These items may be protectable as trade secrets, but many businesses fail to properly protect them, resulting in loss of protection of these valuable assets.

To qualify as a trade secret, information must:

(a) derive independent economic value by virtue of the fact that it is not generally known to, or ascertainable by, others who could obtain economic value from its use or disclosure, and,

(b) be the subject of efforts that are reasonable under the circumstances to maintain its secrecy.

To protect your rights in these valuable assets, you will first need to identify all of your company's trade secrets. Then, the information should be labeled as trade secret and kept in a safe place.

If the information is in a tangible form, it should be kept in a locked room or file cabinet, accessible only to employees who actually need access to that information in order to properly perform their jobs. If the information is kept in an electronic format, it should, at a minimum, be password protected, though you should consider encrypting the information as well. You should also prohibit employees from using flash drives, unless such use is required for the person's job, since these portable drives make downloading confidential information quick and easy.

Employees, independent contractors and any others with access to the information should be required to sign nondisclosure agreements (often called "NDAs") before being granted access to the trade secret information.

You should also conduct exit interviews with employees, reminding them of their legal obligations with respect to your company's trade secrets and other confidential information. Ask them if they have any company materials or information and instruct them to immediately return any such materials or information.

A recent survey revealed that almost 60% of the people interviewed who had lost their jobs took confidential company information with them. Most of them felt that their companies were lax in protecting against this type of theft.

Please let us know if you are interested in obtaining more information about how to protect your trade secrets.

October 30 , 2009

New FTC Guidelines for Advertisers

Last week we discussed new Federal Trade Commission (FTC) guidelines
requiring those who write online product reviews to disclose the receipt
of free merchandise or payment for those reviews. The guidelines also
affect companies who send those online reviewers free products or
payments. These companies can, under some circumstances, be held liable for false or unsubstantiated statements made through endorsements or failing to disclose any "material connection" between themselves and their endorsers.

Not every blogger receiving free products will be considered an endorser,
but if a blogger regularly receives sample products from manufacturers for
review, it is likely that he or she will be deemed an endorser.

Once the new guidelines take effect on December 1st, advertisers will have
an obligation to police endorsers and to advise them of their obligations
under the guidelines. It will, therefore, be important for any advertiser
using third party marketing to prepare its own guidelines to be provided
to bloggers and other third parties endorsing the advertiser's products or
services. These guidelines need to cover the obligations of the blogger
(or other endorser) under the FTC guidelines to make only truthful and
substantiated claims about the advertiser's product or service, and to
clearly disclose any "material connection" (e.g., free product, payments, employment of the reviewer by the advertiser).

Advertisers using third party marketing should also create programs for
monitoring the statements made by these endorsers. In addition, all
companies would be wise to implement internal policies prohibiting their
employees from writing reviews about their own products or services.

Under the new guidelines, celebrity endorsers and the advertisers who hire
them can be held liable for false or unsubstantiated claims that the
endorsers make. Their statements now must reflect their own "honest
opinions, findings, beliefs, or experience." This means that the
celebrity can no longer simply read from a script, but will need to have
actually used the product or service being endorsed. Also, the celebrity
must make only statements that he or she found, in his or her own
experience, to be accurate. Celebrities will also be required to disclose
their relationships with advertisers when making endorsements outside the
context of traditional advertisements. That is, if a celebrity promotes a
product on a social networking site such as Facebook or Twitter, or on a
talk show, he or she will need to disclose any payment or other
arrangement relating to that product or service.

Further, if a company sponsors a research organization to study a product,
and the study is then used to promote the product in an ad, the ad must
disclose the connection between the advertiser and the research organization.

The new guidelines also require that advertisements featuring a consumer
and conveying an experience with a product or service as "typical" when
that is not the case, will be required to clearly disclose what consumers
should generally expect. Earlier guidelines allowed advertisers to
describe the consumer's experience as long as they included a "results not
typical" disclaimer.

Please let us know if you have any questions about the new guidelines or
need assistance drafting guidelines and policies to comply with the new
guidelines.