How can a business protect its critical information when an employee goes to work for a competitor? Many employers simply assume that if it deems information “confidential,” the law automatically protects it when an employee leaves and goes to work for a competitor. That’s not necessarily the case. In order to protect its confidential information, such as intellectual property, information, systems, customer lists, pricing information and the like, an employer must take affirmative steps long before the rogue employee leaves to ensure that its information is protected. Such information can be protected from disclosure both under Illinois common law and pursuant to the Illinois Trade Secrets Act (“ITSA”).
An employer’s trade secrets, such as its customer lists, are a protectable interest. An employer has a clear and ascertainable right in protecting its trade secrets. To show information is a trade secret under ITSA, an employer must meet two threshold requirements. First, it must show the information was sufficiently secret to provide the employer with a competitive advantage. Second, the employer must show that it took affirmative measures to stop others from acquiring or using the information. Examples of steps employers typically take to keep information confidential include keeping the information under lock and key, limiting computer access, requiring confidentiality agreements, and other employer efforts to advise employees that the information imparted to them must be kept secret. Establishing this second prong is where employers typically fall short.
Where employers have invested substantial time, money, and effort to obtain a secret advantage, the secret should be protected from an employee who obtains it through improper means. Although employees may take general knowledge or information with them that they developed during their employment, they may not take confidential information, including trade secrets. The taking does not have to be a physical taking by actually copying the names. A trade secret can be misappropriated by physical copying or by memorization. Using memorization to rebuild a trade secret does not transform the trade secret from confidential information into non-confidential information. A trade secret can also be obtained through reverse engineering
Whether and how an employer keeps information secret is one of the most important factors when determining whether information is a trade secret. When information is generally known or understood in an industry, even if it is unknown to the public at large, it does not constitute a trade secret. If a business fully discloses information throughout an industry through a catalog or other literature, it is not considered a trade secret. If the information can be readily duplicated without considerable time, effort, or expense, it is not considered a trade secret. If a customer list, for example, is generally available to all employees and the employees are not required to sign confidentiality agreements, the list is likely not considered a trade secret.
By far the most litigation in this area is over whether an employer’s customer list is a confidential trade secret. Whether customer lists constitute trade secrets largely depends on the facts of each case. Customer lists and other customer information can be considered a protectable trade secret if the information has been developed by the employer over a number of years at great expense and kept under tight security. However, the same type of information is not protectable where it has not been treated as confidential and secret by the employer, was generally available to other employees and known by persons in the trade, could be easily duplicated by reference to telephone directories or industry publications, and where the customers on such lists did business with more than one company or otherwise changed businesses frequently so that their identities were known to the employer’s competitors.
Illinois courts have found that customer lists do not constitute protectable trade secrets where, for example: a) the particular industry was competitive and customers often dealt with multiple companies; b) the employer had failed to produce sufficient evidence to demonstrate that the customer list was subject to reasonable efforts to protect its secrecy; and c) sufficient efforts had not been taken to maintain the list’s secrecy. To be a protectable trade secret, the employer must demonstrate the information it seeks to protect was sufficiently secret to provide it with a competitive advantage. However, for steps to be deemed sufficient to protect a trade secret, extensive steps must be taken to protect both the electronic and hard copies of the purported trade secret.
For more information regarding the protection of a company’s confidential information, please contact:
(312) 368-0100 or email@example.com
If you are a typical person today, you’ve likely used at least three different apps before 9 am. You get up in the morning and click on your weather app of choice to figure out what to wear and whether to take your umbrella. Then you grab an UBER® to get to the office and during the ride, you order your coffee so it is ready for you as you breeze through the building on the way to the elevator. No sense in waiting for the coffee, as this is a needless waste of time. With more and more people relying on apps, app design, branding, marketing, and protection are more important than ever.
The number of mobile apps is exploding. In June 2016, Apple® reported approximately 2,000,000 total apps in its app store. By May 2017, that number had increased by approximately 200,000. Mobile apps may be discussed in three categories – mobile web apps that enhance web browsing, apps that offer users a new service not previously available via a smart phone, and traditional brands whose business is widely known (such as WALGREENS®). With all of the competition in the marketplace, companies must consider how to protect their app brand as a trademark, before it launches the new app into the marketplace.
To be “protectable” as a U.S. trademark, an app must have a few key characteristics. First, consider the name of the app. Does it describe a feature or function of the app? If so, the owner may want to reconsider, as the U.S. Patent & Trademark Office typically does not allow registration of descriptive marks. Instead, the owner of the app will need to come up with a name that is either merely suggestive of the service the app provides or is arbitrary. Arbitrary names of apps are those that do not describe or suggest anything about the app. APPLE® itself is a good example of an arbitrary trademark, as APPLE® is a trademark for computers, pads, phones and other goods and services, all having nothing to do with fruit. Suggestive trademarks may be the happy medium where the function of the app is not outwardly described, but the app name hints at the meaning. For example, ENLIGHT® is a photo editor app and would be considered suggestive because it suggests something about photo editing but does not describe it.
In considering the name of the app, owners will also want to pay attention to the color and icon they will use with the app. Will these elements convey a unique design that may lend itself to trademark protection? While color is sometimes not claimed as part of a design trademark in the trademark application or emphasized in a typical enforcement setting, in the app setting it is important to claim color, as it is one mechanism to set the app apart from others.
Registration of an app name and design provides many benefits. The most important benefit is having the presumption that the owner has the right to use the name, design, and color of the app nationwide over all others, subject to certain exceptions. Another important benefit is that when the app name or design (or both) is a registered trademark, all others are put on notice of the owner’s rights. That is, all others are held to know about the registered app, even if they did not actually know about it. Finally, federally registered trademarks may obtain relief from an infringer without a lawsuit. If the owner simply wants the infringer to stop using the confusingly similar name, design and/or color scheme, the owner need only submit proof to the marketplace on which the app is available, and the marketplace, such as the Apple® App Store, will assist in removing the infringing app.
For further inquiries pertaining to apps and trademark protection and related questions regarding your intellectual property, please contact:
312.368.0100 or firstname.lastname@example.org.
*UBER®, WALGREENS®, APPLE®, and ENLIGHT® are all registered trademarks of their respective owners.
(Please note that we are not endorsing any products or services mentioned in this blog).