Often, when one thinks of the intellectual property (IP) owned by a business, it is common for things like a name, a logo, or other advertising or branding related trademarks to come to mind. Some small- to mid-sized businesses may put little emphasis on IP protection, given that they do not regularly manage a substantial portfolio of marketing related trademarks and other IP, as is often the case with larger businesses. Yet, even smaller businesses have valuable IP worth protecting.
A business’ customer list can be a trade secret when it contains information with economic value from not being generally known to the rest of a business’ competitors in the industry. Morlife, Inc. v. Perry (1997) 56 Cal.App.4th 1514. The court in Morlife, Inc. v. Perry observed that the customer list at issue in that case was protectable as “a compilation, developed over a period of years, of names, addresses, and contact persons, containing pricing information and knowledge” about particular customer needs. Id. Often important in customer list cases is how readily available (or not) the customer data may be. If the business “expended time and effort identifying customers with particular needs or characteristics,” the courts are more inclined to protect such data to prevent competitors from using this information to capture market share.
Any proprietary information that derives economic value from not being generally known can be protectable as a trade secret under California and Federal law. A business’ technical “know-how” is the quintessential type of trade secret. Whyte v. Schlage Lock Co. (2002) 101 Cal.App.4th 1443, 1456. That may include formulas, methods, techniques, or processes. Id. Business “know-how” may extend to many different types of secret information used in small businesses. If you operate a restaurant, for example, your “secret” recipe with unique ingredients for a hit dish could be protectable as a trade secret. See e.g. Uncle B’s Bakery, Inc. v. O’Rourke (N.D. Iowa 1996) 920 F.Supp. 1405. Beyond technical information, other business “know-how” can include things like cost and pricing information in the form of markup rates and profit margins unique to a particular business operation (as opposed to commonly used industry formulas for setting prices). Whyte v. Schlage Lock Co., supra, 101 Cal.App.4th at 1455-1456.
Business Plans and Marketing Strategies
Even small businesses often have business plans and other internal marketing materials that include strategies for growing the company’s business in particular markets. Such business plans and marketing strategies, plans, and techniques can be protectable trade secrets. See Lizalde v. Advanced Planning Services, Inc. (S.D. Cal. 2012) 875 F.Supp.2d 1150, 1165-1166 (a booklet amounting to a “roadmap” of how to “market and implement” a business model can be a trade secret); see also Whyte v. Schlage Lock Co., supra, 101 Cal.App.4th at 1456 (advertising and marketing strategies, plans, and techniques and company’s five-year strategic plan are protectable as trade secrets). Of course, published advertising and other marketing materials not otherwise amounting to a trade secret may be protectable by copyright law.
The above categories are by no means exhaustive. They are, however, illustrative of the varied types of IP that even small- to mid-sized businesses may have. Recognizing that these types of information and materials are potentially protectable is a first step. Many of these issues may seem academic until an employee leaves and takes information and materials to set up a competing business. You should consider consulting with IP counsel about what may be protectable in your own business and, if protectable, what measures ought to be taken to do so.