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How to Protect Your Trade Secrets: Protect Yourself in a Deal
Many business alliances, such as licensing arrangements, require a company to lay bare its secrets. Protect yourself here again with a nondisclosure agreement. The NDA delineates specifically which information is confidential (and which isn't), limits what the counterparty may use it for, and specifies how long it must remain secret (usually two to five years). Be sure to craft an agreement, says Pooley, that asks for all copies of the information back at the end of the term. Besides reducing the risk that a stray copy will wind up in the wrong hands, "this reinforces the idea of confidentiality by requiring someone to go through a physical act," he says.
If your counterparty declines to sign an agreement, proceed cautiously. Sometimes, you can establish an "implied" confidential relationship, which will grant you rights similar to those of a signed agreement, but it is naturally more difficult to prove. It helps when the other party solicits the information from you. Indicate that you are providing the information for a business proposition in which you hope to be paid, and request that it remain secret. Pooley recommends that before attending a meeting at which you plan to disclose secrets, document your intent by sending an e-mail or letter indicating the information is confidential and can be used only for the intended purpose: "If there's nothing that comes back denying that, then almost certainly the court will agree the meeting is confidential, even though the other party hasn't put their signature on an NDA." Pooley also recommends putting confidentiality stamps on any documents you present.
Dig Deeper: The Merger that Ate My Customer
How to Protect Your Trade Secrets: Trademark Style
When you publicize a business, you are claiming a trademark, whether or not you realize it. That's because there are two kinds of trademarks. Many businesses officially register their mark as a statutory trademark with the U.S. Patent and Trademark Office (uspto.gov), which entitles a company to use the name in every state. But a common-law trademark is yours once you start using a name, whether or not you register it. Provided it doesn't infringe on another's existing mark, it allows you to use the name in your local market or state, and your claim to it grows stronger as your business grows.
A company intending to go national should register its trademark even before it opens its doors. Before filing, do a comprehensive search (in the USPTO's searchable online database) of other national trademarks and of locally registered and common-law trademarks. (See "Resources" below for trademark searchers.) You are looking for any mark that could be confused with yours in the same line of business or in a connected one.
A registered trademark allows you to force another company using the same or a confusingly close name to change it -- but only if the other company adopted the name after yours was registered. A company using the name locally first is free to continue doing so, can limit your entry into that market, and can even object to your application, making the process more expensive.
Even a company that plans to stay local should avoid potential conflicts by confirming that its chosen name hasn't already been nationally registered, says Jonathan Jennings, a trademark lawyer at the Chicago firm Pattishall, McAuliffe, Newbury, Hilliard & Geraldson.
Dig Deeper: How to File a Trademark
How to Protect Your Trade Secrets: What's in a Name?
Lawyer Susan F. Fisher has identified a hierarchy of name types that offer increasingly stronger protection when registering a trademark:
A descriptive name, which describes the product or service offered (Mufflers On Main), is the most difficult to register and defend and should generally be avoided. (Over time, such a name can acquire "secondary meaning" that is well protected -- Office Depot, for example.)
Better is a suggestive name -- one that suggests the nature of the business. Microsoft, for instance.
Better still is an arbitrary name, which has a common meaning that's unrelated to the product or service, as in Apple.
A fanciful name, like Kodak or Xerox, which means nothing outside the context of the company's identity, is the easiest kind of trademark to defend.
In general, a personal name cannot be trademarked.
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