Given the range of vital global issues it is attempting to resolve, cleantech has become an enormous umbrella that sits above every scientific discipline from the most complex biotechnology through to cutting edge digital tech.
Regardless of the focus area and the particular segment of the climate, energy or food crisis they are attempting to address, the one thing all cleantech businesses have in common is their innovation is producing highly valuable assets. These assets give their businesses their competitive edge. They also provide the solid foundation they’ll need as they begin to take their science to the world and, over time, scale up and roll out their inventions so they have the desired environmental impact.
The types of assets they generate will vary depending on the ideas, the business, its objectives, and its chosen business model. However, some of the common types of assets involve manufacturing processes, formulae and recipes, research and development data, software algorithms, marketing and market intelligence, environmental impact assessment data, monitoring and control systems, and - specific to biotech driven innovations - genetic sequences, microbial strains, or enzymatic processes.
While patent protection may have traditionally be seen as the ‘gold standard’ for protecting the science behind the innovation in cleantech, this is rapidly changing. Given the speed of travel not to mention the difficulty of protecting some of the valuable assets with registered IP, trade secrets are becoming an increasingly attractive option for cleantech businesses.
WHAT IS A TRADE SECRET?
A trade secret is any information that has commercial value (now or in the future) because it is kept secret. Note, there is no requirement that the information is technical in nature, and information relating to your market or client base may also give rise to a trade secret. In addition, there is no requirement for the information to be a positive, and in fact, negative information relating to what not to do when e.g. carrying out a particular manufacturing method, also fulfils the criteria.
Trade secret protection is free to obtain (as long as certain provisions are met, which we will go into in more detail in the final section of this blog) and lasts for as long as you keep your trade secrets a secret.
Typically, cleantech innovations provide a new product (e.g. a new material), an improved process (e.g. a more efficient way of manufacturing) or provide a method of optimizing consumption (e.g. home electricity use). Trade secrets can arise from any one of these innovations. In particular, with the rise of green manufacturing processes in the cleantech space, the value of trade secrets in this sector is expected to increase in the coming years.
Examples of aspects that could represent trade secrets in cleantech include:
- A specific recipe that cannot be reverse-engineered and that leads to less waste. The secret could be the combination of reagents, or an order of the combining the reagents that might be specific to the scale of production.
- Specific processing conditions that lead to optimised use of energy in a chemical reactor, which may be specific to the size and shape of that reactor. For example, the temperature, pressure or rate of mixing are all likely to influence the energy consumption.
- Quality control parameters or tolerance levels for a specific commercial product or method that ensures compliance with carbon emission requirements. For instance, the trade secret could relate to tolerance levels for scaling up a process g. temperature or pressure generation.
- Algorithms or software for optimizing or monitoring processes. The process may be a technical process g. a data analysis method for optimizing process conditions, or the method may have commercial value e.g. a method of analysing the market and formulating a commercial strategy. This is particularly relevant for businesses using AI and machine learning algorithms that are proprietary.
It should also be kept in mind that trade secrets need not be positive results, negative outcomes can also be protected as trade secrets, providing the information has value. This type of negative information is often not protectable as registered IP such as patents, which highlights the benefits of having a holistic IP strategy that captures the value in all the IP that is held within a business.
Negative results are particularly valuable in the cleantech sector wherein new or improved methods are often at the core of the business. For example, the negative results obtained when testing or scaling up a process in a pilot plant provides a huge competitive advantage, and is typically difficult to patent.
WHAT ARE THE KEY THREATS?
There are some key threats that will need to be addressed if you are considering using trade secret protection. Again, these will vary depending on the structure of the business, its operating procedures, and the type of technology it is based around but here are some of the general areas all business should be aware of:
- Employees, if these employees have access to sensitive information that would benefit another party or their next venture. These employees don’t necessarily have to be departing employees, they could very much be current employees. This is sometimes forgotten.
- Cyber risks like hacking and malware if the company relies heavily on digital platforms for operation, communication or recordal.
- The risk of partners, suppliers, or contractors stealing any trade secrets they have access to for their own gain.
- Industrial espionage being committed by competitors or even foreign governments.
- The threat of operating internationally given the differences in legal and enforcement frameworks in different parts of the world.
- Data breaches in terms of sensitive information (including prototypes, research data, or information on manufacturing processes) being stolen if it is stored or left without the required security with third-party service storage providers.
However - and perhaps predictably - the most damaging may be the risk of legal action.
If your trade secrets have not been adequately protected and managed, it will be significantly more difficult to prove your ownership if they are legally challenged. This could lead to you losing any claim to them. This could have a disastrous impact on your future plans. This is of increasing risk as the threshold for the burden of proof on the owner continues to rise.
HOW CAN INNOVATORS IN CLEANTECH PROTECT THEIR TRADE SECRETS?
The short answer is, for any trade secret, companies must take “all reasonable steps” to protect their trade secrets. This involves a combination of:
Administrative or organizational measures
For example, having robust trade secret policies and procedures in place and a formal education programme for employees.
Legal or contractual measures
For example, putting confidentiality agreements in place for third parties (collaborators, contract workers and the like) who might have access to the trade secrets, with suitable provisions identifying the trade secrets being shared and how they should be handled.
Technical measures
For example, implementing more access controls and increasing security measures like encryption to make it more difficult for the trade secrets to be stolen.
However, the foundation of robust trade secret protection is forming a coherent trade secret policy. This might include:
- Setting up a system for identifying and assessing trade secrets.
- Creating a formal register of trade secrets.
- Training staff on the need to maintain confidentiality.
- Preventing the loss of confidential information with departing staff.
- Ensuring that contracts and agreements discuss trade secrets, including ownership and obligations of confidentiality.
The word of caution we would offer is trade secrets are only one element of a fully formed IP strategy. Trade secrets will likely provide far greater protection when used in conjunction with rather than as an alternative to patents and designs.
Yes, your trade secrets will definitely help you secure investment, build value, and carve out the exclusivity your future success depends on, but in a multifaceted, highly competitive and fast developing sector like cleantech they will not do the job in their own. The key is to create a comprehensive IP strategy that incorporates overlapping, complementary, and comprehensive rights and policies.
This is exactly what the experienced attorneys and IP solicitors in our dedicate cleantech team do.
If you would like to take an easy first step towards identifying, protecting and exploiting your trade secrets, Potter Clarkson’s simple SafeGuard model will help.
