In a post entitled, Trade Secrets and Third Parties: Top Tips to Prevent Theft, lists its “five top tips” for protecting your trade secrets, all of which apply to China.

Nothing earth-shattering here, but this is actually a really good list (meaning I agree with it 100%) and it never hurts to review the basics, so here goes:

Conduct a strategic assessment of the company’s trade secrets, a process which should incorporate the company’s trade secret policy, the partner’s code of conduct, an evaluation of which trade secrets can be transferred, and careful consideration of the most appropriate operational structures.

Undertake appropriate pre-contractual due diligence, including a thorough assessment of any potential third party partner, evaluation of other IP-related issues, analysis of the partner’s employment and nondisclosure agreements, and investigation of the partner’s subcontractors.

Employ strong contractual protections to safeguard the company’s trade secrets both during the business relationship and afterward, and consider contractual provisions specifically relating to the partner’s employees and subcontractors.

Utilize appropriate operational and security measures to ensure that the correct personnel, physical security measures and technical safeguards are in place to protect the company’s trade secrets. Systematic engagement with the partner can help bolster the effectiveness of these measures.

Take appropriate action after the business relationship has ended, to ensure that departing employees and former business partners honor their continuing obligation not to disclose trade secrets.

Anything else?

  • Ward Chartier

    A few tricks I’ve observed or used through the years:

    1. Imbed an intentional error, like a typo, somewhere with the software, software comments, or documentation.
    2. For higher level assemblies, source key components from several different suppliers, preferably long distances away from one another.
    3. For higher level electronic systems, write operating software that interrogates each major sub assembly for correct responses. Only sub assemblies from authorized suppliers will be able to provide correct responses. The operating software will lock out unauthorized sub assemblies.
    4. Add a subtle feature which has neither functional nor aesthetic value. Unauthorized suppliers who copy that feature will have had to steal the IP. For example, add a little non-toxic heavy metal (i.e. bismuth) to plastic resins or paints. Such adulteration can be easy to detect if one looks for it. Unauthorized copies will not show the adulteration when tested.

    I’m sure readers can list other similar means.

    Assume that somebody will steal IP, and design products so that detecting stolen IP will be relatively easy.

  • Michael Riepl

    Number six: Don’t do business in China. It’s a really big world we live in. There’s a lot of opportunities out there – outside China!!!

    • blwinters

      I think you’re reading the wrong blog.