The legal strategies for protecting IP are numerous. A properly executed protection plan will be tailored to meet the business area and product involved, and often uses a combination of legal protection devices. General information on the legal strategies for protecting IP is contained on this page. This information, in combination with a preliminary discussion with our attorneys will begin to familiarize you with the tools available for protecting valuable information, innovations and products.

This information is not intended to provide legal advice and should not be construed as such. It serves rather, as an introduction to the general types of programs available for protecting IP. Choose a topic below to learn more:

Patent

Marks

Copyright

Design

Intellectual Property Licensing

Trade Secrets

Confidential Information

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PATENT

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PATENT BASICS

The Patent System

The purpose of the patent system is two fold:

(a) To encourage technical innovation by giving innovative companies monopoly protection which will enable them to exploit their own inventions for a limited period (20 years in the BG) free from competition from third parties. Without this protection many companies simply would not be able to operate, as they would have no way of preventing competitors making direct copies of their products; it would make more commercial sense for companies to copy others' products rather than waste money, which could never be recouped.

(b) To encourage the dissemination of technical information. A company applying for a patent has to provide a written description of the invention, and this written description is later published by the Patent Office for all to see. Then, at the end of the 20-year monopoly period, or earlier if the company has lost interest in the patent before that and has allowed it to lapse, the invention becomes free anybody to use.

Thus, the patent system can be considered as a sort of agreement between an inventor and the State: in return for the inventor agreeing to disclose his invention to the world, the State will give him or her monopoly protection on it for a limited period.

Patents

Patent protection can be obtained for most types of new, technically-based inventions, whether articles or processes. More specifically, a valid patent can be obtained in the BG and Europe only if all of the following criteria are satisfied:

(a) The invention is new:

(b) It involves an inventive step;

(c) It is capable of industrial application; and

(d) It does not fall into one of the excluded categories

Novelty

An invention is said to be new, for this purpose, if it does not form part of what is known as 'state of the art'. The state of the art means everything which, at the date of filing the patent application, has been made available to the public. This is a strictly-interpreted expression and a single disclosure by the inventor to another person (other than in confidence) before filing a patent application is enough to invalidate any resultant patent. A patent would also be invalid if, before filing the application, the invention were described in any publicly available document, or if it were used in public, or, in the case of a product, if any sales were made. You cannot protect something which is already publicly known.

If the inventor discusses the invention with others in confidence, however, that does not count as a public disclosure. Thus, in a typical case an invention made in a company research department might be discussed, in confidence, with others in the research department, and also perhaps with management and the legal department before a decision to file a patent application is made.

These discussions, in themselves, will not invalidate any subsequent patent.

Inventive Step

An invention is said to involve an inventive step if, at the time that the patent application is filed, it is not obvious to a person skilled in the art. The requirement for an inventive step is intended to prevent patents from being granted on inventions which amount to no more than trivial or obvious developments of what has been done before. In practice, however, the amount of inventivity required is small, at least in order to obtain a patent in the BG.

Industrial Application

An invention is said to be capable of industrial application if it can be made or used in any kind of industry, including agriculture. There are few otherwise-patentable commercial articles that would fail to qualify for

patentability because of this criterion. Almost all such articles are capable of being made in industry, even if they may not be capable of being used in industry.

A process, on the other hand, will not qualify under this criterion if it is of a completely non-technical nature.

There are two processes which the BG Patents Law specifically defines as not being capable of industrial application, and which are therefore not patentable:

(a) Methods of treatment by surgery or therapy, for use on humans or animals; and

(b) Methods of diagnosis for use on humans or animals.

Products for use in such methods (eg drugs) are however patentable provided that they meet the other criteria. Also, judge-made law has established a way of protecting the industrial aspects of a new therapeutic or

diagnostic use of an old product.

Excluded Categories

1. Not inventions

The following are declared by the UK Patents Act not to be inventions, and cannot therefore be patented:

(a) Discoveries, scientific theories or mathematical methods;

(b) Literary, dramatic, musical or artistic works or any other aesthetic creation whatsoever (ie anything more properly protected by copyright);

(c) Schemes, rules, or methods for performing mental acts, playing a game or doing business;

(d) Computer programs;

(e) The presentation of information.

However, it is only the things above, as such and on their own, which are excluded: a method of operating a machine tool would not, for example, be excluded even though in practice the method might be defined by means of a computer program. Computer programs which do something technical can normally be protected by obtaining a patent which covers the underlying algorithms or logic

2. Patent not to be granted

Patents cannot be granted for the following:

(a) Inventions likely to lead to offensive, immoral or antisocial behaviour (although an invention is not necessarily excluded just because it is prohibited under BG Patent law);

(b) Plant or animal varieties, or biological processes for the production of plants or animals (micro-biological processes and the products of such processes are, however, acceptable).

MARKS

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TRADEMARK BASICS

A trade mark (sometimes known as a brand name or trade name) is a word or logo which a company applies to its products so as to identify them to potential purchasers as being from a particular trade source. A service mark is similar but applies to the provision of services - rather than products.

The trade marks and service marks used by a company are not necessarily the same as the name of the company itself, although they can be. The company name is the name by which the company is legally known, whereas its trade marks and service marks are the words or logos it has chosen to identify its products and services.

Trade marks and service marks can be registered at the Patent Office and, unlike patents, there is no requirement that they be kept confidential: well-used trade marks are in fact often easier to register than unused ones. Of course, if your company is about to launch a new product under a new trade mark, filing a trade mark application before the launch might well be desirable, if only to dissuade competitors from copying the mark when the product reaches the market.

A trade mark or service mark is registrable only if other traders in the same field would not legitimately wish to make use of it in their own business. For this reason, entirely descriptive marks cannot be registered, neither can marks consisting of common surnames or geographical locations. Marks which would be deceptive are also unregistrable.

Trade marks typically have to be registered on a country-by-country basis, although there are a number of International Treaties which allow applicants to cover a number of countries at once by means of a single trade mark registration. One of the most important of these is the Community Trade Mark system: this allows companies to cover all of the European Union countries by means of a single Community registration. For further details, click on the link below

COPYRIGHT

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Copyright is a form of protection provided by the Copyright Laws of the Bulgaria to the authors of "original works of authorship" including literary, dramatic, musical, artistic, and certain other intellectual works. This protection is

available to both published and unpublished works. The Copyright Act generally givesthe owner of copyright the following exclusive rights:

To reproduce the copyrighted work in copies or recordings;

To prepare derivative works based upon the copyrighted work;

To distribute copies or recordings of the copyrighted work to the public by sale or other transfer of ownership, or by rental, lease, or lending;

To perform the copyrighted work publicly, in the case of literary, musical, dramatic, and choreographic works,

pantomimes, motion pictures and other audiovisual works; and

To display the copyrighted work publicly, in the case of literary, musical, dramatic, and choreographic works,

pantomimes, and pictorial, graphic, or sculptural works, including the individual images of a motion picture or other audiovisual work.

Who Can Claim Copyright?

In the case of works made for hire, the employer and not the employee is presumptively considered the author. The copyright statute defines a "work made for hire" as:

a work prepared by an employee within the scope of his or her employment; or

certain works specially ordered or commissioned, if the parties expressly agree in a written instrument signed by

them that the work shall be considered a work made for hire.

The authors of a joint work are co-owners of the copyright in the work, unless there is an agreement to the contrary.

Copyright in each separate contribution to a periodical or other collective work is distinct from copyright in the collective work as hole and vests initially with the author of the contribution.

Mere ownership of a book, manuscript, painting, or any other copy or recording does not give the possessor the copyright. The law provides that transfer of ownership of any material object that embodiesa protected work does not of itself convey any rights in the copyright.

What Works Are Protected?

Copyright protection exists for "original works of authorship" when they become fixed in a tangible form of expression. Copyright able works include the following categories

written literary works;

musical works, including any accompanying words;

dramatic works, including any accompanying music;

pantomimes and choreographic works;

pictorial, graphic, and sculptural works;

motion pictures, video recordings and other audio visual works;

sound recordings; and

computer software.

This list is illustrative and is not meant to exhaust the categories of copyright able works. These categories are viewed quite broadly.

What Is Not Protected By Copyright?

Several categories of material are generally not eligible for statutory copyright protection. These include among others:

Works that have not been fixed in a tangible form of expression. For example: choreographic works which have not been notated or recorded or improvisational speeches or performances that have not been written or recorded.

Titles, trademarks, names, short phrases, and slogans; familiar symbols or designs; mere variations of typographic ornamentation, lettering, or coloring; mere listings of ingredients or contents.

Ideas, procedures, methods, systems, processes, concepts, principles, discoveries, or devices, as distinguished from a description, explanation or illustration.

Works consisting entirely of information that is common property and containing no original authorship. For example: standard calendars, height and weight charts, tape measures and rules, and lists or tables taken from public documents or other common sources.

How To Secure A Copyright

Copyright is secured automatically upon creation.

The way in which copyright protection is secured under the present law is frequently misunderstood. No publication or registration or other action in the Copyright Office is required to secure copyright. Copyright is secured automatically when the work is created in tangible form for the first time.

There are, however, certain definite advantages to registration.

Notice Of Copyright

When a work is published under the authority of the copyright owner, a notice of copyright should be placed on all

publicly distributed copies and on all publicly distributed sound recordings. This notice is required even on works published outside of the Bulgaria. Failure to comply with the notice requirement can result in theloss of certain additional rights otherwise available to the copyright owner.

The use of the copyright notice is the responsibility of the copyright owner and does not require advance permission from, or registration with, the Copyright Office.

Form of Notice for Visually Perceptible Copies

The notice for visually perceptible copies should contain all of thefollowing three elements:

The symbol comprising the letter C in a circle, the word "Copyright" or the abbreviation "Copr.";

The year of first publication of the work.

The name of the owner of copyright in the work, or an abbreviation by which the name can be recognized, or a generally known alternative designation of the owner.

Form Of Notice For Sound Recordings

The copyright notice for sound recordings has somewhat different requirements. The notice should contain the following three elements:

The symbol comprising the letter P in a circle;

The year of first publication of the sound recording; and

The name of the owner of copyright in the sound recording, or an abbreviation by which the name can be recognized, or a generally known alternative designation of the owner. If the producer of the sound recording is named on its labels or containers, and if no other name appears in conjunction with the notice, the producer's name shall be considered a part of the notice.

Position Of Notice

The notice should be placed on all copies or recordings of the work in such a manner and location as to "give reasonable notice of the claim of copyright." The notice of recordings may appear on the surface of the recording or on its label or container, provided the manner of placement and location gives reasonable notice of the claim. The three elements of the notice should ordinarily appear together on the copies or recordings.

Unpublished Works

The copyright notice is not required on unpublished works. To avoid an inadvertent publication without notice, however, it may be advisable for the author or other owner of the copyright to place a copyright notice, or a statement on any copies or recordings, which leave his or her control.

How Long Does Copyright Protection Endure?

A work created (fixed in tangible form for the first time) on or after January 1, 1978 is automatically protected from the moment of its creation, and is ordinarily given a term enduring for the author's life, plus an additional 50 years after the author's death.

Transfer of Copyright

Any or all of the exclusive rights of the copyright owner may be transferred, but the transfer of exclusive rights is not valid unless it is in writing and signed by the owner of the rights conveyed. Transfer of a right on a nonexclusive basis does not require a written agreement.

Copyright Registration

In general, copyright registration is a legal formality intended to make a public record of the basic facts of a particular copyright. However, except in two specific situations, registration is not a condition of copyright protection.

Even though registration is not generally a requirement for protection, the copyright law provides several inducements or advantages to encourage copyright owners to make registration. Among these advantages are the following:

Registration establishes a public record of the copyright claim;

Registration is ordinarily necessary before any infringement suits may be filed in court;

If made before or within 5 years of publication, registration will establish evidence in court of the validity of the copyright; and

If registration is made within 3 months after publication of the work or prior to an infringement of the work, statutory damages and attorney's fees will be available to the copyright owner in court actions. Otherwise, only an award of actual damages and profits is available.

Registration may be made at any time within the life of the copyright. To assure that you have full legal rights for enforcement of your copyright you should file for registration within 3 months after your work is first published and be certain that all published copies carry a copyright notice.

International Copyright Protection

There is no such thing as an "international copyright" that will automatically protect an author's writings throughout the entire world. Protection against unauthorised use in a particular country depends, basically, on the national laws of that country. However, most countries do offer protection to foreign works under certain conditions, and these conditions have been greatly simplified by international copyright treaties and conventions.

 

DESIGN

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REGISTERED DESIGNS

Patents can be used to protect the technical features of a product (eg how it is put together or how it works): registered designs, on the other hand, are used to protect the aesthetic features of a product.

For a design to be registerable it must be new, and it must appeal to the eye. A design for an article cannot be registered if the article is entirely functional (eg a piston head) nor if it is shaped as it is merely in order to

match the appearance of another article (eg a replacement car door).

Applications for registered designs are made to the Patent Office. They last for a maximum of 25 years.

CONFIDENTIAL INFORMATION

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Confidentiality Agreements

The best way to protect your private technical and business information and to guard against unwanted disclosures is through a confidentiality agreement. A confidentiality agreement should be employed whenever you disclose confidential information to anyone that does not have a lifelong duty to maintain secrecy, such as employees, vendors, potential licensing partners, and potential investors in your business.

A confidentiality agreement may be used to protect confidential products and manuals and the information they disclose. Further, the agreement can control the use and ownership of molds and patterns produced based on the confidential information.

A confidentiality agreement can be particularly important if you intend to file for patent protection for the information being disclosed. Under U.S. patent statutes a public, non-confidential use of your invention more than one year before a patent application is filed will invalidate any patent obtained for your invention. A confidentiality agreement will ensure that any unauthorized use of the invention

will be deemed a non-public use that will not endanger future patent rights.

Although a trade secret disclosed pursuant to a confidential relationship, such as to an employee,

will receive some protection, a written confidentiality agreement offers the following advantages:

it clarifies that a confidential relationship exists;

it establishes explicit notice that you consider confidential the information being disclosed;

it provides continuing protection after the implied confidential relationship ends (e.g., restrict use and

disclosure by former employees);

and it enables you to make explicit where and how any disputes will be litigated.

A confidentiality agreement should explicitly create an obligation of confidentiality, restrict the use

and disclosure of information, and limit access to the information. The confidentiality agreement should recite explicitly, yet broadly, the items to be kept confidential. The confidentiality agreement should also be explicit that the information cannot be disclosed to anyone that has not signed a similar confidentiality agreement, including employee and family members of those persons that do sign.

A confidentiality agreement can be a self-contained document or part of another document. For example, employment agreements and license agreements typically include a confidentiality agreement to explicitly define the confidential relationship of the parties to the agreements.

Information You Should Bring With You When Discussing Your Potential Confidentiality Agreement With Your Intellectual Property Attorney

While the above information provides you with some initial guidance on confidentiality agreements, you should consult your intellectual property attorney before negotiating and signing such an agreement.

While the above information is correct as of 1998, changes in the law may affect your particular situation. Before visiting your intellectual property attorney, you should gather certain information, including the following:

(1) a complete description of the confidential information sought to be protected;

(2) the names of the parties involved and their relationship to you;

(3) the monetary or other consideration to be given in exchange for the secrecy;

(4) the length of time you would like the confidentiality agreement to remain in effect; and

(5) the remedies you would like to be enforced in the event of a breach of the confidentiality agreement.

Choose a topic below to learn more:

INTELLECTUAL PROPERTY LICENSING

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Introduction

A license agreement is a contract between an intellectual property owner (the licensor) and a potential user (the licensee) that grants the licensee permission to use certain intellectual property owned by the licensor. A licensor can license any intellectual property, including patent, trademark, copyright, trade secret, and know-how rights. A patent owner, for example, has the right to exclude others from manufacturing, using, offering to sell, or selling a patented invention, but can employ a patent license agreement to authorize a licensee to perform any of those protected actions.

A license agreement differs from an assignment, which involves the complete sale of all rights, including ownership, to a particular item of intellectual property. In contrast, in a license agreement situation the licensor retains ownership of the intellectual property. Assignments are governed by federal law, and thus, can be the subject of litigation in federal court, while license agreements are governed by state law.

A license agreement should reflect as exactly as possible the business agreement or transaction that the parties wish to undertake. The attorney drafting a license should understand the technology involved, the nature of the legal protection available, and the nature of the particular transaction involved. While licensing involves intellectual property, the licensing agreement should be written with other laws in mind, such as federal and state antitrust, regulatory, and tax laws.

Reasons for Licensing

Financial Motivations

Licensing your technology can provide a revenue stream that enables your company to continue developing, manufacturing, and selling new products. Small companies and independent inventors often find that licensing is an indispensable way to obtain sufficient financing to continue developing a business or patented product.

Marketing Motivations

Licensing your intellectual property can expand consumer awareness of your product and company without expending scarce advertising resources. Licensing is particularly important when expanding into new geographic areas, such as new states or new countries. Licensing your trademark for use with quality products beyond your core business enhances the overall image and value of your trademark. From the licensee’s perspective, obtaining a license to use an established trademark with your new product enables you to enjoy instant name recognition with limited advertising expenditures.

Strategic Motivations

Licensing enables you to take a product to market or exploit new markets without financing large manufacturing facilities or distribution networks. Licensing also provides an opportunity to sell overseas by licensing to foreign companies, which generally are in a better position to deal with local government regulations and are more familiar with local markets and customers. Licensing can enable you to create important strategic relationships with well-respected companies which may lead to future licensing relationships or other partnerships. You may wish to create a cross-license with one of your competitors to forego litigation expenses or to obtain technology that complements

your own technology. Licensing can provide you with the other licensing partner’s manufacturing, marketing, and distribution expertise in new technical or geographical areas.

Finding a Licensing Partner

The ability to find a good licensing partner or partners is one of the most important aspects of licensing. There are many companies that actively search for licensors who own intellectual property that the companies desire to license. For example, computer companies attempting to produce multimedia computer products will search for owners of audio or audio-visual content, such as a production company, from whom to obtain a license for use of the content in their multimedia computer products. More often, however, it is the intellectual property owner who searches for prospective licensees.

There are two basic ways to find prospective licensing partners: a network of family, friends and business associates and market research. One good source for performing market research and expanding your personal network is through trade groups associated in your technology of concern. Other sources include your local library, which should have access to company directories, such as The Official Register, in printed or digital form.

After compiling a list of potential licensing partners, you should attempt to narrow the list by researching each potential partner on the list. For example, is the potential partner litigious, particularly with its previous licensing partners? Is the potential partner financially stable? Does the potential partner have the technical, marketing, and sales resources to make the licensing relationship beneficial? Only after such research is performed should you contact the potential partners on your narrowed list to begin licensing discussions.

Preparing for License Negotiations

In general, most of the work needed to obtain a license should be done before the licensing partners begin negotiations. From the licensor’s perspective, the preparation will be used to sell the intellectual property to the licensee at a good price. The licensee will prepare similarly to make an intelligent decision regarding whether to license and at what price.

Selling Your Invention

If you are trying to sell an invention to a potential licensee, there are several steps you can take which will increase the perceived value of your invention. You can: prepare a prospectus that accurately and informatively describes the functions and results of your invention without giving away the secrets of your invention; obtain., and possibly foreign, patent rights in your invention; develop a working prototype or other demonstration of the viability of the invention; perform market analysis, such as consumer surveys, showing the projected benefit to the prospective licensee; and begin selling a product embodying the invention at a profit.

Valuing the Property

Determining the value of the intellectual property sought to be licensed is probably the most difficult, yet important, aspect of licensing. In general, the licensor should seek to maximize the total income from the license, which does not always equate to the highest royalty rate. The license royalty rate should not be so high that it allows the licensee a profit margin less than the licensee could earn elsewhere.

There is no formula for computing the "actual value" of your intellectual property, but the following factors may be relevant to your situation:

the strength and scope of your intellectual property protection;

the uniqueness of the intellectual property;

the expenses needed for the licensee to produce and sell the product protected by the intellectual

property;

the cost of any additional research and development required;

the exclusivity or non-exclusivity of the license agreement;

the size of the projected market for the product; and

the amount of risk involved.

License Provisions

A typical license agreement will describe the technology, the licensor’s proprietary rights in the technology, the extent to which these rights are transferred to the licensee, the term of the license agreement, and the compensation. The license agreement should expressly recite all of the intellectual property being licensed, including know-how and particular trade secrets. The license agreement may be limited to a specified territory or market segment.

Exclusivity

A license may be exclusive, sole, or non-exclusive. An exclusive license provides that only the licensee can exploit the intellectual property being licensed. A sole license allows both the licensor and the licensee to exploit the intellectual property. A non-exclusive license allows the licensor to license the intellectual property to more than one licensee.

Compensation

There are almost unlimited ways in which the compensation can be structured in a license agreement. License agreements often provide for an up-front lump sum payment as well as periodic royalty payments. The licensor should seek to base the periodic royalty payments on sales (and all other types of transfers) rather than profits so that the licensee is not tempted to understate the profits by overstating the costs of the product. The licensor, especially in an exclusive license agreement, usually will seek to establish minimum royalty amounts that must be paid regardless of whether the licensee uses the licensed intellectual property. If the license agreement includes periodic royalty payments based on the licensee’s sales or profits, the license agreement should provide for some method of inspecting the licensee’s accounting records to ensure full royalty payments.

Special considerations arise in patent licensing contexts, especially when a patent has not yet been granted. It is improper to collect patent royalties for an expired patent or for a patent that is not granted. Instead, a license agreement should apportion the royalties among the patent and the non-patent rights, such as know-how or trade secrets, so that a higher rate is paid during the life of each patent that is granted.

Trademark License Agreements

Trademark license agreements are similar to other license agreements except that trademark license agreements must include quality control provisions. A typical quality control provision states that the licensee will meet or exceed the standards of the industry, will provide the licensor with samples of its product on a periodic basis, and will allow the licensor access to information to ensure proper quality. Failure to exert any quality control may result in forfeiting of the licensor’s rights in the trademark.

Miscellaneous Provisions

A properly prepared license agreement normally includes provisions covering several events that can occur during the term of the license agreement. In particular, the license agreement may include provisions for business failure, effort required by the licensee in marketing the licensed product, treatment of confidential information, indemnities for product liability or infringement, warranties, and proper marking of the licensed products. In addition, the license agreement usually will specify whether sub-licensing is allowed.

Information You Should Bring With You When Discussing Your Potential License

Agreement With Your Intellectual Property Attorney

While the above information provides you with some initial guidance on license agreements, you should consult your intellectual property attorney before negotiating and signing such an agreement. While the above information is correct as of 1993, changes in the law may affect your particular situation. Before visiting your intellectual property attorney, you should gather certain information, including the following:

(1) a complete description of the intellectual property to be licensed, including copies of any relevant patents and patent, trademark, or copyright prosecution files;

(2) the monetary or other consideration to be given in exchange for the license grant;

(3) your financial, marketing, strategic, or other reasons for licensing;

(4) marketing and/or valuation analyses of the intellectual property rights being licensed;

(5) any other license agreements on the same or similar intellectual property rights; and

(6) as much relevant information as possible regarding your licensing partner, including financial analyses, other license agreements, and technical and marketing strengths.

Glossary

License Agreement - A contract between an intellectual property owner (the licensor) and a potential user (the licensee) that grants the licensee permission to use certain intellectual property owned by the licensor.

Assignment - A sale of rights, including ownership, to a particular item of intellectual property.

Exclusive License - A contract granting a licensee the sole right to use certain intellectual property to the exclusion of the licensor and all others.

Sole License - A contract granting a licensee the right to use certain intellectual property to the exclusion of all others except the licensor.

Non-Exclusive License - A license agreement that does not prohibit the licensor from licensing others in addition to the licensee.

TRADE SECRETS

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Trade Secrets Defined

When asked to define a trade secret, most people identify examples such as the secret formula for Coca-Cola or the "eleven secret herbs and spices" used by Kentucky Fried Chicken. However, a trade secret can be any valuable business or technical information whose economic value arises from the inaccessibility of the information to others who could obtain value from the information, and for which reasonable efforts have been taken to maintain the secrecy thereof. Trade secrets can include such things as production processes, formulations, computer programs, customer lists, marketing plans, or virtually any other business information that could be valuable to a competitor.

Unlike some aspects of intellectual property law, such as patents and copyrights, state laws rather than a single federal law govern trade secrets.

Under Bulgarian law a trade secret is defined as "information, including a formula, pattern, compilation, program, device, method, technique, or process that (1) independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by, other persons who can obtain economic value from its disclosure or use; and (2) is the subject of efforts that are reasonable under the circumstances to

maintain its secrecy."

Prerequisites for Protecting Trade Secrets

Unlike patent applications, or copyright registrations, there is no formal registration or application procedure for trade secrets. Indeed, public disclosure of your trade secrets could destroy your ability to seek damages for trade secret misappropriation or theft. As described above, the two requirements for trade secrets are (1) that the secret information must have economic value based on the inability of competitors to derive that information; and (2) that

reasonable efforts have been made to maintain the secrecy of the information.

The information claimed as a trade secret must be derived through legitimate means, such as independent development, and must not be readily ascertainable by others through a different, legitimate means.

The trade secret information itself need not be "novel" or "non -obvious," such as required by patent law. Information can be maintained as a trade secret so long as some elements are not readily ascertainable from a legitimate source. Legitimate sources are considered to be those available to the public, such as in magazines, trade

journals, reference books, or other published material. A product itself may also serve as a legitimate source of a trade secret. If the product can be "reverse engineered," any information derived from the reverse engineering cannot be held as a trade secret. For example, if the secret formula for Coca-Cola could be derived from the product itself, the formula could not be maintained as a trade secret.

Reasonable Efforts to Maintain Secrecy

"Reasonable efforts" to maintain secrecy essentially means limiting access to the information itself. Aside from preventing public disclosure, those with access to the information should acknowledge the trade secret nature of the information. In other words, your employees should be advised of their obligations to regard this information as a secret. We recommend using written employment agreements with non disclosure clauses. In addition, you should limit employee access to trade secrets to "a need-to-know basis." Thus, it is vital that you limit access to your trade secrets and take security measures to prevent disclosure of the trade secret information. There are circumstances under which you must disclose your trade secrets to third parties, such as suppliers, customers, or licensees. The same steps identified above should be taken with respect to third parties. That is, access should be limited to a need-to-know basis, and third parties should be advised of the trade secret nature of the information prior to disclosure. Again, a written non disclosure agreement is preferable. If documents containing trade secret information are

disseminated to third parties, the documents should be clearly marked as confidential trade secrets.

Term and Scope of Protection

Unlike patents and copyrights, which have limited lifetimes, a trade secret may be maintained indefinitely so long as it meets the two requirements set forth above. Your rights to trade secret begin with the creation of the trade secret, and the appropriate steps to maintain the trade secret. Trade secret protection terminates when the information is independently created, derived by another, or publicly disclosed. A party whose trade secrets have been misappropriated may be entitled to injunctive relief to prevent further misappropriation. The party may also be entitled to statutory damages under the BG Law. A temporary restraining order or preliminary injunction may be obtained to prevent further misuse of the trade secret until such time as the court can reach a final decision. This will prevent misuse or disclosure of a trade secret until the court can consider a preliminary injunction. A temporary

restraining order is typically limited to ten days. If the trade secret owner prevails in court, a permanent injunction may be entered. A permanent injunction essentially prohibits the defendant from using the trade secret.

Once the court can have a hearing on the matter, the trade secret owner can seek a preliminary injunction. The requirements for a preliminary injunction are as follows:

  1. the trade secret owner has a clear, legal, and equitable right to the preliminary injunction;
  2. the owner has a well-grounded fear of immediate invasion of that right; and

(3) the owner must show that the acts complained of have or will result in actual and substantial injury.

A permanent injunction is granted at the discretion of the court after a trial is held. The court will evaluate the public interest served through permanent injunctive relief as well as the three preliminary injunction requirements described above. In addition to or in lieu of injunctive relief, the trade secret owner who prevails in court may recover damages for the actual loss caused by misappropriation. The trade secret owner may also recover

for the unjust enrichment caused by the misappropriation where such damages are not taken into account in computing the actual loss. In extraordinary cases, such as where there has been will full and malicious misappropriation, the court can award exemplary damages, not to exceed two times the award for actual damages and unjust enrichment. In addition to exemplary damages, the court may also award attorneys’ fees to a prevailing trade secret owner when the misappropriation by the defendant was "intentional, will full, and malicious."

Interaction Between Trade Secrets and Other Forms of Intellectual Property Trade secrets may be patented or copyrighted. However, copyrighting or patenting a trade secret would constitute public disclosure, thereby vitiating trade secret status. Accordingly, the trade secret owner should be aware of the advantages and disadvantages with these other forms of intellectual property.

The advantage of a trade secret over a patent is that a trade secret provides an indefinite term of protection, so long as it remains a trade secret. In contrast, a patent provides a limited statutory term of protection (20 years from the first filing date for utility patent applications .

The disadvantage of a trade secret compared to a patent is that a patent protects the patent owner against independent creation by a subsequent inventor. A trade secret provides no such protection against subsequent independent invention. Subsequent independent invention may result in the loss of trade secret rights if the subsequent inventor obtains a patent for his invention. In such a situation, the trade secret owner may be liable for infringement of the subsequent inventor’s patent. This is a risk that the trade secret owner assumes when he elects to forego patent protection in the interest of maintaining the trade secret beyond the statutory patent term.

Like patents, copyrights have a limited statutory term of protection. As discussed above, trade secret protection can potentially last forever. While a copyright provides its owner protection against copying, it offers no protection against independent creation. Similarly, trade secret law provides protection against misappropriation but offers no protection against independent creation.

Transfer of Trade Secret Rights

As a trade secret owner, you can transfer or license your trade secrets to one or more parties. As discussed above, all transfers should include proper notification of the existence of trade secrets and a nondisclosure agreement completed prior to disclosure of the trade secrets to any third party.

Information You Should Bring With You When Discussing Your Trade Secrets With Your Intellectual Property Attorney

The information provided above outlines the steps that you should take to create and protect a trade secret. You may wish to have your intellectual property attorney review your employment agreements and licenses prior to implementing them. This will ensure that the non –disclosure provisions of these agreements will adequately protect your trade secret.

 

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