When it comes to IP, it pays to diversify your portfolio
“Corporate espionage” sounds like a fancy term from a spy novel, but it’s a problem that affects a diverse range of businesses. If you have a star product that truly works, don’t be surprised if your competitors try to get their hands on it.
If you end up needing to sue someone for stealing your idea, it pays to have more than one winning argument. Business leaders need to understand the difference between patents, trademarks, copyrights and trade secrets, and how to use them in harmony to protect company property.
This blog post uses a recent court decision as a case study for defending your business from your competitors.
The Compulife Case
Compulife Software, Inc. developed a software program that generates and compares life insurance quotes. The company makes money both by licensing the software and by collecting referral fees. According to Compulife, one of its competitors was able to obtain a copy of its proprietary source code by pretending to be a legitimate licensee. The competitor then used the source code to create a bot and scrape a substantial amount of data from Compulife’s website. According to the court, Compulife's competitors copied 84 percent of the source code and after the scraping attack, Compulife’s revenue declined.
What has worked (so far)
Litigation for this case has been on-going for at least seven years. Compulife sued for a variety of claims including copyright infringement and trade secret theft and there has been much back-and-forth between the courts regarding which claims are valid and which ones are not. As of August 1, 2024, the 11th Circuit has sided with Compulife that it is owed compensation for violation of its trade secrets. However, it remains to be seen whether they will also be compensated for copyright infringement.
Don’t keep all your eggs in one basket
This case highlights why, when it comes to protecting company intellectual property, it pays to diversify and not keep all your eggs in one basket. The more legitimate legal claims that a company can bring, the greater its chances of coming out as the winner in the event of litigation.
Business owners are typically less familiar with trade secrets than other types of intellectual property. Patents and trademarks are registered with the United States Patent and Trademark Office. Copyrights are registered with the United States Copyright Office. However, trade secrets do not get registered. A trade secret is something that has economic value because it is a secret. It could be something as complex as proprietary source code or something as simple as a list of clients. The important thing to remember is that trade secrets have to be kept secret. Trade secret lawsuits fail when the competitor is able to show that the trade secret was readily accessible.
Different types of intellectual property require different types of protection. The larger your staff becomes, the greater the chance that someone falls victim to corporate espionage efforts. While you cannot prevent human error 100% of the time, you can set your company up for litigation success by keeping patents, trademarks, copyrights and trade secrets in good standing and appropriately protected.
Thanks for reading the Bevel Law Blog! While this information is hopefully helpful to you, nothing in this blog is intended to be legal advice. Always consult a lawyer before making any legal decisions based on topics in this blog.
Ready to secure your intellectual property? Book a call today at bevellaw.com/call.
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