Tuesday, August 18, 2015

WD-40's Formula Remains a Trade Secret

The formula for WD-40, the lubricant, rust protector, and squeak eliminator, is locked in a vault in San Diego.  Chemists invented it sometime in the 1950s to stop corrosion on the outside of the Atlas space rocket.  Amazingly, the chemists wrote the original formula in pencil on a notepad.  In order to maintain the secrecy of the formula, WD-40 mixes it "in house" and then sends the concentrate to its manufacturing operations.  From there, the manufacturers add some other ingredients and then put the product in the blue and yellow containers with the red cap. 

It takes quite a bit of work to maintain a trade secret.  Often, the secret or product is no longer useful or wanted by consumers.  It is amazing that the WD-40 recipe is still both a secret and in demand.  In fact, WD-40 keeps growing steadily.  Its growth is especially apparent in foreign markets.  Sometimes when you have "that" one product that you believe will be in demand for decades, it makes more sense to try and protect it as a trade secret rather than try to patent it.  It takes work and constant vigilance, but if successful, you can have protection for a very long time.  Whereas, with a patent, you get protection for a relatively short period of time. 

It is a good idea to conduct an annual review of your company's trade secrets in order to make sure that they keep their trade secret status. 

Tuesday, August 11, 2015

Handshake Deals Not Recommended

If I had a dollar for every time a client or potential client came to me and said that they did not need a written agreement for a business deal they were entering into with a friend . . .

It is all too common for friends who decide to go into business together to rely on that friendship rather than a good ol' fashion agreement.  I often see the results of when the business relationship and the friendship sours.  It turns into an ugly divorce! 

A recent news article reminded me of how these relationships based on handshakes, oral agreements, and napkin scribblings often turn into a legal quagmire for those involved.  The creation of Facebook was a fairly high profile example of how things can go so wrong without an agreement in writing.  Now, Snapchat, Inc. is suffering the same malady.

The "founders" of Snapchat, Inc. conceived of their idea for what they hoped to be the next technology start up to make it big.  They agreed to be partners via handshake in their undergraduate dorm room (at that school that shall not be named).  The Snapchat "partners" later became embroiled in a bitter dispute when one founder ousted the other just as the company was going big.  The "partners" settled their dispute sometime last year.

Now, the founders of the message board application Yik Yak, are squabbling.  The common theme throughout these disputes are that the founders are either friends or family.  Each side believes that the friendship or the family relationship is a strong substitute for a binding business contract.  Unfortunately, that is a recipe for disaster especially when an event involving money occurs.  More often than not, the event is a huge influx of cash (purchase by a larger company) and each of the partners wants to get their fair share. 

Unfortunately, my clients get me involved when things go bad rather than at the beginning.  Having clearly defined roles and goals at the beginning will save headaches at the end.  It is important to memorialize your business relationship even if you are friends or family.

Thursday, August 6, 2015

Copyright Infringement and Twitter

Surprisingly, it took this long for a copyright holder to sue Twitter for copyright infringement, but a photographer recently did so.  The lawsuit alleges that someone shared a copyrighted photo owned by the photographer on Twitter.  The account that shared the photo is no longer active.  According to the complaint, the photographer issued a takedown notice pursuant to the Digital Millennium Copyright Act ("DMCA") to Twitter.  Allegedly, Twitter ignored the takedown notice prompting the photographer to file her lawsuit in California. 

The question in the case is whether Twitter is liable for copyright infringement when one of its users shares a protected photograph even though the account is no longer active.  Despite the account being inactive, the photograph remains on Twitter.  The most likely avenue for asserting liability against Twitter would be if Twitter failed to act on the DMCA takedown notice.  As long as an internet service provider (Twitter, in this case) complies with the DMCA in handling takedown notices, the internet service provider is not liable for copyright infringement. 

This will be a case to keep an eye on as it progresses.