As vehicles become increasingly automated, new technology is giving rise to new partnerships. Telecommunications and tech companies are beginning to play a larger role in the design of vehicles, and they are leveraging their technology with OEMs (original equipment manufacturers) in an effort to create safe, cutting-edge autonomous systems.

The trend favoring these new partnerships will not lessen as regulations and compliance requirements become more stringent. But in the rush to form these new partnerships, companies are increasingly overlooking the risks to their trade secrets. These risks arise in three primary contexts.

First, we live in a time during which information is shared more frequently among companies than ever before. This increase in shared information dramatically escalates the risk of trade-secret misappropriation. Second, further driving up the risk of misappropriation are increased employee mobility and the ease with which information can be copied and taken. Taken together, these trends make it a dangerous world for trade secrets.

A third, less obvious risk lurks in the background. Future litigation will arise when AVs (automated vehicles) get into accidents. Although the link to trade-secret disclosure may not be obvious, it’s actually straightforward. The question of who is at fault in the case of an accident will become complicated as driver error is eliminated from consideration. The inquiry will focus on whether the vehicle functioned as intended and, if so, why was it designed to function that way? The answer won’t be easy because AVs will contain numerous parts from a variety of OEMs.

To guard against all of the above risks that may compromise their trade secrets, OEMs must think ahead and take steps to protect their trade secrets in the supply chain continuum. How can they do this? There are two main considerations:

  • Control what you can control — If you want to stop others from misusing or cavalierly disclosing your trade secrets, make sure you are protecting these secrets yourself. Implement a trade-secrets protection program. Identify your secrets and treat them as such. Identify threats. Require your employees to sign confidentiality agreements and restrictive covenants. Implement appropriate security policies and procedures. Train your employees. Assemble a team responsible for ensuring compliance and for responding in the event of a breach. Implement suitable security restraints. Litigate when necessary.

  • Control how others treat your information — Just as your organization must get its internal trade-secrets house in order, it must likewise look outwardly to identify and address external threats. Conduct due diligence regarding external business partners to ensure they have suitable protections in place. Look at their policies, procedures, and financial health. Assess their history, if any, of intellectual property theft. Ensure they have appropriate contractual restraints with their employees and make certain your contracts with your partners include adequate protection, as well. Clearly identify your confidential information, prohibit unauthorized use and disclosure and require notice of any efforts to obtain your confidential information by way of subpoena so that you have a sufficient opportunity to seek a protective order. Require segmentation of manufacturing processes and silo information where possible. Limit your partners’ ability to subcontract when appropriate, and provide yourself with the right to audit or inspect your partners’ procedures.

 

The bottom line

Your company is in business to make a profit. If you depend upon external business partners to sell your product or incorporate it into an end product, your ability to profit can evaporate if others obtain your secrets. As players in the AV industry, particularly if you are a startup, you will be racing to market. In your haste, do not overlook steps essential to protect your intellectual property. Instead, ensure you cross the finish with adequate trade secret protections in place.