Technology Protection Agreements

One of the hidden benefits that come with any Iron Mountain escrow agreement is protection against copyright, trade secret and patent infringement. The name of the service is a Technology Protection Agreement (TPA). A TPA tracks the genealogy of a depositor’s products or ideas. The features of a TPA are part of any Iron Mountain full-service escrow contract, provided you don’t replace deposit materials.

Many software developers, who don’t need to register a beneficiary for their escrowed materials and are mainly interested in protecting their own intellectual property assets, have chosen to open a low-cost TPA account with Iron Mountain. A TPA encourages software developers to file early versions of their source code with a neutral third party. It is this kind of precaution that can make the difference in ultimately protecting copyrighted or patented material, and it substantiates the due diligence and protection claim to validate a trade secret.

Patent Protection
Intellectual property legal experts say that in the area of software patents, what is often litigated is the issue of when an idea is conceptualized. This means that a person whose patent is challenged may have to show when his idea was conceived, and, in some cases, when it was put into use, and that requires documentation. Iron Mountain can provide the courts such pertinent information, as long as the developer has made regular and complete installments into its TPA account.

Copyright Protection
Much of the same is true in protecting software vendors in copyright disputes. One of the key copyright law controversies in the software industry is how the technology was created — that is, whether the building blocks of the software in question were simply borrowed from an existing program or created from "whole cloth" without using the proprietary knowledge of another.

A software developer must be able to demonstrate that the source code was independently developed and document the progress achieved along the way. With a TPA account, Iron Mountain will date and time-stamp all deposits and keep deposited materials separate so that the integrity of older versions already in escrow is maintained. This way, a genealogy of the product is kept on record with an independent third party, who can then testify to its legitimacy.

Copyright documentation also comes into play with regard to the U.S. Copyright Office, which requires that the first and last 25 pages of source code be filed with them. Prudent legal counsel, though, will advise their clients to deposit the entire source code of the registered version in escrow. Such a deposit removes any doubt of the content of the copyrighted works.

Trade Secret Protection
In trade secret cases, plaintiffs must show that they did, indeed, treat the technology as proprietary. This can be done, for example, by requiring former employees to sign exit forms. These forms restrict them from sharing any of their proprietary knowledge with a competitor. In addition, an employer should implement security measures to limit access to the proprietary technology and escrow all sensitive work documents. Prudent legal counsel will recommend project documents be copied, including all associated materials, such as written code, flowcharts, letters and memos. When Iron Mountain accepts those materials, keeps a record of their contents and processes them into an escrow account, it reinforces the confidential status of the information.

Conversely, if employees or visitors can easily procure a copy of the source code from someone’s desktop, it may be difficult to prove that the owner considered the technology to be a trade secret. Setting up a TPA for the sole purpose of protecting intellectual property as a trade secret will put to rest many arguments to the contrary.

Just over the last few months several trade secret infringement lawsuits have been filed and are under investigation. While Iron Mountain is not aware of any of those named in the lawsuits having the foresight to use a TPA-like concept to protect their trade secrets, these cases help illustrate the importance of TPA in trade secret disputes. Of particular concern is the need to store each version of a computer program as it evolves.

For example, in May Novell Inc. sued three former employees and their start-up company, Wolf Mountain Group Inc. In the suit, Novell alleged that they stole trade secrets and breached employee contracts in the development and pending release of a version of Novell’s top-secret clustering technology, which had the code name Wolf Mountain.

Novell’s suit claims that it is beyond reasonable belief that the defendants could have independently developed a new and unrelated clustering technology in the few days between their departure and their announcement of a pending release of the new technology.

Wolf Mountain’s attorney said that while they have a contract to keep in confidence trade secrets, it does not prohibit them from competing. At issue is, perhaps, the interpretation of that contract, but both Wolf Mountain and Novell would benefit if they had escrowed the documentation of the development of the clustering technology and of the work conducted on that project. Much clearer evidence may exist for the courts from a neutral third party to help render a decision.

Wolf Mountain, if it does not produce records of earlier versions of the technology, may have to fight a previous court ruling. In at least one case, the court has decided that whether the source code documentation was destroyed unintentionally or deliberately, it can be inferred that the programming was stolen.

And for Novell, if it had set up an escrow account, a third party could testify, and any question of its integrity would likely be dismissed.

Proof of Ownership
On a similar note, a TPA can solidify a software developer’s position in merger or acquisition negotiations. When a software business owner seeks to sell his company, his greatest asset will be his intellectual property, and a TPA account will serve to authenticate his ownership of the technology. An audit trail will strengthen his posture during negotiations.