Losses to businesses from the theft of their trade secrets add up to as much as three percent of the U.S. gross domestic product, according to a 2014 report by the Center for Responsible Enterprise and Trade and PricewaterhouseCoopers LLP. Yet a 2017 study by law firm Baker McKenzie found that less than a third of companies maintain inventories of trade secrets and have action plans for responding to theft.
A product launching today, Tangibly, targets precisely that problem. It says it is the first IP management platform to systematically tackle trade secrets, helping companies identify and catalog trade secrets and transform them into protected assets, much as companies already do with their patents and copyrights.
“There’s technology to protect nearly every other asset class, but there is still a major gap in tech for trade secrets,” said Tangibly founder and CEO Tim Londergan, a longtime IP licensing executive and investor, who said that many companies still manage trade secrets on a spreadsheet.
“These are assets that significantly impact enterprise value,” he said. “By ensuring that every aspect of trade secrets is protected to the highest legal standard, companies of every size can now mitigate IP risk and protect their competitive edge.”
Protecting ‘Brilliant Ideas’
Describing himself as “a chemist by training, an entrepreneur by circumstance,” Londergan told me he had long been concerned with the lack of formal protections for the know-how that was the core intellectual property for most companies. Even as companies took measures to protect and license their patents, few were paying attention to protecting their trade secrets.
That began to change in 2016 with the enactment of the federal Defend Trade Secrets Act, which gave rise to a new area of litigation and an evolving body of common law pertaining to protection of trade secrets, Londergan said. But even then, while there are established rules and procedures in place for protecting other forms of IP, the process around protecting trade secrets remains largely do-it-yourself.
“Most companies just are doing a poor job of the best practices, which is that you’ve got to document this stuff and you need to let people know that you’re treating it as a trade secret,” he said.
Mark Britton, the former founder and CEO of Avvo and a Tangibly investor, said he believes companies have a strong need for a product such as this.
“Every company I’ve worked with has the same problem: Brilliant teams coming up with brilliant ideas that they can’t patent,” Britton said. “Through regulatory filings, investments, partnerships, whatever, these ideas regularly spill into the public domain with no structure, no protection.
“Tangibly changes this – their software keeps brilliant ideas where they belong – inside the brilliant companies that originated them.”
Focused on Five Questions
In a recent briefing, Londergan told me that Tangibly is architected around five questions companies should be able to answer regarding their trade secrets:
- What is it? This involves identifying a company’s trade secret assets. “If you can’t be specific about what the asset is, then good luck litigating it,” Londergan said.
- Who has access to the trade secret? Tangibly uses three personas — employees, contractors and partners — to define the contractual relationships that may protect the asset.
- Do they know it’s a trade secret? Tangibly incorporates a workflow that sends a digital-signature request to those who have access for them to acknowledge that it is a trade secret.
- What contracts are protecting the asset? Tangibly helps a company catalog all those contracts and their expiration dates.
- Have they been trained? Tangibly provides a series of training modules for employees and others and then tools to document the training.
As it launches today, Tangibly offers two distinct products. Tangibly Manage is the core trade secret management platform. The cloud-based platform provides a dashboard where users can manage all their assets and associated people. It enables companies to ensure that their assets are well organized, articulated and protected.
A second product, Tangibly Share, is designed to make it easy for companies to execute and track NDAs. It provides tools rapid execution of NDAs and then for tracking and auditing them.
Future plans for the product call for greater automation and risk assessment, using AI-enabled tools for rapid portfolio assembly and risk management. This would include helping companies identify where they are likely to have trade secrets, given the business they are in. The risk assessment part would automate understanding of the state of case law and how that should influence a company’s protection of its portfolio.
Even further down the road, Tangibly would help companies think about how to monetize their trade secret assets.
No Direct Competitors
Londergan says Tangibly has no direct competitors on par with what it is offering. A U.K. product called Hazel purports to offer trade secret asset management, but its use appears to be primarily as an adjunct to its founder’s IP consulting practice. Another, Trade Secret Examiner, appears to be primarily a database inventory system.
Tangibly has partnered with multinational corporations to beta test the application, some of which have already converted to paying customers, Londergan said. Major law firms, including DLA Piper and Ulmer, are also piloting Tangibly for their clients and their firms’ own use.
Pricing for the Tangibly Manage product is on a per-seat basis, with options for enterprise pricing. The Tangibly Share product is sold separately and is available to try for free.
Londergan said that Tangibly has received seed stage investments from some small Seattle based funds and a small group of other angel investors and is working on raising a seed round.
Investor Britton, who was general counsel at Expedia before founding Avvo, told me that when he was a GC, he was consistently amazed how little of the company’s business was protected by the patent laws.
“In every joint venture, potential partnership or international launch, our legal team was usually crossing its collective IP fingers rather than relying on any meaningful governmental protection,” he said. “Tangibly helps protect the whole IP iceberg, rather than just its tip, and that’s why I’m so excited about what they are doing.”