The federal Defend Trade Secrets Act has ushered in a wave of litigation since its passage in 2016, heightening the need for companies to properly protect their intellectual property that is not patented.
But Tim Londergan, a long-time IP licensing executive and investor, said he noticed there were no enterprise software solutions on the market specifically geared toward effective trade secret protection.
Encouraged by IP lawyer Ray Miller, Londergan developed a trade secret management product called Tangibly that launched earlier this year and recently announced $1.3 million in pre-seed financing. The technology is designed to be used by general counsel, heads of IP and companies’ outside counsel.
Londergan and Miller, who is now a DLA Piper partner, recently spoke with Legal Dive about the key ways Tangibly can help companies manage their confidential data.
Londergan, Tangibly’s founder and CEO, said the primary use case for the software is helping companies identify and catalog their trade secrets.
Typically, companies’ research and development staff generate invention disclosures, and patents will be filed for a small percentage of the inventions cited.
Londergan said the innovations that are not patented could be categorized as trade secrets, but too often they are not proactively managed in that fashion by companies.
“What Tangibly helps people do is codify the fact that these are now trade secrets,” he said. “Two-thirds of our users start there because that's the most obvious place where they've got the need.”
Miller said cataloging is particularly important in the aftermath of the Defend Trade Secrets Act, which has resulted in companies becoming more likely to categorize their IP as trade secrets rather than filing for patents. The European Union’s 2016 Trade Secrets Directive has had a similar impact internationally, Londergan added.
“I think what you're going to start seeing is more of a balance between well-categorized and cataloged trade secrets and the patent portfolios [companies] have always had,” Miller said.
Employee and partner management
Once trade secrets are designated as such in Tangibly, the technology helps companies track who has had access to them.
Miller said the ability to use Tangibly to monitor which employees have been exposed to specific trade secrets is particularly helpful when an employee moves to a different position within the company or leaves for a new job.
In-house lawyers or their outside counsel can remind the departing employees of their trade secret exposure — and even notify the employees’ new employer if necessary.
“That's really important because when the trade secret issues pop up, they are not typically in the context of some third-party trying to steal a trade secret,” Miller said. “They typically pop up in a situation where an employee moves from one company to another.”
Meanwhile, Londergan noted that companies in industries such as the life sciences and biotech often work with outside partners who are given access to their trade secrets. But keeping track of who has been given access to confidential information is a common company pain point, and Tangibly can help address that issue.
“What we're seeing is that Tangibly provides sort of the ultimate documentation platform for notifying those partners that they have the company’s trade secrets,” said Londergan, a former Intellectual Ventures executive and WaveFront Venture Labs founder.
Non-disclosure agreements, or NDAs, are another tool companies frequently use in hopes of protecting the confidentiality of their trade secrets.
But Londergan said many companies do not have effective NDA processes in place, which can result in agreements that don’t cover the right material or expire too soon.
In response, his company has released a free tool called Tangibly Share that assists users with NDA creation, execution, tracking and auditing.
“We heard from enough GCs at important companies that their NDAs are still a mess,” Londergan said. “We built Share with the idea that you just need to centralize these [documents], keep an eye on the expiration dates, make sure they're actually signed and easy to find.”
Miller said he could envision Tangibly Share quickly gaining strong traction in the market given the high importance of NDAs in a range of industries.
One additional element of Tangibly that both Londergan and Miller said has generated positive feedback from users was its educational component.
The platform’s website includes short informational videos about trade secrets topics that employees without legal expertise can understand. The videos are also designed to make the content, which can be dry, more interesting.
“What we found was that the companies that do a very good job managing their trade secrets, training is a core component of it,” Londergan said. “But even then, it's often a bit boring. It’s often lawyers droning on for hours at a time. And so for us, it became basically an opportunity to start creating our own content.”
Tangibly’s recent funding round was led by WS Investment Company, which is Wilson Sonsini’s venture arm, and Madrona Venture Group. The company’s investors also included seed funds, influential founders and angel investors, among them Clio CEO Jack Newton and avvo.com Founder Mark Britton.
Londergan said the new capital will be used in part for product development utilizing artificial intelligence and machine learning, with one goal being the ability to provide risk analysis to companies based on trade secrets litigation data.
“We are excited to back Tangibly as they build their platform into a solution for global companies in all disciplines,” said Patrick Schultheis, a partner at Wilson Sonsini, in a prepared statement.