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Lecture 4 v2 - eHandout Business Professional Ethics...

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e Handout Business & Professional Ethics Lecture 4 v.2 1 Dr. David E. McClean This Lecture Discusses Issues Surrounding Trade Secrets, Conflicts of Interest and Confidentiality Businesses have possession of information or knowledge that is proprietary and critical to their overall success. Such information comes in a variety of forms, including such things as cash on hand, plants built and operating, and potential litigation. Much of this information or knowledge is of such a nature that the business does not want it to fall into the hands of the general public or, especially, competitors or potential competitors. A special category of business knowledge is called trade secrets . As Boatright discusses it, trade secrets consist of information or knowledge that was developed by the business and is proprietary to the business, and is of such importance that the ability of the business to compete would be harmed, significantly, if the knowledge that comprises the trade secret were disclosed to parties outside of the business. What kind of information are we talking about? Well, for example, the “special sauce” recipe that McDonald’s uses in its Big Mac sandwich is a trade secret. The Big Mac is a centerpiece of the McDonald’s menu, and has been for decades. The “special sauce” is probably the critical ingredient, since it is what gives the Big Mac sandwich its distinctiveness, since all of the other ingredients (lettuce, tomatoes, bun, sesame seeds etc.) are commonly found in other hamburgers sold by other restaurants. If the recipe for the “special sauce” were to get out, it would likely cost McDonald’s tens of millions in lost revenue, since competitors would likely duplicate the Big Mac and draw customers away. The company’s competitive advantage would be harmed. According to intellectual property attorney Gene Quinn, a trade secret “is defined as any valuable business information that is not generally known and is subject to reasonable efforts to preserve confidentiality. Generally speaking, a trade secret will be protected from exploitation by those who either obtain access through improper mean as, those who obtain the information from one who they know or should have known gained access through improper means, or those who breach a promise to keep the information confidential. While virtually every business has at least some trade secrets, they are quite fragile because they protect information and resource that are secret, which necessarily means that protection is lost if and when the secret becomes publicly known.” (IPWatchdog.com/tradesecret) According to the Uniform Trade Secrets Act, a trade secret “is information, including a formula, pattern, compilation, program device, method, technique, or process, that (i) derives independent economic
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e Handout Business & Professional Ethics Lecture 4 v.2 2 Dr. David E. McClean value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means
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