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by Dr Erica Smith
The local retail sector is undergoing fundamental changes. This has been evident since 2020 and the onslaught of the COVID-19 pandemic when many people, unfortunately, lost their jobs temporarily and permanently. Businesses and consumers were forced to quickly adapt and accelerate their transition to e-commerce. The result has been an increased diversity of suppliers for all types of goods including food retail.
What has been interesting is the number of people who are selling many of the same products, English supermarket brands and otherwise, available in major local retail outlets and on social media at very competitive prices.
This raises a number of questions: How many of these entrepreneurs were or even are employed in food retail locally? How much time and money did they have to invest in research, identifying and negotiating with suppliers and building relationships? Many companies assume when you speak of Intellectual Property (IP) that you are concerned with copyright, patents and trademarks, not recognising the value of trade secrets which are also a form of IP.
Even if they do, the understanding is often limited to recipes and methods, but tremendous value also resides in supplier, customer, and price lists. If an employee has access to these then it is very easy to compete with their employer very quickly after leaving the job. Of course, some might even compete for the job!
An employer cannot unreasonably restrain a former employee from working in the same field or even becoming a competitor and this is an accepted reality of doing business. But, if the value of trade secrets is understood, then steps should be taken to at least delay the former employee from being a competitor.
First, the company must understand what its trade secrets are, that is, its undisclosed know-how and business information of commercial value. Of course, some employees must have access to trade secrets, but this access should be limited to as few persons as possible, on an as-needed basis, who are subject to confidentiality agreements and internal policies.
Internal policies should ensure that documents are appropriately labelled so that employees are clear about who can have access and the ability to copy, distribute including electronically and even remove these from the premises. Documented information should be maintained in a secure location, such as a safe and passwords and other technical measures should be applied to electronic documents.
The above concerns do not only apply to the food retail industry and documented information. People often query, for example, how to protect secret processes or methods. As might be expected, these can be more challenging and there is always the possibility of reverse engineering, which is legal. One strategy is to separate the processing into stages and to limit the access of employees to the specific stages and thereby their knowledge of the process in its entirety.
A related issue arises where employees develop know-how or implicit knowledge on the job and fail to share it so that when they depart, the knowledge departs with them.
Have you ever experienced a sudden change with a popular meal at a restaurant after many years because the chef left? Many restaurants have lost customers because of the chef’s recipe and method not being made institutional knowledge, even if this information is maintained as a trade secret of the business. If the value of this knowledge is understood, then the business will ensure there are internal systems to capture, codify and document this information.
These strategies are not only relevant for large businesses but also for small and medium enterprises. It should also be understood that they are generally not used on their own but as part of an overall, comprehensive intellectual property management strategy.
Caribbean businesses need to appreciate that IP is not some abstract foreign notion but that it is increasingly part of the business landscape and a key determinant of competitiveness and sustainability.
Erica K. Smith PhD is a regional consultant with expertise in intellectual property strategy and management.