Most Well Kept Automotive Industry Trade Secrets | Everything You Need Know

Every business can learn the ins and outs of trade secret protection by following the example set by the automotive industry. Today’s auto manufacturers use a combination of legal tools to protect their most valuable information, including non-disclosure agreements (NDAs), intellectual property (IP) audits, and physical and digital security to limit access. You could consider the auto industry’s complex protection of its trade secrets a trade secret it chose to share with other industries.

4 Ways To Protecting the Automotive Industry’s Secrets

1. Learning the Need for Protection

Today, according to The Zebra, each American drives an average of 14,263 miles per year, but, in the earliest days of automobiles, people rarely drove long distances or racked up mileage. Most people wanted a car or motorized bike for commuting. Many bicycle companies added motors to their trikes and bikes, leading their engineers to explore adding tires to form a four-tired vehicle.

Even the top companies, such as The Rover Company, didn’t develop their engines; early engineers at what we now call Range Rover pulled an engine off of another manufacturer’s design and reverse-engineered it. That sort of activity worked to vault designs forward quickly but did nothing to protect the privacy of each company and its designs. The legal industry helped with that by encouraging engineers to patent designs while in development and use NDAs to ensure trade secrets didn’t accompany an engineer hired away by another company.

2. Improving Security for Modern Auto Design Secrets

In some instances, similarity to others proves a good thing, but not so in auto design. For example, 90% of people residing in the Western world marry before age 50, but in automotive design, it pays to belong to the rare 10%. Automakers build teams of their most talented engineers to design race cars for Formula 1 and NASCAR with sponsorships paying for a portion of their research and design (R&D). These elite vehicles and the races that test them provide a paid proving ground for industry developments.

In 2007, automotive manufacturers discovered the need to improve their trade secrets’ protection when Team Ferrari’s race technical manager, Nigel Stepney, defected to Honda, taking with him many trade secrets. Sharing these designs with rival automaker McLaren for four months, Stepney defied basic tenets of fairness in trade and business legality.

Also Read: Best Honda Sports Cars

His actions stemmed from anger at the promotion of Mario Almondo to Team Ferrari technical director but transformed legal protections used by automakers, and resulted in McLaren’s disqualification from Formula 1 competition in 2007, a $100 million fine for the auto manufacturer, and 20 months in prison for Stepney. Today, manufacturers limit access to trade secrets using physical and digital methods, updating access to information as soon as an employee’s status changes, plus requiring non-competition agreements (NCAs), along with NDAs.

3. When Vehicle Defects Reveal Designs

Sometimes, an automaker’s trade secrets reveal themselves when a flaw in the design causes widespread problems that may necessitate a recall. According to HowStuffWorks, vibration from a vehicle’s undercarriage provides the number one sign of a drive shaft gone bad. That fact stems from many drive shaft problems and mechanics asking car owners what led to them bringing the vehicle in for service. When a poorly made design causes many owners to take their vehicles in for servicing, mechanics share information, which can lead to discovering what makes one manufacturer’s design different from others.

4. Protect Your Business Trade Secrets

The competitive automotive industry has become a proving ground for the protection of trade secrets. Learn from it and consult with a business attorney to develop protocols that protect what makes your business special. Consider combining an IP audit with NDAs, NCAs, and enhanced security protection that reduces the number of people with access to your business’s trade secrets, just as the automotive industry has done.

Conclusion

In conclusion, the automotive industry’s meticulous approach to trade secret protection offers a blueprint for businesses across all over. By employing a combination of legal agreements, rigorous IP audits, and robust physical and digital security measures, companies can effectively protect their important information from competitors. This not only protect their innovations but also deafened their market position.