The New Space Race: Protecting Trade Secrets on the Final Frontier

Space: The final frontier.  For millennia, people have wanted to explore the great unknown of outer space, and series like Star Trek and Star Wars continue to our fuel our fantasies about what lies beyond our stratosphere.  This fascination, as well as countries’ desires to maintain their military prowess, led to the First Space Race after World War II.  Today, while NASA’s dominance may have fizzled out, private companies have embarked on a commercialized space race to gain market dominance from their designs. Indeed, the House of Representatives recently passed the SPACE Act to enable commercial space mining activities.

However, for as long as people have been thinking of ways to travel the cosmos, there have been miscreants looking to steal their ideas.  Before a company begins gazing towards the future (and future profits), it must consider several trade secret issues orbiting the aerospace sector.  Here are just a few of them:

  • State-sponsored trade secrets theft: In a highly publicized case from 2009, a former Boeing engineer was convicted of economic espionage for technology, some of which related to Boeing’s Space Shuttle program, for China.
  • Trade secret or patent protection?: Similarly, some companies may worry that if they publicly disclose their inventions to receive a patent, their designs will nevertheless be stolen by foreign competitors.  As a result, commercial aerospace companies may simply forego patent protection on some designs and instead opt for trade secret protection. In fact, Elon Musk of SpaceX recently said that his company has virtually no patents.
  • Cybersecurity: Companies will have to devise better encryptions and security methods to protect their secret information.  Recognizing the importance of cybersecurity, the U.S. Department of Defense issued final rules in 2013 requiring government contractors and subcontractors to provide adequate security to safeguard unclassified controlled technical information,” which applies to “technical information with military or space application.”
  • Compilations of information: Some companies have started launching asteroid-analyzing telescopes. These telescopes identify and compile large sums of data about what asteroids have the most resources to harvest. However, free riders may try to steal this information if it is not protected as a trade secret.
  • Preserving confidentiality while marketing products: If companies do not impose secrecy obligations on potential customers while demonstrating their products, they may inadvertently waive their trade secret protections. This is exactly what happened in Gal-Or v. U.S., when the U.S. Court of Federal Claims dismissed an Israeli scientist’s misappropriation claim because he failed to insist that his clients sign non-disclosure agreements each time he showed them his inventions.

Therefore, before a company can “boldly go where no man has gone before,” it must remember to protect its trade secrets at all costs. In an industry where success is contingent on R&D prowess, commercial space companies should rely on several traditional strategies to protect their trade secrets. Companies should use confidentiality, non-disclosure, and non-compete agreements to ensure that employees do not leak proprietary information. Companies should also jealously guard their trade secrets by enforcing these agreements whenever an infringement occurs. Finally, companies should limit physical and electronic access to its trade secrets to only those employees who need to work with the information.

In the meantime, be sure to stay tuned to TSW to gain more insight into ways to prevent corporate trade secrets from blasting off.