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Trade Secret Protection

The American Bar Association estimates the market value of S&P 500 companies can include as much as 75% of intangible assets. This is quite an increase over a 1975 estimate indicating less than 20% of these companies’ collective market value consisted of intangible assets. A good portion of these intangible assets is intellectual property which includes patents, trademarks, copyrights and trade secrets. As you may be aware, there is now federal jurisdiction for trade secret theft.  The Defend Trade Secrets Act of 2016 (DTSA) was signed into law on May 11, 2016, after being unanimously passed in the Senate and ratified in the House by a vote of 410-2. The DTSA became immediately effective for all trade secret misappropriation taking place after the bill’s signing date.

While many of us might not think of trade secrets (such as the formula for Coca-Cola) as being commonplace, the National Science Foundation estimates that corporations actually employ trade secret protection perhaps two times as often when compared to patents.  As such, trade secrets certainly constitute a significant amount of value of intangible assets for American corporations. Trade secrets can include a formula, practice, process, design, instrument, pattern, commercial method, or compilation of information.  To fit the federal definition of a trade secret, the information must include a) information; b) reasonable measures taken to protect the information; and c) information which derives independent economic value from not being publicly known as defined under 18 U.S.C. § 1839(3) (A), (B) (1996).

A paper co-authored by create.org and Pricewaterhouse Coopers estimates that trade secret theft ranges from 1% to 3% of the Gross Domestic Product of the U.S. and other advanced industrial economies. As such, the federal government chose to create a federal cause of action for trade secret misappropriation in the DTSA. This legislation includes a three-year statute of limitations, and it authorizes remedies similar to those found in current state laws. The DTSA also creates a seizure procedure for use in extraordinary circumstances where the offender “would destroy, move, hide, or otherwise make such matter inaccessible to the court, if the applicant were to proceed on notice to such person.”  While the seizure may be carried out immediately, the new law provides that the court shall set a hearing not less than seven days after the issuance of the order.  Finally, the law protects whistleblowers from retaliatory accusations of trade secret misappropriation, so long as the whistleblowers disclose the trade secret information to government or court officials in confidence.

The DTSA does not preempt existing state law, which will preserve options for metalcasters in regard to whether to file federal or state claims and court selection.  It also notably omits any requirement that a trade secret plaintiff describe its trade secrets with particularity, which helps to protect the sensitive trade secret information after prosecution of the offender.  The criminal provisions of the DTSA increase the penalties for a criminal violation from $5,000,000 to the greater of $5,000,000 or three times the value of the stolen trade secrets to the organization, including the costs of reproducing the trade secrets.

As a result of the legislation, your metalcasting operation may wish to consider four responses to the DTSA after consulting your business attorney:
First, you may wish to update your employment and confidentiality agreements to disclose the whistleblower immunity provisions in the DTSA. If you do so, your metalcasting facility may be eligible to recover double damages or attorney fees in trade secret litigation.

Second, reevaluate your company’s tolerance for bringing trade secrets claims. Many companies have been deterred from making claims in the past because of the uncertainties and delays in state courts. Federal courts, however, have smaller case loads, allowing them to more directly and efficiently manage such litigation.

Third, take inventory of your company’s trade secrets and evaluate the protections in place to maintain the confidentiality of those secrets. Preventative measures are far more effective and less costly at keeping your secrets safe than trying to “re-secure” a trade secret after it is disclosed.

Fourth, develop response plans for suspected misappropriation and for receiving a seizure order. Trade secret litigation tends to move relatively quickly. Having a plan for what to do in the event your secrets are stolen will prevent unnecessary delays that can compromise your rights. 

Click here to see this story as it appears in the April 2017 issue of Modern Casting.


Plant Energy Benchmarking for the Metalcasting Industry

How much energy does it take to produce a pound of finished casting?

The honest answer to this seemingly simple question is: “It depends.”

Why is that?

Energy benchmarking is the tracking of energy use using standard metrics to compare past and future performance. Such metrics sometimes can be used to set usage standards to compare your energy use to similar machines in the same facility or to similar machines at other facilities. But our industry brings significant challenges that complicate the issue.

Efforts have been made to establish energy usage standards for the metalcasting industry by the U.S. Department of Energy (DOE) and others, without much success. An ideal benchmarking methodology continues to be sought, but has not yet been identified.

You can’t manage what you don’t measure. Energy benchmarking requires a regular regimen of data collection of energy consumed correlated in time with the amount of finished product produced. The time interval of the data collection is critical; it will provide your smallest time window into the operations of your organization. Putting time-resolved power meters on major energy consumption devices helps provide a better understanding of your power consumption and provides new insights into your production operations.

Perhaps an analogy is in order. We can easily calculate the actual mileage that our car gets for each tank of fuel. Establish your mileage and you can compare the cars’ fuel cost and performance over time. This is a simple form of benchmarking. Collecting mileage metrics has led to estimated mileage standards by the EPA to help us when we shop for a new car. But such standards are established for only four categories of vehicles, based on two factors: vehicle type (passenger cars or light trucks) and size of the vehicle. As the sticker on the window warns, “Your Mileage May Vary.” Many factors, such as driving style, traffic congestions, tire pressure, etc., will influence the mileage that you get in your car.

Energy usage in the metalcasting industry is affected by many more variables than calculating car mileage. Hold times on furnaces, power settings, energy types and costs, metallurgy type (including which alloy), insulation levels, maintenance issues, outside temperatures, and other operational issues can be the metrics you include in the values to be benchmarked.

Two operations are rarely identical in energy performance—even in the same facility with similar equipment. In fact, performance between different shifts with the same equipment can be significantly different. For example, certain mechanical properties of the final product may require different heat treatments using different amounts of energy.

When benchmarking against the amount of finished product produced, plant recovery operations will greatly affect results. Benchmarking metrics will all be affected by melt loss, planned recovery from machined material losses and unplanned recovery losses, like spills and scrap.

Establishing the Baseline
Tracking essential metrics does not have to be difficult. A spreadsheet can be used to establish basic benchmarking capabilities. This simple analysis is only useful for the case in which the electricity monitored by the meter in this example is primarily used for production equipment and not building HVAC.

If you’re looking for a more comprehensive spreadsheet-based tool, Energy Performance Indicator (EnPI) has been developed by the DOE Advanced Manufacturing Office (AMO). EnPI V4.0 is a regression analysis-based tool developed to help plant and corporate managers establish a normalized baseline of energy consumption. This tool can track annual progress of energy-use improvements, energy savings, Superior Energy Performance (SEP) metrics, and other energy-related metrics that account for variations due to weather, production, and other factors. This DOE tool is designed to accommodate multiple users including Better Buildings, Better Plants Program and Challenge Partners, SEP participants, other manufacturing firms, and non-manufacturing facilities such as data centers. The EnPI add-in can be downloaded at https://ecenter.ee.doe.gov/EM/tools/Pages/EnPI.aspx.

There is a great benefit from energy benchmarking in order to monitor vital metrics within your own organization. It will give you the ability to find serious cost savings, improve process efficiency, and increase production throughput… often with little or no capital expense. Is it time to better understand how a major expense for your company is spent? The choice is yours; the electric bill will continue to arrive in the mail. 

Click here to see this story as it appears in the April 2017 issue of Modern Casting.

 


On the Leading Edge of the Industry

This issue of Modern Casting includes a major focus on additive manufacturing. There are case studies from our industry, perspectives to consider, and perhaps a call to action for your own company. The issue follows the American Foundry Society’s first multi-day conference on additive manufacturing last autumn.

At that conference, held Oct. 3-6 in Novi, Michigan, we had an exciting and close look at how these emerging, disruptive technologies are being used in our industry to produce cast components and what it will mean for metalcasters. We toured facilities that have adapted additive manufacturing as significant parts of their business plans.

Just as additive manufacturing is on the leading edge of our industry, each month our editorial team strives to provide inspirational, informative, and interesting content that helps you and your team be as innovative, productive, and profitable as you can. There are frequent updates on other technological process advances, tips on eliminating casting defects, stories of successful conversions from fabrication to castings, government affairs updates, and insight into ways to engage your manufacturing workforce to perform at the highest possible level.

Speaking of high-performance workforces, AFS is on the leading edge of providing knowledge and skills training for the metalcasting industry. All AFS Institute classroom courses have been revamped to employ adult-learning best practices. For those who prefer training in the convenience of their own facility, the AFS Institute offers most courses as in-plant, company-specific options. Moreover, many dozens of foundries are now employing e-learning from the AFS Institute to develop their talent, as was noted in a recent Modern Casting case study of Charlotte Pipe and Foundry. A skilled workforce can not only improve a foundry, but also differentiate it from the competition.

Metalcasting is a fast-changing industry, operating in an atmosphere of rapid-fire change in the marketplace, the workforce, and in government. AFS has an obligation to help lead the industry successfully through these changes. Modern Casting is one of the essential ways we communicate critical information and advance those aims.

Thank you for your readership, and enjoy this issue.

Click here to see this story as it appears in the April 2017
issue of Modern Casting.

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