MRO Q&A: How to Prevent Machine Trade Secrets from Going Public

A reader asks...

We have equipment we have modified over the years to improve efficiency and cut repair costs. Because some of it is under warranty, the suppliers often are in our plant to perform scheduled maintenance. What is the best way to prevent our improvements from being given to our competitors while not alienating our vendors?

Our expert responds...

You should be applauded for making modifications that move the operation forward. I would think many of the modifications are on pieces of equipment that are out of warranty. If it is under warranty, the vendor would still be liable, provided you required a performance guarantee. First, you can require a confidentiality agreement with the vendor and stipulate that any equipment changes made by your company are the sole property of your company. This is very difficult and expensive to enforce if you have to.

The second line of defense is to isolate modified equipment from vendor personnel who are working in your plant. If this is not practical, you might consider covering sensitive equipment with a tarp and restricting the vendor from the area. If your modifications involve programming, it would be almost impossible to ascertain what the modifications are if the equipment isn’t running. Your last option is to eliminate the requirement for or the enforcement of warranties. Review your past history of the number of times you have actually claimed or collected based upon a warranty to see if this is practical.

The particular strategy you use will depend upon several factors and will be specific to your situation.