A trade secret is knowledge that offers a corporation a competitive advantage. Its worth stems from the fact that it is not generally recognized, and making it public would diminish its worth. Trade secrets are legally protected, most notably under the Lanham Act and the Uniform Trade Secrets Act, although there is no official registration mechanism. Protection lasts just as long as the trade secret stays private, but it may last indefinitely if no one exposes it.
A trade secret is something that has independent economic worth for a corporation. This includes the following:
Recipes and formulae, such as the secret recipe of the KFC Colonel
Innovative ideas for which you have not yet applied for a patent
Marketing strategies that are unique to the firm
Manufacturing procedures
The client information of a corporation
Not all trade secrets are meant to be preserved indefinitely. You may just have to keep them hidden until you’re ready to expose them. For example, if you intend to patent your idea, it is only a trade secret until you do so, since the knowledge is essentially made public by your patent application.
How to Protect Trade Secrets
Safeguarding trade secrets requires keeping them hidden rather than seeking for protection. Taking reasonable precautions to preserve your secret not only helps you retain it, but it also enhances your case against anybody who unlawfully reveals it. If you don’t take security steps, the courts will likely conclude that it wasn’t a trade secret, and you won’t be able to sue.
Depending on the shape of the secret, you have many choices for safeguarding it:
Keep it in a secure location.
Password protection and network security procedures should be used.
Restrict the amount of workers who have access to the information and only provide access to those who require it to complete their jobs.
Make it obvious to everyone you tell that the information is confidential and should not be shared with anybody, even coworkers.
When outsourcing, attempt to employ many suppliers for various components to prevent revealing the whole secret to one business.
Where needed, use non-disclosure and non-compete agreements.
As long as you have taken reasonable efforts to avoid broad exposure, disclosing the knowledge to chosen workers, prospective investors, or others does not terminate your trade secret rights. Non-disclosure agreements may be included in employment contracts as well as with prospective investors or partners to guarantee they are legally compelled to keep your secret. Non-compete agreements may assist keep ex-employees from disclosing company secrets to rivals.
It’s also critical to retain detailed records of when you established the trade secret. Otherwise, you may have difficulty showing that it was not created by someone else before you.
Trade Secret Protection Loss
If your secret becomes generally known, it no longer qualifies as a trade secret, and you no longer have the right to trade secret protection. This remains true even if the secret was disclosed unlawfully, however you may be able to seek compensation. A trade secret may also be lawfully divulged, in which case you have no remedy, even if it was not your intention to reveal it.
Unlawful disclosure may be done by those who:
To get the information, criminal techniques such as theft or bribery were used.
The information was obtained from someone they knew had no authority to share it.
I got the information by mistake, but I should have realized it was secure.
Signed NDAs or other agreements to keep the material private but opted to publish it anyhow
The federal Economic Espionage Act of 1996 makes such disclosures illegal. Moreover, most states have established laws based on the Uniform Trade Secrets Act, establishing consistency in identifying a trade secret as well as how to address trade secret theft.
If the information release was restricted, you may attempt to reduce the harm by obtaining a court order barring further publication. Unfortunately, you will very certainly lose your trade secret status. You may also sue and collect damages, but you will not be able to regain trade secret status.
Even if you did not want to make the revelation, it is not prohibited. Someone who reverse engineers your product has done nothing illegal, but if the knowledge gets public, you will lose your trade secret designation. Your secret might potentially be discovered if someone finds it on their own or if your security measures are inadequate.
If the exposure of a trade secret has harmed your company, consult with an intellectual property attorney to see whether you have any legal options.
Remember that the best way to safeguard your trade secrets is to keep them hidden. Take all essential safeguards, and you should be able to keep your secret forever.
