A “trade secret” is generally defined as a piece of confidential information belonging to a company that provides the business with a competitive advantage in the marketplace. A few common examples include recipes, formulas, or presentations. While trade secrets can prove invaluable to a company’s success, owners must take appropriate steps to ensure their “secrets” remain under wraps.
What Exactly is a Trade Secret?
The law considers trade secrets as a form of intellectual property (IP). IP is essentially property used in commerce that is the creation of the mind. Some examples are:
- literary works, and
For the law to consider IP as a trade secret, the property must generally contain three key features. These include:
- The property must provide a business with a competitive advantage in the marketplace,
- The property must derive an economic value from not being generally known to the public, and
- The property’s owner typically has to take reasonable efforts to maintain the property’s secrecy.
A common example of a trade secret includes the formula for Coca-Cola. Other examples include:
- Marketing strategies,
- Computer algorithms,
- Processes and methodologies to deliver services
- Survey methods,
- Manufacturing techniques,
- Customer and supplier Lists
- Technical data.
- Recipes for certain food products and other products.
Note that trade secrets are a distinct from patents, copyrights, and trademarks. The latter have their own specific features and characteristics. Its often overlooked form of proprietary rights protection but a very useful one for just about any company.
How do Trade Secrets Work?
Unlike many other forms of IP, trade secret owners do not register them with the federal government to protect them. Owners basically secure protection by keeping the secrets just that, “secrets.” Business owners will enjoy protection for as long as they keep their secret(s) hidden away or under wraps. Note that protection usually ends once a secret is made known to the general public.
There are times in the course of business when a party unlawfully steals a company’s confidential information. In these events, the laws of most states provide businesses with certain remedies for the misappropriation of trade secrets and other top-secret information. For example, under the Washington Uniform Trade Secrets Act, Washington law provides remedies to businesses whose trade secrets have been wrongfully acquired or disclosed. These remedies can include:
- A court order or injunction that either prevents someone from using a stolen trade secret or provides a trade secret owner with royalties for the use of the secret, and
- A lawsuit for damages caused by the disclosure of a trade secret or for another party’s wrongful gains made from a misappropriated trade secret.
These remedies can be critical to a businesses and operation and not to be taken lightly by either the business owner or the party misappropriating the secrets.
How Can I Protect a Trade Secret?
Let’s return to Coca-Cola for a moment. The formula for Coca-Cola is kept locked in a bank vault. A bank employee can only open the vault in the event of a resolution passed by Coca-Cola’s board of directors. In fact, only two of the company’s employees know of the formula at any given time.
Granted, not all trade secrets will demand this type of high-level security. But business owners nonetheless should take certain steps to ensure their secrets get protected. A few simple acts we strongly recommend to take include:
- Labeling the secret as “Confidential,” this can be simply done with physically writing Confidential on the tangible item or verbalizing it to the person you are providing the information too. The later is less ideal.
- Limiting the number of employees or third parties who have access to the given property,
- Locking secrets in a secure location after the close of business hours,
- Maintaining appropriate computer security, and
- Using non-disclosure agreements (NDAs) with all parties that have access to the confidential information.
More questions? Not sure if your proprietary information constitutes a trade secret?
Foundry Law Group Is Here to Help!
The attorneys at Foundry Law Group have years of experience in helping businesses take the appropriate measures to protect their confidential information. We also help companies obtain certain remedies in the unfortunate event that their trade secrets become compromised. Please contact us today with any questions about your confidential information or other forms of intellectual property. Our team is always here to help!