Trade Secret

What is a trade secret?

A trade secret is the “secret ingredient” to the success of your business. In essence, what makes your business better than your competitors belongs to you, and it should enjoy legal protection. Unlike the other flavors of IP which encourages public knowledge and enjoyment, a trade secret has to stay a secret, and the law is set up to protect that secrecy.
How to obtain trade secret protection

A business will automatically receive trade secret protection for many of its secrets. Trade secret law is complex and differs from state to state, but generally some level of protection is afforded to secret information which is essential to a business’s operational success. Some famous examples: a certain soft drink formula; a certain recipe for fried chicken; and a certain internet searching algorithm. But other secret information may be considered a trade secret as well: customer lists, business processes, or even consumer profiles, so long as you reasonably try to keep them a secret. When other types of IP are not appropriate to protect your business, there is always an option to preserve trade secrets.

Trade secret rights enforcement & defense

Trade secret enforcement is similar to other types of IP enforcement, but with some important distinctions. There is no registration requirement for trade secrets, so a plaintiff must prove the existence of a trade secret each time. Therefore, there are important considerations to preserve the secrecy and subsequently the legal protection. Trade secret claims are similar to unfair competition and interference claims in that they are fact specific and take careful and aggressive advocacy by your legal counsel.

Other considerations

Employee theft

Perhaps the most likely scenario your business will encounter a trade secret claim is through the conduct of an existing or former employee. On one side, an employee may have used your trade secret for personal gain, usually by profiting through a competing business. On the other side, you may have gained some advantage when one of your employee disclosed a trade secret of his or her former employer.

Non-disclosure agreements

In order to receive trade secret protection, your claimed trade secrets must actually be secret. Therefore, it is important to have policies and agreements properly set up to protect your secrets. It is imperative for every current and prospective employee to be covered by a valid confidentiality agreement. Further, each time you do business with a third party, you must also take care to not disclose your trade secret.