Trade secrets is a broad term used to describe confidential business information that provides a competitive edge, such as lists of customers or suppliers, market data, formulas and methods, manufacturing processes, and distribution methods. Trade secrets are not registered but the unauthorized use of such information by third parties is regarded as an unfair practice and a violation of the trade secret. A company must make reasonable efforts to keep its confidential information secret. The secret formulas for Coca-Cola and KFC are two of the most famous examples of trade secrets. Find out more.
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Trade Secrets are one of the most important pieces of IP protection, and the good news is that this protection comes completely free! Non-disclosure is one of the most secure forms of protection.
Compared to trademarks, patents and copyrights, which protect specifically limited types of creative works and discoveries, trade secret protection is much broader, covering almost any kind of confidential business information that can lend your business an advantage. This could be customer contact information, manufacturing techniques, internal pricing information, or even recipes or formulas for products (the formula for Coca-Cola is one famous example).
Another advantage of trade secret protection is that an owner does not need to go through a complicated process in order to receive such protection. The only requirements are that the information sought to be protected must be a trade secret (that is, it must have business or commercial value and not be generally known by the public), and the trade secret holder must take reasonable steps to protect the secret from being disclosed.
To establish a claim for misappropriation of a trade secret, the trade secret holder must show that the information was wrongfully acquired. Thus, for a typical business, showing that it has taken reasonable steps to protect the secrets is often the most important consideration (and something that should be integrated into its daily practices).
How to protect trade secrets:
1. Limit internal access to critical information to only those employees that need to access the information. For example, for a trade secret that is customer contact information, limiting access to only salespeople and anyone else who needs to use the information.
2. Require employees to sign a log when accessing your trade secrets.
3. Communicate clearly (for example, in employee handbooks or contracts) about the need for protecting access to the trade secret information and the company’s ownership of such information.
4. Regularly remind employees and contractors of their duty to protect your company’s trade secrets. This includes using exit interviews as an opportunity to remind employees leaving your company of their continued duty to not disclose your trade secrets.
Integrate these best practices into the fabric of your business from the beginning to protect your proprietary information.