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What qualifies as a trade secret and how can it be protected?

On Behalf of | Jun 17, 2024 | Trade Secrets |

Many successful businesses have trade secrets that set them apart from their competitors. It may be a recipe or formulation, a process or technique or a device used in your process or service. Common trade secrets might be Kentucky Fried Chicken’s original recipe, the formulation for WD-40, or the Google search algorithm. Businesses may try to duplicate these secrets but if they do so by means of leaking or stealing the information, they can be held legally liable for damages.

What are trade secrets?

Trade secrets, as defined by the Uniform Trade Secrets Act (UTSA) is:

  • “information, including a formula, pattern, compilation, program, device, method, technique, or process that:
  • Derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by, other persons who can obtain economic value from its disclosure or use; and
  • Is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.”

Generally, a trade secret has three parts:  the information itself, the value of keeping it secret and the reasonable efforts taken to protect its secrecy. To be considered a trade secret, it must have value to your business and to a competitor. You must have developed strategies to keep the information from the public or competitors, and there must be processes that have been violated causing the leak of information. Once a trade secret becomes public knowledge, it is no longer considered a trade secret and it no longer has protection by law.

How to protect trade secrets

There are some easy, common ways to protect your business’s trade secrets. The first step is to simply identify what exactly needs protecting. Remember that it must have value to your business as well as to your competitors. 

Monitor not only the information but where that information is stored, who has access and ensure that the proper amount of security is used. Computer integrity is a must, so controlling who has access to systems and information where your trade secrets are stored is important. 

Access to vendors, employees, and customers must be critically monitored as well. Those who must have access to trade secrets must sign nondisclosure agreements or NDAs, preventing them from disclosing the trade secrets to future employers, your competitors or using the information in any way to benefit themselves. 

What to do if someone steals your trade secrets

If you own a trade secret, you can ask a court to issue an injunction to prevent the person who stole the information from further disclosure. Intentional theft or misappropriation of trade secrets can constitute a crime under both federal and state laws. Courts ruling in your favor often award economic damages and impose prison time for convicted offenders.

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