A trade secret is any information that provides the trade secret holder with economic value or a competitive advantage precisely because it is not readily known or ascertainable by the general public. Unlike patents, trademarks, and copyrights, trade secrets are not registered. Rather, it is the job of the trade-secret owner to take reasonable steps to maintain the “secret” status of the information, so that employees, contractors, members of the public or other business interests do not steal it for their own potential financial gain.
What is a trade secret?
Examples of typical trade secrets are methods, formulas, recipes, ingredients, processes, product development information, customer or client lists, and other similar types of information that can give that can give their owners great competitive advantage in the marketplace.
Trade secrets can often represent the most valuable asset of a company, and may even form the very basis of a business venture. In such a situation, theft or exposure of the secret information can ruin a business.
How can an owner protect trade secrets?
At our law firm, we help businesses protect their trade secrets in several ways. Our attorneys help develop policies and procedures for keeping trade secrets secure and confidential such as through locked storage, computer security, restriction on employee access, confidentiality labeling, nondisclosure and confidentiality agreements with contractors and service providers with access to secret information, and similar agreements with employees and executives.
We also bring and defend trade secret misappropriation lawsuits under state or federal law. In such a suit, the trade secret owner may request that the court issue an order called an injunction to stop the use or sharing of the information by a party wrongfully in possession of the trade secret information. The trade secret owner may also request damages for financial losses from the alleged misappropriation.
Smart internal practices
When an employee or executive comes on board, there should be a formal training program, setting expectations and conveying trade-secret policies and procedures. New hires should be presented with the required nondisclosure, noncompete and confidentiality agreements for execution, when appropriate. It can also be a good idea at this time to make it clear that the employee may not disclose or use any trade secrets belonging to a former employer in the course of the new job.
Finally, at the end of employment, hold an exit interview with the employee to discuss expectations for secrecy after leaving employment and reset expectations already agreed to in the hiring agreements. Any entrepreneur or established business of any type or size should seek legal advice about trade-secret protection early in the formation of a business.