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What Is a Trade Secret and Why Should I Care?

  • Jan 23 2020

When it comes to business, it’s a competitive world. When one company is successfully executing a product or service, it’s common that other companies will soon attempt to follow suit. While other companies are typically allowed to do so based on public knowledge, it is usually what your competitors do not know about you that can give you an edge. So how do you protect your company secrets from being revealed?

What Constitutes a “Trade Secret?”

To put it simply, a trade secret is a company’s “secret sauce,” the “ingredient(s)” that covers the way you do things, ideas, processes, methods, information, data, or anything else related to your company’s innovation. It is likely that you have some kind of trade secrets – you would be hard-pressed to find a business that does not. 

However, in order for something of yours to be considered a protectable trade secret, it must meet the following three requirements:

  1. It must not be readily known to the public 
  2. It must have its own economic value 
  3. Reasonable efforts must be made to keep such information secret (courts usually consider this to be modern technology or continuous efforts)

Trade secrets differ from other areas of intellectual property such as copyrights, trademarks, and patents in that they do not require any registration or certificate for you to establish them. You have a legal right to damages against anyone who takes your trade secrets from you, which is referred to as “misappropriation”. 

How Do You Officially Establish a Trade Secret?

A trade secret begins once the three criteria are met, but it is best to create a contract to handle your trade secrets before you hire anyone. Such contracts include a confidentiality clause and an assurance that anything that is created or accessible by your employee or contracted individual belongs to you and the business – not them.

Reasonable efforts to maintain secrecy can include clearly labeling as “CONFIDENTIAL” or “PROPRIETARY” any emails and other documents that include any written process, guidelines, flowchart, etc. that could be considered secret. However, other steps could and should be taken to ensure that steps to keep the information secret have been taken.

Just because something could be patented does not mean that it should be. You should pursue a trade secret – rather than a patent – in the following situations:

  • Infringement under patent law is undetectable
  • The innovation does not fit with business goals
  • What you are selling is not able to be reverse-engineered
  • What you have developed is not ready for the market

Unlike patents, which are free to use by the public after a period of 20 years, trade secrets maintain your legal rights in perpetuity. 

The Attorneys at Scully, Scott, Murphy & Presser Help Those Who Wish to Protect Private Company Information

If you are unsure as to whether or not your information is patentable or a trade secret, or are unsure as to how to proceed with either, it is advisable that you consult with a knowledgeable and experienced intellectual property attorney. At Scully, Scott, Murphy & Presser, we have the best interest of you and your company at heart. We will help you to navigate the oft-confusing world of intellectual property. To learn more or to schedule a free consultation, contact us today!

Posted in: Trade Secrets