Is Your Secret Out? What are Trade Secrets

Is Your Secret Out? What are Trade Secrets

Originally posted 2018-11-19 10:38:54

By Laura Schrauth|

What do Coca-Cola, the “11 herbs and spices,” and WD-40 have in common? All are closely guarded trade secrets.

A trade secret is a formula, practice, process, design, instrument, pattern, commercial method, or compilation of information not generally known or reasonably ascertainable by others by which a business can obtain an economic advantage over competitors or customers. Many brands choose to maintain trade secrets in favor of patents or other various methods of protection because trade secrets do not require public disclosure, where a patent does.  Keeping information a trade secret prevents competitors from gaining the knowledge necessary to reproduce the process themselves.      Although there is no federal registration for trade secrets, they are still protected under the Economic Espionage Act (EEA) at the federal level, and by state statute under the adoption of the Uniform Trade Secrets Act (UTSA).

Besides state and federal protection, trade secrets have international protections under the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS).

TRIPS outlines the requirements of a valid trade secret:

A trade secret is information that

  1. Is not generally known to the public;
  2. Confers economic benefit on its holder because the information is not publicly known); and
  3. Is the subject of reasonable efforts by the holder to maintain its secrecy.

If your company has information that fits this criterion, it is especially important to ensure that it is subject to reasonable efforts by your company to maintain its secrecy, or else the protections might be lost.

“Reasonable efforts” can be a hard thing to define, so working with your lawyer to determine what those might be is very important.

One way to protect a trade secret is to employ a professional Non-disclosure Agreement (NDA) to anyone who may have knowledge of the trade secret BEFORE you share your secrets. NDAs are not infallible but they do help to ensure that secrets stay secret and penalize breaches of trust. Another way to protect secrets is to get into the practice of marking all internal documents as “classified” and alerting all parties to the information that it is classified and should not be shared with anyone.

Think about your trade secrets. What is your special sauce?

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