Trade secrets consist of information and can include a formula, pattern, compilation, program, device, method, technique or process. They must be used in business give an opportunity to obtain an economic advantage over competitors who do not know or use it.
About Trade Secrets
Unlike patents or copyrights, trade secrets never expire nor do they require an idea to be unique or original. All you need to do to protect a trade secret is demonstrate that it’s valuable to your company, and that you’ve taken reasonable steps to keep the information secret.
That said, trade secrets have their limitations, especially with technology-based products. Relying on their protection as an easier, cheaper alternative to a patent can be a costly mistake, because:
- It’s perfectly legal for your competitors to reverse-engineer your product in order to copy it. The minute an unpatented product is sold in the marketplace, it is no longer considered a trade secret. Who says so? The U.S. Supreme Court.
- No trade secret is safe from reverse-engineering, no matter how well you’ve concealed it. When market share is at issue, businesses will sometimes go to great extremes to appropriate a competitor’s secrets. Hackers and pirates can almost always crack the code.
- By accident or design, external parties might compromise your secrets. Take every precaution to protect yourself, and to document that you’ve done so. For vendor confidentiality agreements, make sure they thoroughly cover design and packaging issues. Explicitly state the confidential nature of any sensitive verbal or written communications to external parties.
Protecting Your Secrets
You can protect your valuable information by following some basic guidelines:
1. Your company needs a formal trade secrets program — explicit policies that are made clear to employees from their first day, and that apply to all visitors to your facility as well.
2. Document and lock away trade secrets, and restrict access to this information to employees on a need-to-know basis.
3. Require non-employees who share in company secrets to sign confidentiality agreements. Always limit the number of people made privy to sensitive information.
4. Clearly mark all sensitive documents, whether electronic or hardcopy, as confidential or secret.
5. Hire specialists to conduct regular audits to ensure your trade secrets are sufficiently defined and adequately protected.