Does your company rely on trade secrets for its success?
A trade secret is confidential information that gives a business a competitive edge. Depending on your industry, it might be a process or design, a formula, a client list, or any other information that is not for public knowledge. Trade secrets have real value, and much of the value lies in the fact that it is not available to competitors.
Unlike patents, which will eventually be disclosed upon expiration a trade secret is closely held and protected indefinitely – unless they are revealed. Once they’ve been disclosed, the genie is out of the bottle and there is little that can be done to put it back in. That means that the most important thing a business can do to retain a trade secret’s value is to take steps to prevent its disclosure and secure the confidentiality of anybody who knows the secret.
When somebody uses or discloses a trade secret without its owner’s consent, it is known as misappropriation. Misappropriation may be the result of theft, such as electronic hacking or physical stealing information; through a breach of confidentiality on the part of employees of partners; or through corporate or industrial espionage. There is also the possibility that a trade secret can be identified through reverse engineering, but this is not misappropriation unless something fraudulent was involved in the process.
There are a few tools that can be used to protect your trade secrets. These include:
- Crafting non-disclosure agreements (NDAs) and requiring employees, contractors, and business partners to sign them before they have access to the secret. This should include a process for departing employees to return any documents or information that is proprietary and a reminder of the terms of their NDA.
- Limiting access to the trade secret to a few valued employees or partners on a need-to-know basis.
- Strict employee training on the importance of protecting trade secrets, as well as on the consequences of misappropriation.
- Security measures including encryption, cybersecurity, and physical security such as locked cabinets and surveillance systems.
- All confidential documents should be clearly marked as proprietary to avoid accidental disclosure and emphasize secret status.
If your trade secrets have been misappropriated, there are a few legal actions available to you under laws such as the Defend Trade Secrets Act. This will allow you to seek damages, and if it’s not too late to stop disclosure, to seek an injunction to stop the secrets from being shared.
If you need assistance in protecting your company’s proprietary information and trade secrets, contact us today to set up a time for us to meet.
