What Are Trade Secrets?
Any information that gives a business a competitive advantage and has economic value due to the fact that the information is kept a secret can be considered a trade secret. Trade secrets can be knowledge, information, a device, a tool, a method of doing something, a recipe, schematics, or nearly anything. Trade secret protection is created when the holder of the trade secret actively takes steps to keep the information secret. So long as the information remains a secret, the trade secret holder can have trade secret protection - potentially indefinitely.
How To Protect A Trade Secret
Trade secret holders need to actively go about protecting their intellectual property. This means taking steps and precautions to ensure that the trade secret does not fall into the wrong hands, that the trade secret is not used in an unauthorized manner, or that the trade secret is not accidentally disclosed to the public. When the secret gets out, it is referred to as the misappropriation of the trade secret, and protection is lost from then on. However, trade secret holders may have a legal cause of action when their trade secrets are wrongly misappropriated.
A few measures that can be used to protect the secrecy of a trade secret include:
- Consistently and diligently using nondisclosure agreements with employees, contractors, vendors, suppliers, customers, etc.
- Limiting access to the trade secret information to only those employees or people that need to know the secret information.
- Keeping the trade secret information in a restricted place, e.g., locked up, password protected, etc.
- Labeling any trade secret documentation as “confidential.”
What Is, and Is Not, Misappropriation of a Trade Secret
Misappropriation is the improper acquisition of trade secret information, the unauthorized use of trade secret information, or the disclosure of trade secret information to the public. When a trade secret is wrongly misappropriated, either by deliberate theft of the trade secret, or inadvertent disclosure, and the trade secret holder has actively taken steps to prevent the loss of trade secret protection, the trade secret holder can seek to enforce the trade secret protection through the courts. The trade secret holder can request an injunction that will prevent the entity that misappropriated the trade secret information from disclosing it or using it, and can also seek damages for any losses that are the byproduct of the misappropriation.
Conversely, independent discovery of a trade secret, and reverse engineering of a trade secret, is not misappropriation. If trade secret information is learned from either independent discovery or reverse engineering, then the party who learned the trade secret information is free to use what they have learned for their own purposes.
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