Trade Secrets

Protecting Trade Secrets

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Trade secret protection lasts for as long as the secret is kept confidential.

A trade secret can be any information that derives independent economic value from not being generally known or readily ascertainable. Among the things that can be trade secrets are a formula, pattern, compilation, program, device, method, technique, or process. For example, courts have found machining processes, blueprints, stock-picking formulas, customer lists, pricing information, and non-public financial data to be trade secrets.

Unlike other forms of intellectual property such as patents, copyrights, and trademarks, trade secrets are not registered with a governmental agency. To secure trade secret protection, a trade secret owner must take reasonable precautions to keep the information confidential. Trade secret protection lasts for as long as the secret is kept confidential. Once a trade secret is publicly disclosed, trade secret protection ends.

A trade secret owner can prevent others from copying, using, and disclosing its trade secrets without permission. In some instances, individuals are automatically bound by a duty of confidentiality not to disclose or use trade secret information. However, many people who may need to know the trade secret may not be subject to a duty of confidentiality.

In these cases, a nondisclosure or confidentiality agreement may be used to impose a duty of secrecy or confidentiality. The agreement requires the individual to keep the trade secret confidential unless the owner grants permission to the individual to share the trade secret. Employees and other individuals who may be in a position to learn a company's trade secrets, including high-level employees, company presidents, lenders, and investors may be required to sign nondisclosure or confidentiality agreements.

A trade secret owner may institute trade secret infringement actions against people who breach their duty of confidentiality or against people who acquire a trade secret through improper means such as theft, industrial espionage, or bribery. To prevail in a trade secret infringement suit, the trade secret owner must show 1) that the information that was improperly disclosed provides a competitive advantage, and 2) that the trade secret owner uses reasonable precautions to maintain the secrecy or confidentiality of the information. In addition, the trade secret owner must show that the information was either improperly acquired or improperly disclosed by the defendant.
Trade Secret Examples
Trade Secret Examples
Business

Business practices may be protected under trade secret law.

Trade Secret Facts

Business practices may also be protected by patent law. Once a patent is issued, the trade secret protection for the practice ends, but the patent limited monopoly begins.