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Economic Value of Trade Secret Information

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Why Is the Economic Value of Information Important?

In order to qualify as a trade secret, information must not only be kept secret, but must also derive some economic value from being kept secret.

Does the Economic Value of the Information Have to Relate to Gaining an Advantage over Competitors?

As long as the information you are trying to protect has some economic value to someone, it is eligible for trade secret protection. It does not have to be related to competition. For example:

  • If you conduct extensive and costly research, only to discover that a certain process does not work, that result can be protected by trade secret since it could be of great value to a competitor
  • If you have information pertaining to ongoing research and development for a product that is not yet on the market, you may be able to protect it as a trade secret

However, the information does have to have economic value. You cannot use trade secrets to enforce duties of confidentiality.

Does Information Have to Be Kept Absolutely Secret in Order to Be Valuable?

No. Trade secret law requires that the information be not generally known, not that it be an absolute secret. This means that the information is kept secret from people in the industry who could benefit economically from knowing it.

What Other Factors Do Courts Consider?

When determining whether or not information is valuable, courts also consider the following factors:

  • Did you spend a lot of money to develop the information? Although the money you spent to develop information does not necessarily mean the information is valuable, it does show that if you were willing to spend money to get it, someone else might be willing to pay to get it too.
  • Have you licensed the information to others? If other people were willing to pay for the information that might show that it's valuable.
  • How much money have you spent keeping the information secret? Your willingness to spend money to protect the information may indicate its value.
  • Did someone use improper means to get the information? If a person was willing to violate ethics to get the information, that might show that that person thought that the information was valuable.
  • Would it cost someone else a lot of money to develop the information? Even if you didn't expend much money getting the information, if it would cost someone else a great deal of money to develop the same information, the information is probably valuable.

Should I Consult a Lawyer Experienced in Trade Secret Law?

If you have questions about whether information meets the requirement of being economically valuable to qualify for trade secret protection, you may want to consult a trade secret lawyer. A lawyer experienced in trade secret law can answer your questions and make sure your information receives the protection it deserves.

Photo of page author Ken LaMance

, LegalMatch Law Library Managing Editor and Attorney at Law

Last Modified: 09-01-2015 09:30 AM PDT

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