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Ownership of a Trade Secret

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Who Owns a Trade Secret?

A trade secret is a type of of intellectual property, and it comes in many different forms. There are no actual laws governing trade secret ownership, but trade secrets generally pertain to information held by a company rather than by an individual. So typically employers or hiring parties own trade secret information even if it is generated by an employee.

Why Does Ownership Matter?

The person or company that has ownership of the trade secret is the only one who is allowed to use the trade secret. If you use the trade secret and do not have ownership of it, you may be guilty of misappropriation and be liable for any damages your use caused.

When Does the Issue of Ownership Come Up?

Disputes over ownership typically come up when two parties each claim that they have the right to a trade secret. In determining who has ownership rights to the trade secret, courts generally ask whether one of the parties got the information under circumstances that should have let them know they had a duty to keep the information secret or to limit its use. The most common situations where ownership disputes arise are:

  • Employer/employee relationships
  • Two parties terminate a contractual relationship. For example, there might be a trade secret ownership dispute between a buyer and a supplier, or between two members of a research group.

When Does a Company Have Ownership of Trade Secrets Developed by Its Employees?

Generally, information generated by employees is owned by the employer. Some common situations where ownership of information developed by employees belongs to the employer include:

  • The employee has signed a contractual agreement promising to assign all rights to the company
  • The employee was hired to develop that information
  • The employee was working within the scope of his employment when he developed the invention

Can More than One Person Own a Trade Secret?

It is possible for two parties to be joint owners of a trade secret, but it is rare. Joint ownership typically occurs when two parties work together to develop trade secret information. It is also possible for two or more parties to develop the same trade secret information separately. In this case, the parties are not joint owners but independent owners of the same trade secret.

Do I Need to Consult a Trade Secret Lawyer?

If you have questions about ownership and your rights, you should consult a trade secret lawyer. An experienced intellectual property lawyer will be well versed in trade secret law and will be able to explain your rights and can offer you advice on how to obtain the maximum amount of protection for your ideas.

Photo of page author Adam Vukovic

, LegalMatch Legal Writer

Last Modified: 08-31-2015 04:09 PM PDT

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