Security Measures for Trade Secrets Lawyers

The essence of trade secret law lies in that economically valuable information is kept secret from the public domain. You must have some security measures to keep your information secret to qualify for trade secret protection.

Without adequate security measures, even if someone steals or misappropriates your information, it will not be considered a trade secret, and you will have no recourse.

What Are Trade Secrets?

Generally, a trade secret is valuable information that gives a business an edge over its competitors. It can be a formula, pattern, compilation, program, device, method, technique, or process.

Trade secrets include the following three elements:

1. The information is not known to the public
2. The information is economically beneficial to the holder
3. The information holder makes reasonable efforts to maintain its secrecy

What Kind of Security Measures Will Protect My Trade Secret?

To protect your trade secret, you must take reasonable security measures.

Several factors will determine the reasonableness of your security measures.

The following are some of these factors:

• For security measures to be reasonable, the value of the information must be high
• People you disclose information to should be trustworthy – It is probably only reasonable to disclose information to people who will keep it confidential
• The necessity of disclosure – Information should only be disclosed if it is necessary to do so.
• Trade secrets cannot be protected if you don’t value your information enough to limit who you disclose it to
• Conforming to industry standards can make you seem more reasonable if you follow them
• The cost of security measures should be proportional to the value of the information to your business. You don’t need to spend a lot of money to protect your information

What Are Some Common Security Measures?

A trade secret can be protected in several ways. Among them are:

• Non-disclosure or confidentiality agreements for employees and independent contractors
• Physical limitations such as fences, locked doors, security guards, or restricted areas
• Notices, such as “no trespassing” or “confidential,” letting people know that information should be kept secret
• Computer network security such as coded barriers or password protection
• Limiting the number and identity of employees who access trade secret information

What Are the Differences Among Trade Secrets, Trademarks, and Patents?

Different statutes protect the sources of intellectual property. Federal statutes (namely, the Lanham Act and the Patent Act) protect trademarks and patents. For the most part, state law protects trade secrets, and most states have enacted the Uniform Trade Secrets Act (UTSA). However, the theft or misappropriation of some trade secrets is a federal crime.

The public can also view trademarks and patents. Alternatively, trade secrets are kept from the public due to the loss of economic advantage if the information is made public.

Finally, trade secrets are not subject to the legal exemptions that apply to trademarks and patents. Satires and parodies of trademarks are usually protected speech under the First Amendment. Moreover, patents typically expire after twenty years, while trade secrets can last a lifetime.

How Do Businesses Protect Their Trade Secrets?

Companies can legally protect their trade secrets by adding certain terms to employment contracts. Non-Disclosure Agreements (NDA) are the most straightforward protections. An NDA requires employees to keep company information confidential. Companies can also use Non-Compete Covenants to prevent ex-employees from disclosing trade secrets to competitors.

Employees can also be trained on how to use a trade secret and how to communicate about it. These policies can be addressed in training or orientations as soon as the employee is hired. Trade secrets should be kept confidential by the company.

What Is a Non-Disclosure Agreement?

A non-disclosure agreement (NDA) is a legal contract between two parties that agree not to disclose information covered by this agreement. This contract establishes a confidential relationship between the parties.

An NDA can also be referred to as a confidentiality agreement.

In general, an NDA’s purpose is to:

• Protect sensitive information,
• Assist the inventor
• Keep the patent rights, and
• Expressly outline what is considered private information.

For example, this could include things like:

1. Test results
2. Customer lists
3. Software
4. Passwords
5. System specifications, and
6. Other data.

Through NDAs, trust is maintained, and crucial information is protected from being leaked.

NDAs can be mutual non-disclosure agreements, one-way confidentiality agreements, or confidentiality letters. Each has a specific purpose based on the needs of the client.

NDAs are commonly used in employment and business situations. To protect the employer’s trade secrets and other confidential business information, employees may be required to sign an NDA.

It is most common for businesses to use them when entering into negotiations with other companies. These platforms enable companies to share sensitive information without fear of it falling into the hands of competitors. A marketing strategy, a sales plan, a manufacturing process, and proprietary software may be protected.

These agreements generally last for as long as the confidential information is considered useful. In some cases, a shorter or more reasonable period of time, such as one year, might be more enforceable by the courts depending on the nature of the information that was exchanged.

But, information like trade secrets may benefit from being kept confidential for a longer period of time. A reasonable period can therefore vary between contracts and parties adhering to them. NDAs, like most contracts, are unenforceable if they contain illegal terms.

What is Included in a Non-Disclosure Agreement?

Formats of NDAs vary by state. However, the agreement must include some terms.

The following are among them:

• Identifying the parties to the agreement;
• Defining what constitutes confidential information in this case;
• Defining the various exclusions from confidentiality;
• Determining the appropriate uses of the information to be revealed;
• Determining the reasonable time periods and;
• Other miscellaneous provisions (state laws and attorney fees).

A boilerplate NDA is a standardized legal document that can be reused without substantial changes. Consequently, courts are becoming more reluctant to enforce NDAs since they do not heavily rely on changed circumstances. This language is considered vague and overbroad because it unnecessarily covers all information regarding a company’s business.

The courts have a problem with provisions that lack geographic and time limits because one limit in one state may not apply to another, resulting in additional NDA disputes. It is common for these documents to remain unchanged, which can lead to parties accepting unfavorable terms that could have been avoided with even small revisions to the boilerplate text.

State laws and the needs of the parties can influence NDAs. Whether you need assistance with drafting or reviewing an NDA for your particular issue, a lawyer can help. Additionally, this will ensure that the agreement is legally enforceable and binding.

Difficulties Surrounding Trade Secret Lawsuits

In most trade secret lawsuits, the alleged owner of the secret sues its competitor(s) or former employee(s). In lawsuits against competitors, they often claim that they first invented the trade secret. It is, therefore, very important for companies to keep records of when their trade secrets were created.

Should I Consult a Trade Secret Lawyer?

If you have information that you wish to protect as a trade secret, you may want to consult a trade secret lawyer or intellectual property lawyer. Trade secret lawyers can help protect your information and guide you in various areas of trade secret law.