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Termination of a Trade Secret

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What Is a Trade Secret?

A trade secret is a form of intellectual property. It is defined as any information, process, formula, technique, or method that is not readily known by the public and provides an economic benefit to its holder. This makes it different from other forms of intellectual property, such as copyrights and trademarks, where the subject matter must be in a easily visible and tangible form, rather than just an idea or piece of information. In order for information to keep its status as a trade secret, the holder must make reasonable efforts to preserve the information’s confidentiality.

Unlike other types of intellectual property, one does not register their trade secrets with government agency. Instead, trade secret protection is typically secured through means such as contracts, non-disclosure agreements, and non-compete forms. These documents and agreements provide guidelines for people who are exposed to the trade secret that prevent them from sharing that information with anyone who may disseminate the information to the company’s competitors.

How Long Do Trade Secrets Last?

Trade secrets last as long as they are kept secret. Therefore, if no one ever discloses them and they are not publicly known, trade secrets can last forever. It is recommended to put safeguards in place not only to protect the trade secret, but also to show the court that you gave a reasonable effort to protect it in the event that another person attempts to violate your protection measure and expose your trade secret.

How Do You Terminate a Trade Secret? 

Information can lose its protected status as trade secret if it becomes public knowledge. If the information is readily accessible to people who could commercially exploit it, it can no longer be claimed as a trade secret.

Can a Trade Secret Be Terminated by Any Disclosure?

No, disclosure terminates trade secret protection only if the information becomes generally known or readily ascertainable. Some types of disclosures that will not terminate trade secret protection are:

  • Disclosure to employees
  • Disclosure to suppliers
  • Disclosure to people who want to license your product

As long as the person you make the disclosure to is under some duty to not disclose trade secret information to others, and as long as they respect that duty, disclosing trade secret information will not terminate protection.

When Does Disclosure Terminate a Trade Secret?

Disclosure will terminate a trade secret when it makes the information publicly available. It does not matter if the disclosure was intentional or accidental. It does not matter if the trade secret owner took all reasonable precautions to protect the information. What matters is whether or not the information is made generally known. This can occur in several different ways:

  • The trade secret owner can deliberately terminate the trade secret by publishing the information or by selling a product that makes the information obvious
  • Someone else who learned of the information can disclose it

Is Disclosure the Only Way to Terminate a Trade Secret?

Disclosure is not the only way to terminate a trade secret. A trade secret is terminated any time the protected information becomes available to the public. For example:

  • If someone develops the information independent of the trade secret owner
  • If a person reverse engineers a product to find out how it was made (in other words, buys a product legally, takes it apart, and figures out how to make the product as a result of taking it apart) 

Do I Need to Talk to a Lawyer About Protecting My Trade Secret?

Trade secrets are important for the operation of many business endeavors, and losing a trade secret can seriously harm a company. If you have questions or concerns regarding the security of your trade secret, you may want to consult with an intellectual property lawyer. They can help you take the appropriate steps needed to protect your trade secret.

Photo of page author Kourosh Akhbari

, LegalMatch Legal Writer

Last Modified: 10-08-2015 08:50 AM PDT

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