Trade secrets consist of confidential business information that could give the business a competitive edge over other companies that do not know it or use it. Trade secrets can include a formula, agenda, pattern, process, device, technique, or procedure. Attorneys specializing in protecting trade secrets do so by litigating the misappropriation of trade secrets and helping their clients safeguard proprietary data.
Trade secrets lawyers protect their clients through licensing agreements, confidentiality agreements, non-disclosure agreements (NDA), and non-competition agreements. These agreements have become commonplace in business dealings and deliver protection and legal recourse when a business’s trade secrets are revealed.
Experienced attorneys also handle litigation cases involving the stealing, misusing, or misapplication of trade secrets, whether or not any agreements, licensing, or restrictions exist. Attorneys protect their clients from the misappropriation of trade secrets, but they also defend clients accused of misappropriation.
Specifically, a trade secret includes these three elements:
- The information is not known to the public
- The information is economically advantageous to the holder
- The information holder makes reasonable efforts to preserve its secrecy
What Kind of Subject Matter Can Be Protected as a Trade Secret?
Only info that derives monetary value from not being generally known and not being readily ascertained by others can be guarded as a trade secret.
Can Any Information Be a Trade Secret?
Trade secret law typically categorizes the following info as potential trade secrets:
- Formulas: formulas can cover anything from a chemical formula to a recipe
- Patterns: typically, these are drawings or blueprints for creating a machine
- Compilations: these are usually databases or lists of factual info that are not available to the public, such as client lists or marketing data
- Programs: computer programs are often guarded by trade secret
- Devices: designs or concrete ideas for functional machines
- Methods, techniques, or processes: these are often things like business methods or manufacturing strategies
Although these are the most standard types of trade secret info, this list is nonexclusive, and other data that meets the other trade secret requirements can also be shielded.
What Does It Mean for Information to Derive Its Economic Value from Not Being Generally Known?
Information that is advantageous because it is kept from the public can be guarded as a trade secret. If the information would not be economically useful to a competitor or other individual who doesn’t know it, it cannot be shielded as a trade secret.
Therefore, while a boss may want to keep news about an affair with his secretary quiet, he cannot assert it as a trade secret because it does not hold any monetary value.
What Does It Mean for Information to Be Readily Ascertainable?
If competitors could quickly figure out the info you want to shield without resorting to improper means, the data is readily ascertainable and not qualified for trade secret protection. Some everyday situations in which data is deemed readily ascertainable include:
- Information can be located in published sources
- Information about a product can be determined just by looking at it
- Information presents itself to competitors voluntarily, like in the case of a client list where consumers identify themselves to competitors
What Are the Differences Among Trade Secrets, Trademarks, and Patents?
Various statutes safeguard the sources of intellectual property. Federal statutes (namely, the Lanham Act and the Patent Act) cover trademarks and patents. For the most part, state regulation covers trade secrets, and most states have enacted the Uniform Trade Secrets Act (UTSA). Yet, the theft or misappropriation of some trade secrets is a federal offense.
Also, trademarks and patents are not kept secret from the public. On the other hand, trade secrets are hidden from the public because if the data becomes public, the trade secret holder will lose its financial edge.
Ultimately, trademarks and patents are subject to several legal exemptions that do not apply to trade secrets. Individuals can usually use satire or parody trademarks; such parodies and satires are usually speech shielded by the First Amendment. Furthermore, patents normally expire after twenty years, while trade secrets can extend indefinitely.
How Do Businesses Protect Their Trade Secrets?
Businesses can lawfully defend their trade secrets by adding specific terms to employment agreements. Non-Disclosure Agreements (NDA) are the most straightforward protection. An NDA directs workers to keep company info secret. Businesses can also use Non-Compete Covenants to stop ex-employees from revealing trade secrets to competitors.
Businesses can also create guidelines and policies for employees using the trade secret and communications about the trade secret. Businesses can address these policies in training or orientations as soon as the worker is employed. The business should communicate its intent to preserve the confidentiality of the trade secret.
Difficulties Surrounding Trade Secret Lawsuits
Most trade secret lawsuits are between the alleged holder of a trade secret and its competitor(s) or former worker(s). In lawsuits against competitors, the competitors will often claim that they made the trade secret first. For this reason, businesses need to maintain a record of the dates of when they assembled their trade secrets.
What Is a Non-Disclosure Agreement?
A non-disclosure agreement (NDA) is a legal contract between two parties that agree not to reveal information covered by this agreement. This agreement sets a confidential relationship between the parties. An NDA can also be referred to as a confidentiality agreement. An NDA’s goal is to safeguard susceptible info, help the inventor keep the patent rights, and expressly outline what is deemed private info.
Do I Need to Contact a Lawyer?
Intellectual property (IP) is an area of law that contains fundamental ownership rights over inventions, creative works, unique names, ideas, industrial processes, business models, and computer program codes. Intellectual property protection aims to protect the works of creatives and inventors while allowing the public access to those works without the threat of theft.
Intellectual property attorneys assist their clients by specifying and defending intellectual capital. In practice, an IP lawyer helps clients with copyrights, patents, trademarks, licensing, franchising, trade secrets, technology transfers, and distribution issues. Drafting licensing agreements, performing due diligence, and negotiating IP settlements are standard practices for lawyers specializing in intellectual property.
If you believe that someone is using your trade secret without your permission, contact an experienced lawyer. Your lawyer can determine whether you have a proper claim. If you have a claim, you may be permitted money damages or an injunction to stop using your trade secret. If someone used illegal means, such as theft, to obtain your trade secret, the perpetrator could also be subject to criminal fines.
If you are considering using information that may be someone else’s trade secret, or if you have been accused of taking someone else’s trade secret, you should speak with a lawyer immediately to assess your liability.
If you have questions about what can and cannot be a trade secret, you may want to contact a lawyer experienced in trade secret law or more generally versed in intellectual property. An experienced intellectual property lawyer can explain the limits to what trade secret laws cover and can help you determine if your information qualifies as a trade secret. Use LegalMatch to find the right lawyer for all your legal needs today.