Trade Secrets – Protecting Your Confidential Information
Some of the most valuable intellectual property in the world is not protected by a patent or trademark. A famous example is the formula for Coca-Cola – it is protected as a trade secret. A more recently created trade secret is the algorithm Google uses to rank websites. Google protects it by keeping it secret. But trade secrets are not limited to blockbuster inventions by huge companies – almost every business has trade secrets worth protecting. What if your biggest competitor hired away one of your key employees? What confidential information would you not want this person to take? This article describes how to identify and protect your valuable trade secrets.
What is a “trade secret”?
“Trade secrets” can include customer lists, databases, pricing information, cost and profit margin information, computer programs, the content of contracts and much other valuable information. Basically, anything that gives you a competitive advantage over your competition can be a trade secret. A trade secret is something not generally known or easily discoverable by people outside your business.
If your information has “trade secret” status, then you can take legal action to prevent someone (such as a former employee) using the misappropriated information and, in some circumstances, you can seek a monetary recovery from someone who has misused your trade secrets. Trade secrets offer important advantages. They do not require any patent or trademark filings, fees or government approvals. Trade secret protection does not expire after a fixed amount of time.
How do you obtain trade secret protection?
To get trade secret protection, you must make a reasonable effort to protect your confidential information. A good place to start is by thinking about and listing what information you have that is not known to the public or easily discoverable that you would like to protect. After you have identified your confidential information, here are some of the steps you can take:
- label the information “confidential” or “proprietary”
- have employees sign a confidentiality agreement
- limit access to those who need to know
- keep the information in a secure location
- remind departing employees of their obligation not to disclose confidential information
The particulars of your situation help determine the appropriate steps to take. A good place to start is a company policy about protecting confidential information.
Making an effort to protect your confidential information is a wise investment in preventing your important information from falling into the wrong hands (anyone other than you!).
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- Data Privacy Advisory, November 16, 2020
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- Data Privacy Advisory, June 15, 2020