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How To Protect Your Business’ Trade Secret


A trade secret is any valuable information that gives your business an edge over others. It could be a secret formula, a unique way of doing things, or any confidential info that’s important for your business and not known to the public.

To protect your trade secrets, you need to make sure they stay confidential. If you don’t take steps to keep them secret, you can’t complain if someone else uses or steals them. It’s like leaving your car unlocked and then being upset when things inside get taken.

Examples of trade secrets include things like secret formulas for food products (like Coca-Cola’s recipe), special patterns for making shoes, unique apps, innovative devices, special methods for doing things, and new processes that make products different from others.

If your trade secrets are stolen, it’s crucial to know what steps to take to address the situation and protect your business.

What Counts as a Trade Secret?

To figure out if something is a trade secret, a jury considers a few things:

  • 1. How much people outside the company know about it.
  • 2. How much employees and others within the company know about it.
  • 3. What steps the company took to keep it a secret.
  • 4. How important it is to the company and its competitors.
  • 5. How much time and money the company spent developing it.
  • 6. How easy or hard it is for others to get or copy the information.

How to Keep Your Business’s Trade Secrets Safe

Protecting trade secrets is not a one-time thing. It’s an ongoing process you need to establish and maintain in your business. Always staying alert is the best way to keep them safe.

Here are seven steps to protect your business’s trade secrets:

  • 1. Identify the trade secrets in your company.
  • 2. Set up rules for visitors, limit access, and use security measures like video surveillance.
  • 3. Secure your computers by limiting access, monitoring emails and remote use, and keeping track of computer events.
  • 4. Understand insider threats and how thieves and competitors might try to get your secrets.
  • 5. Train your executives, employees, and contractors on keeping things confidential.
  • 6. Appoint someone to be in charge of your overall plan.
  • 7. Have a plan for dealing with incidents to reduce the damage and work with law enforcement.

Keeping Secrets Safe: Confidentiality Agreements

To prevent key employees or others from taking your trade secrets, you can have them sign a confidentiality agreement, also known as a non-disclosure agreement or NDA. This is like a promise between your company and an employee, vendor, or contract worker.

The agreement should say exactly which secrets they can’t share, and there should be a set time when this agreement is in place.

Describe the secret information clearly to avoid confusion, and specify the time the information needs to stay a secret; don’t leave it open-ended.

Trade Secrets vs. Copyrights and Patents

Another way to protect trade secrets is by copyrighting or patenting them. Unlike trademarks, which are visible to everyone, trade secrets are hidden. Copyrighting or patenting makes them known to the public.

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For instance, if you create a new app for evaluating customers, you can keep it as a trade secret within your company or patent it to sell. While trade secrets have no time limit, patenting helps in legal action if someone steals it.

Trade Secret vs. Copyright or Patent

  • – Internal/external protection: Trade secrets are internal, while copyrights and patents are external.
  • – Internal processes and system: Trade secrets involve business processes, while copyrights and patents require registration.
  • – Protection term: Trade secrets are indefinite, while copyrights and patents have limited protection.
  • – Proving protection: Trade secrets require proving they are secrets, while registration makes it easier for copyrights and patents to be protected.

Federal and State Trade Secret Laws

The Uniform Trade Secrets Act (UTSA) created a law to fight against theft of trade secrets in all states. However, some states have slightly different laws, so it’s important to know your state’s laws for proper protection.

The Economic Espionage Act of 1996 defends trade secrets that can benefit a foreign power, and violations can be tried in federal court. The Defend Trade Secrets Act of 2016 establishes a federal, private, civil case for trade secret theft.

What to Do If Secrets Are Stolen

If you suspect your trade secrets are stolen, the first step is to get legal help for an injunction. This court order tells the thief to stop using your secret for profit. Once the damage is limited, you and your attorney can take legal action against the theft.

Common Questions about Trade Secrets

1. How do I get compensated for a stolen trade secret?

  • – You need to take the person who stole your trade secret to court. If the court agrees with you, you can get damages, which include money for lost sales, lawyer fees, and sometimes extra money as a punishment. Keeping good records of your costs and income can help you when figuring out the damages.

2. How long can a trade secret stay protected?

  • – There’s no set time limit for how long a company can keep a trade secret. For most patents, it’s 20 years. If you copyright your secret, it lasts for the author’s life plus 70 years. If it’s made for your company by an employee, it’s protected for 95 years from first publication or 120 years from creation, whichever is shorter.

3. What doesn’t count as a trade secret violation?

  •   – It’s not against the law for someone to:
  •     – Independently come up with the same information in a trade secret.
  •     – Analyze publicly available products or info to find secret details.
  •     – Figure out how a product was made by working backward (reverse engineering).

4. Who usually steals trade secrets?

  •   – Often, it’s employees, but sometimes it’s competitors. For example:
  •     – An ex-employee of Susquehanna International Group tried to steal computer codes and had to pay the company back in court.
  •     – An engineer at Dura-Bar downloaded many documents on his last day, and although he got caught, only some were considered trade secrets in court.
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