Trade secrets can be the difference between your brand and a competitor’s. They are intellectual property, but they fall outside the registration and protections offered by the U.S. Patent and Trademark Office and the U.S. Copyright Office. They are defined by each state, although all states except for New York have adopted the Uniform Trade Secrets Act in one form or another.
The exact legal definition varies from state to state, but trade secrets are more or less defined as information that has independent economic value by virtue of being maintained as a secret.
The Uniform Trade Secrets Act allows a broad interpretation of that definition and protects virtually any piece of information that provides a competitive advantage to a business. The secret does have to be something that is not generally known, and you do have to take active steps to keep the secret in order for it to be protected.
Examples of trade secrets include secret recipes, components of products and proprietary ways of making products or performing services.
If you have a trade secret to protect, here is a general plan for keeping it secret. You should also talk to your attorney about trade secret protection.
- Determine what constitutes the secret information. Without being over-inclusive, decide what the core secret is and when new secret information is created. Create a system for keeping track of how the secret might be disclosed and how you plan to prevent that.
- Create a secure storage area and limit access. Consider all hard copies, along with electronically stored versions and decide who needs access to the information. Store the secret information where the public, vendors and non-essential employees can’t get to it.
- Maintain good security, including computer security. You may only need a locked filing cabinet and computer passwords, or you may need substantially more security.
- Label the documents “confidential.” Do this for both hard copies and electronic copies.
- Limit the access of vendors and suppliers. These may be weak points in your protection scheme if they have access to parts of the secret information. For example, if you are keeping a recipe secret, be careful what you tell the person who supplies the secret ingredient.
- Create employee training and policies, including confidentiality or nondisclosure agreements. Set up exactly how you would like to allow access to the secret, including what credentials are required and who has them. Train employees and affected contractors on an ongoing basis. Audit how the information is being accessed and used. Hold exit interviews with departing workers to ensure they return any secret materials and understand that they must abide by the confidentiality of nondisclosure agreement they signed.