Trade secrets are a crucial part of the ecosystem of business development. They are the formula, recipe, design, or manufacturing process that a company considers confidential. A trade secret can be any information a company considers confidential, but not all confidential information is a trade secret. It is often information about how a product or service is developed and sold. Trade secrets are protected from other companies and from employees who have access to this information through a variety of legal tools. Traditional trade secrets are closely tied to patents, copyrights, trademarks, and trade names. They have value to others who do not have legitimate access to this information.
To be legally protectable, trade secrets should be written down or documented electronically. The document must contain a notice of confidentiality. For example, a cover page with the following information:
CONFIDENTIAL. This document contains trade secrets or otherwise confidential information owned by the Company. Access to and use of this information is strictly limited and controlled by the Company. This document may not be copied, distributed, or otherwise disclosed outside the Company’s facilities except under appropriate precautions to maintain confidentiality, and may not be used in any way not expressly authorized by the Company.
Additional warnings should be applied to all pages of the documents. Such as, “Confidential Information” or “Confidential Information of the Company.”
Once it is documented, the law requires that adequate protections be made to keep trade secrets secure. Keep the electronic files in password-protected locations with strict access restrictions or secure hard copy documents in locked file cabinets or in a safe.
New employees should sign a nondisclosure agreement that sets out the limitations, scope, and enforcement options for the protection of the company’s trade secrets. All departing employees should be reminded of the obligations of the nondisclosure agreement and the potential legal ramifications of violating the agreement. These agreements should be rigorously enforced by the business. If violations of the agreement are not enforced, your business could lose the ability to enforce violations in the future and more importantly, lose the value of those trade secrets in the marketplace.
If your business has trade secrets in its portfolio, you should create a policy for the creation, documentation, and protection of those secrets. If you would like to get a sample policy, I have included one in the resource material that accompanies this book.