What Constitutes a Trade Secret?

Trade secrets are protected under a number of state, federal, and in some instances, international laws. They are a form of protection that exists largely as long as the information remains a secret.

Merriam-Webster’s Collegiate Dictionary defines a trade secret as “something (as a formula) which has economic value to a business because it is not generally known or easily discoverable by observation and for which efforts have been made to maintain secrecy.”

In practice, a trade secret could be any information used in a business that may represent a competitive advantage. Trade secrets could be the use of a certain method of producing a good or a method of providing a service, such as a recipe or a computer algorithm. Trade secrets are treated in such a way as to reasonably keep the public or competition from learning about them, unless they are improperly acquired, such as by means of a violation of a non-disclosure agreement or by theft.

One advantage of trade secrets compared to other forms of protection is that they are potentially longer lived. A patent, for example, is typically granted for a period of 20 years, while copyright protection, though it may be extended for decades longer, is not forever.

For example, a patent protects against the unlicensed use of the patented device or process even by someone who might discover it on his or her own. In essence, it is a limited form of monopoly awarded to the inventor. However, when a patent is registered and issued, any secrecy is lost.

A trade secret can be something that is patentable, but it does not necessarily have to be.  The novelty that is necessary for a patent to be issued is not required for something to be deemed a trade secret. For example, it is possible for other people to know of a trade secret who have discovered the same process or formula by independent means.

Unlike other forms of intellectual property, such as patents, copyrights, and trademarks, a trade secret does not have to be registered with the government. Rather, trade secret security is a matter of keeping the information confidential. Who is allowed to know of a trade secret is at the discretion of a business owner, so it might be shared with employees or board members who have been directed not to disclose the information.

If the trade secret is revealed in breach of a non-disclosure agreement, it may be possible to sue for damages. However, once a trade secret is revealed, it may not be possible for it to become a secret once more.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s