Identifying and Protecting Your Trade Secrets

Trade secrets exist across nearly all industries. Tech giants like Google go to great lengths to keeps their proprietary algorithms out of their competitors’ hands. Advertising and marketing firms maintain confidential contact lists and demographic data to maintain a competitive edge. Internal processes that keep businesses running smoothly are often protected as trade secrets, and even the New York Times keeps their definition of a “best seller” secret from the public. The value of trade secrets is widely recognized by successful companies. In fact, trade secret protection can be one of the most crucial ways to protect the future of your business.

What is a Trade Secret

A trade secret may be any specialized information or knowledge that your business uses to obtain an advantage over your competition. Where the other forms of intellectual property (trademarks, copyrights, and patents) have finite protection periods, a trade secret can exist in perpetuity as long as it remains a secret.

Common Types of Trade Secrets

Trade secrets vary in form. As a trade secret really can be anything that gives your company an advantage over your competition, it takes many shapes. While the standards for defining trade secrets do vary from state to state, there are three general standards that can help identify and define your trade secret.

1. The information must be either secret or only known to a small group of people who interact with this information.
2. It must have some commercial value or advantage, which is why it would need to stay a secret.
3. Your company must take reasonable documented steps to protect the secret information.

Common Examples of Trade Secrets

• Methods or software algorithms
• R&D information
• Tools, devices, or inventions
• Formulas
• Processes or automation
• Patterns
• Design
• Know-how

What is Considered Reasonable Protection and How Can I Implement?

Unlike other forms of intellectual property that are publicly disclosed in exchange for legal protection, the value of a trade secret is that it is held in secret from competitors. As a result, trade secrets are even less tangible than other forms of intellectual property. There is no formal registration or application process is necessary, however, the owner of a trade secret must make reasonable efforts to maintain secrecy.

After identifying your trade secrets, you will want to put a plan in place to maintain that secret. This would include implementing a way to keep the information confidential, and then educating the employees who need to know the information on how to keep it confidential. Common security steps taken are Non-Disclosure Agreements, Employment Agreements, and Independent Contractor Agreements with specific information relating to confidentiality of trade secrets, encrypting computer files, and having ID cards with a specific access level.

Developing a Plan to Secure Your Trade Secret

Start protecting your competitive advantage with these proactive steps.

• Create a Protection Team – have an assigned group of people who can ensure confidentiality and help create processes and procedures.
• Record Your Policies – write down the policies and procedures that your protection team develops to ensure consistent handling and training.
• Implement a Training Program – make sure that anyone who must know the secret knowledge has been sufficiently and clearly trained.
• Run Quarterly Risk Assessments – stay proactive throughout the year by monitoring who has access and if policies are being followed.
• Take Corrective Steps – if your risk assessments fail, take the steps you need to correct the faulty procedures.