Intro to IP Law – Part IV – Trade Secrets

More from the ideas2money lectures.

Trade Secrets

What do they protect?

Trade secret protection is afforded to confidential information that has actual or potential commercial value by virtue of its secrecy.   Source code, engineering specs, manufacturing tricks, business plans, customer lists… if it’s valuable to you because you keep it known only to yourself and not to your competitors, then it’s probably protectable as a trade secret.

How you get them?
Trade secret rights apply to confidential information that you actively protect as a secret.  No formal registration is required, or, for that matter, available.  You protect trade secrets by guarding their secrecy.  Typical steps include: executing nondisclosure and nonuse agreements with employees, contractors, and everyone else to whom trade secrets are disclosed; keeping trade secrets in inaccessible places such as locked cabinets and vaults, and, if in digital form, behind password-protected security; and establishing procedures for preventing unauthorized access, disclosure, and use.

How long do they last?

Trade Secret protection lasts for as long as you keep the underlying confidential information a secret. The formula for Coca Cola has been protected as a trade secret continuously since 1886.

Who can you sue?
You can bring suit against anyone who misappropriates your trade secrets.  Misappropriation occurs when someone takes, discloses, or uses your trade secrets without your permission contrary to a prohibition not to.  A common scenario is when a departing employee carries a deck of source code or a customer list out the door.

Any limitations on what can be owned?

Trade secret protection only applies to actual secrets.  Trade secret protection can be lost once the information is publicly available, independely discovered by someone else, or disclosed by you to someone who is not obligated to maintain it in confidence.  Be sure to check your standard form of nondisclosure agreement to ensure its obligations of confidentiality do not terminate too soon.

Is this really necessary?
Most every company has a few bits of information they would rather keep to themselves for competitive advantage.  Depending on your business, trade secrets can comprise a large and valuable component of your IP portfolio.  Trade secrets are the primary method of protecting new inventions until they are patented, for example.  Advocates of open source methodologies suggest that certain kinds of information becomes more valuable as it is shared with others; in this light, trade secrets can be seen as inefficient.  The conservative approach is first to ensure that all trade secrets are protected, then to determine which, if any, should be injected into the public domain as open source
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