Certain elements of your business shouldn’t be easily accessed by members of the public, so protecting them may be necessary if you want your business to maintain some secret information. Trade secrets aren’t information that is damaging to your business, but are specific insights and information that can help you have a leg up on competitors. Different states have varying laws around trade secrets and how they are protected, so it is best to do your research or work with a legal professional. There are reasonable measures that business owners must take to protect trade secrets for the longevity of their business.
What Are Trade Secrets?
A trade secret is a formula, pattern, device, or compilation of information that helps a business have a competitive edge. This information is not generally known or easily discoverable by outside parties. The information often only has value because of the secrecy that surrounds it. Some examples of trade secrets include:
- Recipes
- Algorithms
- Product designs
- Customer lists
- Formulas
- Pricing schedules
- Manufacturing techniques or locations
- Marketing
- Technical data
Reasonable Measures To Maintain Secrets
The owner of a business has the responsibility to protect any information they don’t want in the hands of competitors. These reasonable steps are used to guard your secrets and customer information that could be considered private. Practical protection is needed if you want to keep your products or services as the best on the market. Companies like Apple, KFC, Coca-Cola, Nike, and other large companies have used reasonable measures to protect their processes or specific products. Learn more about different measures of protection below.
Contracts
There are different types of contracts that can help protect trade secrets. Some of the most common options include NDAs, confidentiality contracts, or ownership establishment contracts between owners and contractors. Agreements will need to have clear language and be signed by each employee or third party that may have a hand in your manufacturing or product creation.
Internal Policies And Training
Another way to protect your internal processes and trade secrets is to work from the inside out. Some internal policies can help employees from making major mistakes or prevent someone from stealing from the company while working there. Consider limiting personal device use for work tasks, limiting who has access to information, labeling documents as confidential, hosting recurring trainings, and conducting interviews before employees leave to ensure confidentiality obligations.
Digital Security
Since most of our information is digital in today’s world, digital security is crucial. Password-protected servers and thorough IT hiring processes can protect your trade secrets from being released. Another great option for digital security is to implement data loss prevention software. These DLP tools can help you catch suspicious downloads or transfers as it happens. Stop your secrets from getting into the wrong hands almost instantly.
Things That Invalidate Trade Secret Protection
While protecting your trade secrets is crucial, it is important to keep in mind what could cause these protections to be seen as invalid in court. If a protection is seen as invalid, this information could become public and used by competitors to take away your loyal customers. Making a mistake could cost business owners their trade secrets and, in turn, their business success.
Factors that invalidate trade secrets include:
- Publishing or posting information online or in marketing materials
- Neglecting confidentiality agreements with third parties or failing to dispose of documents
- If the product or process can be easily dissected and replicated by a competitor
- If a party develops a product or process that is similar without stealing, the original holder doesn’t have exclusive rights
- The information or technological advancements are outdated or rendered obsolete
How Do I Know If My Information Qualifies As A Trade Secret?
Information that has been developed by your business and gives you a competitive edge is considered a trade secret. If you benefit from keeping it private or holding on to confidential information, it can qualify for reasonable protection. If you feel that your trade secrets have been stolen, make sure that they will qualify under your state’s trade secret law and if it is subject to federal protection.
Business Insights From WW Partners
Our lawyers are experts in business law and can help your legal journey end in success. Combining expertise and experience, our lawyers can help you get over any legal hurdles, providing peace of mind to individuals and business owners. Operating a business can be overwhelming at times, so having a legal expert on call can help you feel prepared for anything life throws your way. Our attorneys have experience working with many different complex situations in Salt Lake City and the surrounding areas. Reach out to our team to learn how we can help you and your business.