Q: What is a Trade Secret?

Trade secrets are information (1) that has actual or potential value, (2) that isn’t generally known in your industry (and therefore provides you with an advantage over your competitors), and (3) which you’ve made “reasonable efforts” to keep secret and confidential. Trade secret information doesn’t have to be novel, but it does need some “modicum of originality”. Simply calling information a “trade secret” won’t work.

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Q: Why protect Trade Secrets?

Trade Secrets are your company’s intellectual property. The intellectual property your company owns is the foundation of your business. Protecting this intellectual property is essential to extracting its value and in taking advantage of the opportunities that arise from it.

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Q: What must be done to protect Trade Secrets so that they remain Trade Secrets?

Here as some of the “reasonable efforts” you can make to show a court that you intended to keep your trade secret information secret. Note that extraordinary measures (e.g., putting them in a bank vault) aren’t necessary.

  • Mark trade secret materials as “confidential”.
  • Limit access to trade secret materials to individuals with a genuine need to know them by, among other things, locking them away after business hours.
  • Maintain appropriate security over computers through which someone could access your trade secrets.
  • Require those who have, or could have, access to trade secret materials to sign nondisclosure agreements.

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Q: Should I patent my Trade Secret?

The perpetual nature of a trade secret can sometimes provide an advantage over a patent when it comes to an invention. A patent application for an invention is published and any trade secrets it incorporates are made public. In addition, while patent protection for an invention, and the patent owner’s exclusive right to exploit that invention, last 20 years after filing, once this period expires, anyone can use or exploit the invention without compensation to the patent owner. In contrast, a trade secret may be protectable, and the owner may recover damages for its unauthorized acquisition and use, for as long as it’s a trade secret (e.g. the formula for Coca-Cola).

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