To develop a successful long-term risk minimization strategy, your company must take time to create and protect valuable intellectual property assets. To be effective, this strategy will involve critically analyzing your existing IP protection. Perhaps you may already use and rely on copyright, trademarks and patents to maximize the value of your business’ assets. But your company’s secret sauce—that confidential and proprietary business information and practices that give your organization a leg up over the competition—is protectable IP under trade secret law.
Trade secret law allows you to protect any information that is kept secret and creates an economic advantage to your business. In most instances, that protection will last as long as you actively prevent disclosure of the trade secret outside of your company.
What trade secrets protect
You may already be aware of trade secrets maintained by companies, like Google’s search algorithms and Coca-Cola’s original recipe for Coke. But did you know that trade secrets may cover just about any piece of information that is of value to your business? For instance, you can potentially claim trade secret protection for:
- Strategic plans
- Customer lists
- Compiled information
- Useful techniques (and useless ones, too!)
- Unsuccessful ventures
Trade secrets do come with limitations. You cannot claim as trade secrets general knowledge in the field, general ideas and concepts, and information about how something accessible to the public works.
Enforcing your trade secrets
It is against the law for someone to misappropriate information you hold as a trade secret. If someone gained unauthorized access to one of your trade secrets, you can seek relief under civil and criminal laws. This relief can be considerable depending on the value of the asset at issue or the level of misconduct involved in obtaining it. Examples of court-ordered relief include economic damages, injunctive relief, fines and, sometimes, jail time.
Although details vary by jurisdiction, in general, to get relief from a court for trade secret misappropriation, you must prove the following three elements:
- The information derives its value because it is a genuine secret—others are not generally aware of it and you would suffer economic harm if it is disclosed
- You have taken reasonable precautions to limit access to the information to maintain its secrecy
- An unauthorized party received the information wrongfully (e.g., through breach of a contractual or implied duty, through the use of the information without license, or through outright theft or other unlawful activity)
Identifying and maintaining your trade secrets
Adequate protection and the strength of your legal claim depend on how you navigate two interdependent elements. First, how well have you identified the secret itself? Second, what are those reasonable precautions you put in place to protect that secret?
The first step requires you to analyze your business practices and identify information you use that adds value to your business. Identification means that the trade secret information is clear and distinct from other information. By identifying and keeping the trade secret from others, the information benefits you and your business, and gives you an edge over the competition.
The second step is to safeguard that secret information once you identified it. You do this by limiting internal access to the information. Personnel with access to and knowledge of the trade secrets should handle them securely and according to a specific protocol. You must also train your employees on what they must do and not do to keep that information a secret. Courts will not presume that your employees know what information is a trade secret or understand what obligations they have with respect to that secret.
Part of proving the wrongfulness of a misappropriation claim is considering those steps an unauthorized party had to take to circumvent your security measures. Unfortunately, there is no specific rule when it comes to determining how many reasonable precautions you must put in place. But there is a general understanding that more valuable information requires more internal safeguards for its proper handling.
Documenting your secrets for ultimate protection
If you have not done so already, you should consider implementing the trade secrets best practice of documenting trade secrets and related security measures. Written evidence of a procedure for identifying and maintaining your trade secrets will form the foundation of any court case you may bring to enforce your rights. In fact, a few states already make specifically identifying the trade secrets at issue a condition for obtaining relief in a trade secret claim. Documentation also provides you with comprehensive IP portfolio and allows you to gain greater control over your property.
In most cases, however, it is probably impractical and overly burdensome to identify every last piece of information that is a trade secret and establish security mechanisms for protecting it. After all, trade secrets are only valuable if the company can continue with its business efficiently. It may be more efficient to protect less valuable information with general confidentiality agreements that employees and agents may sign, and reserve more stringent security measures for the most valuable trade secrets. Of course, a company would be wise to seek legal guidance in protecting a portfolio of valuable information using these and other mechanisms.
The definition of a trade secret is quite broad. This means it is safe to presume your company is in possession of some information that you could possibly protect as trade secret IP.
If you are not already taking advantage of this legal protection, now is the time to act. Take the time to properly assess and document all business-specific information you use that confers economic value on your company. Then, make sure you take reasonable steps to protect that property. Managing your trade secret program now can only help you should you find yourself seeking relief for misappropriation. And, given the potential liabilities at stake, a robust program may even deter present and future competitors’ ambitions to access your trade secrets in the first place.
The articles on our Website include some of the publications and papers authored by our attorneys, both before and after they joined our firm. The content of these articles should not be taken as legal advice.