Trade secrets are a way to protect confidential information without a legal fee. Any piece of knowledge that gives a business or corporation a competitive advantage can be a trade secret. Do you have rights to a trade secret? Read on.
1. Trade secrets can include technical and commercial information.
According to the Uniform Trade Secrets Act (UTSA), a trade secret can be any “formula, pattern, compilation, program, device, method, technique, or process” that has commercial value based upon keeping it a secret. This can be technical information (ex. manufacturing processes and computer program designs) or commercial information (ex. client lists and marketing strategies).
2. A trade secret can be protected for an infinite period.
The intellectual property (IP) rights of a trade secret last as long as:
- it has economic value due to its confidentiality
- it is only known by a select group
- precautions are taken to maintain its secrecy
Once these three requirements are no longer met, the trade secret can no longer be enforced, and the information now belongs to the public domain.
3. The trade secret owner must take steps to protect their trade secrets.
It is the responsibility of the trade secret owner to protect their trade secrets. It’s easier to protect information when the trade secret holder takes precautions such as:
- filing non-disclosure agreements (NDA)
- filing non-compete agreements (NCA)
- implementing IT security infrastructure
- limiting the accessibility of crucial documents
4. The use of a trade secret does not always mean misappropriation occurred.
When filing a trade secret claim, the holder of the information must show that proper precautions were implemented and that the trade secret was wrongfully taken. Examples of misappropriation include disclosure of someone else’s trade secret without consent and the use of improper means (ex. theft, bribery, or espionage) to acquire the trade secret.
However, trade secrets are only protected when obtained through improper means or a breach of confidence. Lawful ways to learn trade secrets include:
- research and development
- reverse engineering
- market analysis
5. Trade secrets are protected on both the state and federal level.
The UTSA aimed to standardize state laws governing trade secrets and it has been adopted by 48 states. The Economic Espionage Act of 1996 made the theft or misappropriation of a trade secret a federal crime with penalties of imprisonment for individuals and fines for corporations. Additionally, the Defend Trade Secrets Act of 2016 amended the Economic Espionage Act to include the right for an individual to sue in federal court for trade secret misappropriation.
6. Protecting too many trade secrets may prevent the public from accessing important data and information.
The protection of corporate information blocks people from learning about various topics, ranging from surveillance technologies to environmental hazards. Trade secret protections promote a lack of transparency between the company and the consumer, limiting accountability for public health and safety. Information protected by trade secrets may also limit scientific research and development. While patents only protect information for a set period, trade secrets can protect information such as clinical trial results or drug formulas indefinitely. This secrecy may have unintended consequences regarding treatment and vaccine development.
Due to modern technology such as artificial intelligence (AI), the risk of trade secret theft is at an all-time high. Collaboration between legal, IT, security, and HR teams is essential to ensure proper protocols are followed to protect trade secrets. Increasing employee awareness about the significance of protecting trade secrets is just the first step in the fight to keep confidential information confidential.
– Masin Kearney