Trade Secrets

What Is A Trade Secret?

Advantages Of Trade Secret Protection

Disdvantages Of Trade Secret Protection

Developing A Trade Secret Protection Program

Intellectual Property Audits

What Is A Trade Secret?

A trade secret is generally something that is not known or readily discoverable that gives the owner an advantage in its business activities. A trade secret may be business information, such as customer lists, business or marketing plans, lists of suppliers, ideas or plans for business expansion. Products and product information can also be protected as trade secrets, including formulas, manufacturing methods, software code, maintenance techniques and non-standard tooling and manufacturing methods.

The essential requirement of trade secret protection is that relative secrecy be maintained. This requires that persons outside the organization that owns the secret not be provided with the information, unless they are under an obligation not to further use or disclose the trade secret.

Advantages Of Trade Secret Protection

Trade secret protection has advantages in some circumstances over other types of protection, including patents. Patents may last for a maximum of approximately 20 years. Trade secret protection may last as long as the information remains secret. Trade secret protection also typically costs less to maintain.

Disadvantages Of Trade Secret Protection

A major drawback of using trade secret protection is that care must be constantly exercised to ensure the confidentiality of the secret. Even one inadvertent disclosure of the information may result in loss of trade secret protection. Anything that can be readily discovered by "reverse engineering" cannot be protected as a trade secret and some other type of protection must be used if the invention is to be protected.

Developing A Trade Secret Protection Program

The effective protection of trade secrets usually involves developing a program to ensure legally effective protection. Such a program needs to be developed by working in conjunction with an attorney who has experience with trade secrets and must be tailored to the particular situation.

Elements of some trade secret protection programs may include:

1. Employee confidentiality agreements,

2. Non-disclosure agreements with suppliers and vendors,

3. Restricting access to records and manufacturing facilities,

4. Controlling access to facilities by visitors and consultants,

5. Restricting use and disposal of documents, materials and equipment,

6. The use of non-compete agreements with key employees and consultants, and

7. Designing products to make reverse engineering difficult.

The steps that may be required to have effective trade secret protection will depend on the nature of your business and the type of information you need to protect.

Intellectual Property Audits

Many businesses only think about protecting their patents, trademarks, copyrights or trade secrets after they have encountered a problem. It is much less costly to have a plan for protection of your valuable "intellectual property" so that problems can be avoided.

One approach to avoiding problems is to have an "intellectual property audit" conducted. An intellectual property audit involves having an attorney experienced in intellectual property review the business activities and the protection you currently have. Such reviews usually uncover areas in which protection can be improved at a very low cost. Just like an annual physical checkup by a doctor, an annual review of intellectual property protection can avoid serious problems later.