How to Keep Trade Secrets Secret
Trade secrets set you apart from your competitors, so it’s critical to keep them safe. Taking steps to protect private information can stop it from being stolen and help you get relief if it is.
What are trade secrets?
A trade secret is information that has independent economic value by not being widely known and that reasonably can be kept secret. This includes anything you keep confidential and don’t want your competitors to know. Secret food and drink recipes are obvious examples, but trade secrets can be almost anything, including:
- Formulas
- Compilations
- Programs
- Devices
- Operations
- Techniques
- Customer lists
- Supply sources
- Corporate research
- Computer code
- Business and marketing strategies
- Financial data
Why do you need to protect trade secrets?
Depending on what they are, trade secrets can easily be stolen. For instance, if the information can be quickly jotted down or memorized by an employee, that makes it more vulnerable to theft. The same is true if many employees know or can access the information. If a competitor or former employee takes this information, to pursue action against them, you’ll have to prove that what was stolen was truly a trade secret. This means you’ll need to show that you made reasonable efforts to keep it secret.
So how can you keep trade secrets secret?
Here are some tools businesses can use to protect trade secrets:
- Control and compartmentalize who can access trade secrets.
- Allow employees to access trade secrets only from company property, like a company computer.
- Control how many copies of trade secret material exist, mark them confidential and make sure employees check copies out and back in.
- Issue access cards to enter spaces where trade secrets are kept or have computer locks or passwords to access trade secrets electronically.
- Have employees sign nondisclosure and noncompete agreements.
- Include language in the employee handbook that employees must keep trade secrets private.
- Have employees sign a non-solicitation agreement to prevent former employees from recruiting others for a certain amount of time.
- Conduct formal exit interviews and remind employees about signed agreements and the privacy obligations that continue after the employee leaves.
There’s no one-size-fits-all solution to keep trade secrets safe. For a smaller company, a secure file cabinet may be enough. A larger company may need a more sophisticated process. For many businesses, a combination of safeguards works best.
Please contact Warner J. Delaune, David Patrón, Mary Ellen Roy or any other member of Phelps’ Intellectual Property team if you have questions or need compliance advice and guidance.