What is a Trade Secret and How Do You Protect It?
We hear a lot about trade secrets, and about the need to protect them. Many people who draft, review, sign or give out employment agreements or employee manuals, often know to include some kind of language protecting their business’ trade secrets. But what exactly is a trade secret?
What Are Trade Secrets?
Trade secrets are not just novel, new inventions, like a new technology, or the development of a medicine or vaccine (although those may qualify for trade secret protection, as well as other intellectual property protections). Trade secrets are anything that is unique to your business, developed by you, which is generally protected by you from disclosure to the outside world.
The simple process that your company does business, or how it makes its product, can be a trade secret.
If you wanted to open a restaurant, you could not steal information from McDonalds as to who supplies their food, the agreements they sign with their contractors, the computer programs they use to take orders or the financial formulas to figure out how many hamburgers they have to sell to make a profit. All of these things are trade secrets even though they may not seem “scientific” or innovative.
The way your business operates is your trade secret. What documents do you use? What machines do you use? How do you log your orders? How do you get the best deals from your advertisers? All of these things are the “nuts and bolts” of a successful business, likely developed by you from a long and expensive process of trial and error, and thus, as long as the information is not readily accessible to anyone who wants it, they are your trade secrets.
Your customer lists are your trade secrets as well, so long as they are derived in a way that gives them trade secret protection. If your customer list is nothing more than random names from Facebook, there may be no protection. However if your customer lists have been developed through years of networking, former clients/customers, or from a technique used by a marketing company that you hired, your lists may be protected.
But all of this is not enough to make something a trade secret. You also must show that your business has treated information as secret to get the benefits of a trade secret. If your import-export business has a list of overseas contacts, that may be a trade secret. However, if you freely give that list to every contractor and employee who works for you and they aren’t signing anything that says these are trade secrets, you may lose the protection.
Put simply: if you don’t treat something like it is a secret, the court likely won’t either.