What is a Trade Secret, and How Can You Protect Yours?
Trade secrets are carefully guarded procedures or methods that provide businesses with a competitive edge over their competitors. In short, how do you know if your company’s process, recipe, algorithm, or other intellectual property is a trade secret? It isn’t enough to simply have a unique method or design; there are set criteria for classifying something as a trade secret that must be met before protections are granted.
Elements of a Trade Secret
The courts look for three elements to determine if your small business or corporate intellectual property is a trade secret:
- The information has existing or potential economic value because it is generally unknown.
- It is valuable to other businesses or entities who cannot have access to the information.
- Reasonable efforts are made to keep the information secret.
All three elements are required for the courts to classify something as a trade secret. How can you determine if your company information qualifies? Working with an intellectual property attorney can eliminate much confusion around how to protect trade secrets and requirements to enforce against disclosure of secret information.
How to Analyze Your Potential
There are a series of questions you can ask yourself to determine if your intellectual property or company information may qualify for trade secret protection.
- How many people outside of the company know this information?
- Do all employees have access to this information, or do only a few key people know it?
- What security measures are in place to protect the information?
- What is this information worth to my company and my competitors?
- How much money, time, and effort has my company spent discovering, creating, or developing this?
- Can others easily duplicate it?
These questions aim to determine if your secret satisfies the secrecy and value requirements for classification as a trade secret, and each one is important. Additionally, you can also use this method for combination trade secrets. Combination trade secrets are secrets that consist of multiple unprotectable components that combine to create a unique whole. Overall, it is highly important to work out a company-wide plan on how secrets will be protected, including limiting who knows the trade secrets and having a system for employees to provide notice of any breaches of the secret.
Time Limits
Trade secret duration classification relies on the three elements listed above that define if something is a trade secret. As long as your secret maintains those elements, it will continue to be classified as a trade secret. However, it is not uncommon for trade secrets to lose their designation over time. Trade secrets that become common knowledge or lose value due to being outdated, as a result, lose protection.
Accordingly, protecting your trade secret involves a concerted effort to maintain its secrecy while proving that it has economic value.
EmergeCounsel’s intellectual property and business attorneys can help you classify and protect your trade secrets. Schedule your free consultation today.