When most people think of a trade secret, Coca Cola and KFC come to mind. Both brands are known for having secret recipes—KFC even keeps theirs in a state-of-the-art, high-security vault. But does your entity have trade secrets? And if so, is it doing everything in its power to keep them safe from prying eyes?
Let’s look at four ways that your company can protect its trade secrets.
1. Understand what a trade secret is.
A trade secret isn’t just a secret formula or recipe that needs to be protected. In fact, almost any type of company information can be a trade secret, including customer databases, supplier lists, research and development (R&D) projects, pricing information, and even company policies.
Here’s an easy way to remember it: a trade secret is any information coming from your entity that your competitors could use against you.
2. Know who has access to your company’s trade secrets.
Once you figure out what trade secrets your brand needs to protect, it’s time to get a clear picture of who has access to them. Do only certain executives have access to next year’s pricing information? Are all employees able to view and modify the brand’s full customer database? And if your company does have a secret recipe hidden somewhere, who knows where it is and how to get to it?
Remember to include third-party insiders in your analysis: do independent contractors, customers, suppliers, and/or consultants have access to trade secrets?
3. Figure out how someone could get their hands on your trade secrets.
Now that you know a) what trade secrets you need to protect and b) who currently has access to them, it’s time to think about how your secrets could fall into the wrong hands.
Trade secrets can exit your company in many ways: in your employees’ minds; on flash drives or CDs; on laptops, phones, or tablets; through outbound mail; in drawings or other physical media that someone takes with them. Outsiders can also potentially enter your offices and gain access to the trade secrets.
4. Make sure employees understand the importance of keeping trade secrets confidential.
Having a confidentiality agreement with your employees is a key part of ensuring that your trade secrets stay under wraps. A confidentiality agreement should:
- Define the trade secret information that the employee intends to protect. It’s a fine line between defining the trade secret too narrowly and defining it in such a broad way that a court could perceive it as unrealistic and unenforceable. A good intellectual property lawyer can help with this.
- Define the employee’s obligations to keep the information confidential. This should include any conditions under which the employee might be allowed to disclose the information (for business or legal reasons).
- Explain how the information should be kept confidential.
- Make it clear that the trade secret information must remain confidential even after the termination of employment or the contract.
- Comply with the Defend Trade Secrets Act (DTSA) requirements to provide some immunity to whistleblowers.
Keeping your trade secrets confidential requires more than just having employees sign a confidentiality agreement, however.
If your employees need to have access to trade secrets to conduct business, it’s critical to establish accountability and build understanding of why the trade secrets are so important. Emphasize that your brand’s trade secrets directly influence employees’ income, stock options, and other benefits. That is to say, if the trade secrets were leaked, it would have devastating consequences for the company, in turn directly affecting all its employees.