WHAT IS CONSIDERED A TRADE SECRET?

Several factors will determine whether a piece of information falls under the legal definition of a “trade secret.” General secrecy alone is not all that matters: To what extent the information is known outside your business and within your organization is also important. The inherent value of the information and the amount of money you have invested in the information, including in efforts to keep that information secret, will also come into play.

Generally, a piece of information is considered a “trade secret” if:

• The information is not publicly available: If a member of the public – that is, someone who is not an employee of your business – can easily discover the content of the information, it is by definition not secret.
• The information has economic value: Trade secrets provide crucial competitive advantages to your business. Many tend to give you the information you need to create and offer specialized or superior products or services. If the information became publicly available (or was made available to a competitor), would your business lose a competitive advantage? If so, there is a good chance the information offers some sort of economic benefit.
• You take active steps to protect the information’s secrecy: This element is extremely important. For a secret to become a trade secret, a company must make a continued effort to protect the information’s secrecy. Several tools, including nondisclosure and (in some states) non-compete agreements, are commonly used to prevent the misappropriation of secrets and meet this legal requirement.

Examples of common trade secrets include:

• Recipes and formulas
• Business plans
• Ideas
• Information that benefits your company that you do not want competitors to know about
• Research
• Customer lists and contacts
• Processes
• Software
• Research

Protecting your trade secrets is paramount, and we can help. When you work with our trade secret attorneys at Potts Law Firm, we will identify the types of information that warrant protective measures and what you can do to keep these secrets secret.

HOW IS A TRADE SECRET DIFFERENT FROM A PATENT?

Trade secrets and patents are both types of intellectual property that provide significant value (including competitive advantages) to a company. Patents are public, however, and information on them is accessible to the public – including competitors. To compensate for this, the safeguards offered by intellectual property law are generally stronger. A patent holder has the right to exclusively use their patent for a set period, typically up to 20 years, even if another party independently invents an identical or substantially similar invention. Still, patents do expire, meaning someone could conceivably use a patented invention in several decades, thereby limiting its long-term value to your business.

Trade secrets, in theory, can remain “secret” forever if appropriate measures are taken. Keep in mind that some types of information, such as ideas lacking concrete execution, customer lists, and research, may also not necessarily qualify for patents. Our team at Potts Law Firm can walk you through your intellectual property protection options and help you decide which approach is right for you.

WHAT ARE THE ESSENTIAL ELEMENTS OF A TRADE SECRET CLAIM?

When you discover a trade secret has been stolen or illicitly distributed, you have the right to take legal action and sue the misappropriating party. Three elements are generally needed for a trade secret claim.

Our trade secret lawyers will work to prove:

• The misappropriated information meets the definition of a trade secret
• Precautions were taken to protect the misappropriated trade secret
• The trade secret was misappropriated or taken illegally

Information that is legally obtained through reverse engineering or inadvertent disclosure may not be a breach that is prosecutable. We will always be transparent when discussing your legal options and be direct when advising whether you have a strong case.