Trade Secrets 

If you’re an employer who has employees, you likely have proprietary information; specifically, trade secrets. What are trade secrets? Think about client lists, marketing plans, pricing and discount structures, production processes, food processing methods, formulas, and even software source code.

Trade secret protection can be amongst your most valuable assets, and this is especially true if the disclosure of the trade secret to employees or third parties is necessary for you to derive income. Of course, trade secret protection only applies to business, financial, and technical resources if the following criteria are met:

• Information is not generally known or ascertainable by the general public.

• Keeping the information secret creates an independent economic value or business advantage for the employer.

• The employer takes reasonable measures to ensure the privacy of the secret.

So how are trade secret rights created, secured and maintained?

Unlike other intellectual property assets, there is no official registration procedure for trade secrets. An owner secures trade secret rights by taking reasonable measures to preserve secrecy and discourage misappropriation. At minimum, this requires confidentiality and nondisclosure agreements. Additionally, it is advisable that an owner marks documents containing the proprietary information as “secret” or “confidential”.

The right to file an action against someone only arises on misappropriation of the trade secret. By way of example, the improper disclosure by a former employee, theft of documents, or breach of a valid confidentiality agreement can trigger liability. Moreover, a third-party that acquires the trade secret with knowledge or reason to know that it was acquired by improper means (i.e., theft, breach of contract) can be held liability for trade secret misappropriation. Keep in mind that one of the valid defenses to trade secret misappropriation is that the owner neglected to take reasonable efforts to keep the information confidential.

In light of this, if you need to protect your trade secret, feel free to contact me to discuss setting up a comprehensive trade secret protection program.