Trade Secrets Are Valuable Business Assets. What Are You Doing to Protect Them?Posted August 21, 2012 by in Articles & Publications
If you are in business, then you definitely have trade secrets, also referred to as proprietary or confidential information. What, if anything, are you doing to protect these valuable assets? To answer that question, it is important to understand what kind of information can be considered a trade secret. There are two criteria to be met in order for the information to qualify as a trade secret. First, don't worry, the information does not have to be anything unusual or "eye poppingly" original. Instead, it is the kind of information that you have accumulated, discovered, developed or generated in the course of operating your business and that is not generally known. And second, you must take reasonable steps to preserve the secrecy of the information.
In contrast to a patent which can give you exclusive rights for a limited period of time, and can be costly to obtain, there is no time limit on the life of a trade secret, provided you keep the secret. ( Think of the formula for Coco-Cola, which goes on and on.) It also does not have to cost a great deal to preserve the secret.
Examples of some reasonable steps you can take so that the information can be protected by law include: First, identify what the information is that you wish to protect. Some examples of the kinds of information that can be your trade secrets are: customer and supplier lists, tax returns, business and marketing plans, software developed for you, internal procedures you have developed, recipes, techniques and systems you employ. However, be selective as to what information you consider important enough to protect. That will give you better control over the process. Second, take precautions as to who actually will have access to the information. You may stamp "confidential" on the documents; have employees, consultants, and other third parties sign confidentiality agreements; lock away sensitive materials; protect computers with fire-walls and passwords; limit access to those "with a need to know;" and consistently enforce your secrecy procedures.
Most states and the District of Columbia have a statute that address trade secret protection. You may have a claim against another who has misappropriated your trade secret. To misappropriate means that they either wrongfully acquired the information or disclosed it to a third party or used it without your permission. You can see from this explanation why it is important to guard your trade secrets. If inadvertently you let the secret out, then it is in the public domain and anyone has the right to use it, provided they can show they obtained it lawfully. However, if in fact there was misappropriation involved, the kinds of remedies you might seek could include an injunction from further disclosure, actual damages, a claim for unjust enrichment, imposition of a reasonable royalty, punitive damages and possible attorney fees. However, there is a cautionary tale in all of this. If you bring an action against another in bad faith for misappropriation, you could find yourself paying the other party's attorney fees.