What (is a trade secret)?
In business, exclusivity is a huge advantage. Patents give the patent holder the exclusive right to make, use, or sell an invention, and, as a result, obtaining a patent can be an incredibly lucrative decision. However, patent rights do come at a price. Not only is the process of acquiring a patent very expensive and time consuming, the patent holder must disclose exactly how to make and use the invention to the public.
As you can imagine, many businesses have information that is most valuable because it is not in the hands of their competitors. If public disclosure is a requirement for registration with the government, then there are situations where it doesn't make any sense to register certain information - this is the situation where trade secrets come into play.
Trade secrets cover any confidential information that gives businesses a competitive advantage because of the fact that it is a secret.
Who (do trade secrets apply to)?
Trade secrets can be kept by individuals or entities with business information they would like to keep a secret for commercial reasons. No, trade secrets do not cover shady business deals and illegal activity, but they do cover lists of client information, business methods, recipes and formulas, and data collected by a business.
Why (should I consider a trade secret)?
Why not rely on other types of intellectual property to protect your information? Because the information will not be kept a secret.
Patents, copyrights, and trademarks all require formal procedures and result in the information you provide being shared with the world. There are times where this can be extremely detrimental to a business.
One of the more famous trade secret examples is the Coca-Cola recipe, which has remained a trade secret since the product was first developed. Coke could have sought a patent for their formulation, but that would have meant the disclosure of the recipe to rival companies, who might have been able to use the information to their advantage while avoiding infringing Coke's patent. Coke didn't want to take that risk. Instead, they decided to treat the recipe as a trade secret, which remains under lock and key to this day.
Where (and how do I register)?
There is no registration process, and that is the point. Instead, of depending on the legal system, the secret holder takes reasonable steps to protect information from being acquired, obtained, or misappropriated by others.
The definition of "reasonable steps" depends on the situation. Confidentiality agreements, privacy fences, vaults, and other safeguards may all be reasonable under the circumstances, depending on the type of information being protected and the measures that the business is capable of taking.
When (should I take action)?
Now, if it isn't already too late. Once the secret is out, it is out. Speak to your attorney before sharing proprietary information with family, friends, clients, employees, contractors, and partners in order to protect your secrets from falling into the wrong hands.
About the Author:
David "Tyler" Bennett is a business and intellectual property attorney, and he is a partner at Verhagen | Bennett LLP. To learn more about David, please click here.
For questions or comments about this post, please email David directly at: David@VerhagenBennett.com
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© 2017 David T. Bennett — This article is for general information only. The information presented should not be construed to be formal legal advice nor the formation of a lawyer/client relationship.