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Trade Secrets
Over the past few years, the importance of trade secrets has grown. Due to the explosion of technology, with many areas changing rapidly, the law does not encompass protections for withal of the technological developments. Creating and controlling trade secret rights is a relatively easy, bureaucracy-free way for companies ensure some protection for their intellectual property. A trade secret is information that has commercial value and has been kept confidential by the owner of the information. The information does not need to be in actual use, but merely needs to have potential value to the business. Financial, economic, marketing, scientific, and technical information can be trade secrets. Most businesses have trade secrets, examples of which include customer lists, manufacturing processes, chemical, food and cosmetic formulas, recipes, project designs, business plans and magic tricks.
A business must make a reasonable effort to keep the information secret, by limiting access to information (for example, by using password protection), requiring employees to sign nondisclosure agreements, and other methods. If a trade secret owner does not make a diligent attempt to maintain the confidentially of the information, it may have no recourse in the courts if someone else uses the information. If a trade secret is stolen, however, the owner may bring a lawsuit to obtain an injunction to stop an unauthorized party from using or disclosing the information, money damages to compensate for monetary loss, and in some cases, punitive damages. In addition, federal law — and some state laws — provide criminal sanctions for some trade secret theft, including prison terms, fines, and forfeiture of property obtained as a result of the theft.
Trade secret law does not prevent a business from taking apart a competitor's product to try to figure out how it is made, or from independently developing the substance of the secret.
- Example: Mrs. Baker attempts to duplicate Mrs. Field's chocolate chip cookies by buying a dozen of them, dissecting them to see what is in them, and then experimenting with recipes until she produces her own cookie that tastes the same as a Mrs. Field's cookie. Trade secret law does not prohibit her from selling her cookies.
- Example: Mrs. Baker bribes an employee of Mrs. Field's cookie company to give her the recipe for Mrs. Field's chocolate chip cookies. She then uses the recipe to make cookies that she sells in her bakery. Mrs. Baker and probably the employee have violated trade secret law.
Like other kinds of intellectual property, a trade secret can be sold. When a business is sold, trade secrets often are included in the purchase agreement.
Information can be a trade secret even if a patent application has been file, because the US Patent and Trademark Office keeps patent applications confidential. Once a patent has been granted, though, the information no longer can be a trade secret due to the disclosure of detailed information about the invention to the public in the patent.
If you have legal issues involving trades secrets, or concerns about protecting the trade secrets of your business, an experienced intellectual property lawyer can provide you with sound advice and legal guidance. Contact an attorney with experience in trade secret law to discuss your legal needs.
Learn More: Reasons to Contact an Intellectual Property Attorney
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Reasons to Contact an Intellectual Property Attorney
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