Trade secrets are any type of data or information that is of value to a business that the business maintains as a secret. Trade secrets are generally maintained in strict confidence not disseminated or known to the public. Examples of trade secrets include:
- Sales and marketing plans and procedure.
- Management policies.
- Customer data such as customer lists, customer sales data, demographics for current and potential customers.
- Manufacturing processes and other types of engineering information.
- Formulas such as, for example, the formula for Coca Cola.
- Software code and manuals.
- Financial information.
- Economic information.
Some trade secrets might be eligible for patent or copyright protection, but filing patent or copyright applications destroys the secrecy of the information, as patents are ultimately published when issued, if not before, and copyright registration requires a copy of the work to be deposited with the Copyright Office, where it is publically accessible.
Businesses may choose to maintain data or information as a trade secret for a variety of reasons, some of which may include:
- Formal registration of trade secrets is not required.
- Trade secrets are not publically disclosed.
- Trade secret protection does not expire, for example, unlike patent protection which expires 20 years after filing (Coca Cola's secret formula is over 100 years old, and still a trade secret).
- Information which may not be eligible for any other type of legal protection may be protectable under trade secret law.
Trade secrets are protectable under a variety of state and federal laws. The basic requirement for trade secret protection of information is where:
- The owner of the information has taken reasonable measures to keep such information secret; and
- The information derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable through proper means by, the public.
What are “reasonable measures”? Generally, methods of protecting information that are generally regarded as effective in the applicable industry for maintaining the confidentiality of information (i.e. best industry practice) and are not unduly burdensome. The more technologically sophisticated the industry, the more sophisticated cc reasonable measures” might become.
This is a fuzzy standard, to say the least, but for most businesses, reasonable measures might include:
- Physically securing the information, such as locking it in a filing cabinet or safe, where only a limited number of persons can unlock the filing cabinet or safe.
- Securing electronic information on a network using one or more techniques known in the art, such that a limited number of persons have access to the information.