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Trade Secret Protection

Not all IP protections are complicated. An effective and low-cost option is simply not to reveal unique aspects about your product idea. Trade secrets protect proprietary information because they are never divulged outside of the company which uses them.

It is very hard,if not impossible,to develop IP protection at a university. Keep in mind as well that a good trade secret strategy can be quite expensive, requiring intensive maintenance and record keeping, employee contracts, etc.

What is a Trade Secret?

A trade secret is the legal term for confidential business information. The Uniform Trade Secret Act (1985) defines proper trade secret subject matter as information “including a formula, pattern, compilation, program, device, method, technique, or process.” A good non-legal definition of a trade secret is a secret belonging to a business. This information allows your company to compete effectively. Examples of trade secrets include customer identities and preferences, vendors, product pricing, marketing strategies, company finances, manufacturing processes, and other competitively valuable information. In the field of education technology, source code for software may be considered a trade secret.

Under the Uniform Trade Secret Act, information must meet three criteria to qualify as a trade secret. First the information must not be “generally known or readily ascertainable” through proper means. Second, the information must have “independent economic value due to its secrecy.” And third, the trade secret holder must use “reasonable measures under the circumstances to protect” the secrecy of the information. Information can be protected as long as the information fits the definition of trade secrets. This can be moments or decades. Trade secret laws are state granted rights although many states have adopted the “Uniform Trade Secret Act” which attempts to make the trade secret laws the same state to state.

Unlike other forms of intellectual property such as patents, copyrights, and trademarks, keeping a trade secret is basically a do-it-yourself form of protection. There is no ability to register with the government to secure your trade secret; trade secret protection continues for as long as the secret is kept confidential. Once a trade secret is made available to the public, trade secret protection ends.

Any confidential information can be considered a trade secret, such as a sales plan, a list of customers, a manufacturing process, or a special formula. The best way to protect a trade secret is with a nondisclosure agreement.

Keep in mind however, that if others discover the secret independently, that is, without using illegal means or violating agreements or state laws, there is no government protection of the trade secret. For example, it is not a violation of trade secret law to analyze (or “reverse engineer”) any lawfully obtained product and determine its trade secret. In addition, employees can move from company to company, often bringing trade secrets and expertise with them. Trade secrets can be very difficult to distinguish from employee expertise and know-how.