What is a Trade Secret?

What is a Trade Secret?tradesecretexample

All states have statutes that provide civil legal remedies for misappropriation of trade secrets. A trade secret generally consists of any information that derives independent economic value from not being generally known to the public, and not readily ascertainable by proper means by anyone one who would profit from its disclosure and use, and for which the trade secret proprietor has taken reasonable measures under the circumstances to maintain its secrecy. This universal definition is broad and essentially includes virtually anything that provides a commercial advantage over competitors because of its confidential status. The recipe for Coca Cola® is an example of perhaps one of the most aggressively guarded trade secrets in the world.


Protecting a Trade Secret.

From a business perspective, prevention is the lynchpin of protection. Typical steps to reduce the likelihood of misappropriation or inadvertent disclosure include: (1) identify, label and segregate all confidential information, (2) make liberal use of confidentiality agreements with employees, contractors, temporary personnel, and non-disclosure agreements with vendors, suppliers and potential customers, and (3) limit access to confidential information [locks, passwords, and encryption].


Effect of Misappropriation.

State statutes and a nationwide legion of interpretive case law make it clear that trade secret status is not lost because it has been misappropriated, provided that the proprietor is found to have taken reasonable steps under the circumstances to protect it. This is important within the contest of bringing and maintaining lawsuit. However, as a practical matter once the secret nature of the information has been compromised, its inherent value moving forward is lost forever.