How to Protect Trade Secrets?
Unlike other forms of intellectual property (IP), trade secrets are not registered with any government or regulatory body. The trade secret right is automatic, as long as the criteria for protection have been fulfilled.
Unlike other forms of intellectual property (IP), trade secrets are not registered with any government or regulatory body. The trade secret right is automatic, as long as the criteria for protection have been fulfilled.
Generally, three steps must be met in order for an item of information to qualify as a trade secret:
While a decision will have to be taken on a case-by-case basis, it would be advisable to make use of trade secret protection when:
Expert tip – Trade secrets are protected only against improper acquisition. There is no protection if the same information is acquired by another through independent development, reverse engineering, leakage or otherwise becomes generally known.
In addition, trade secrets are not a monopoly right like a patent. That is, if two companies independently create information that qualifies for trade secret protection, both will have trade secret rights in the same information, until one or both of them publish the information.
The employment contract should contain terms that prohibit employees from using or disclosing your confidential information outside the scope of employment as well as prohibit them from using or disclosing confidential information learned during previous jobs. Employees should be provided with training on what you consider confidential and what is expected of them in maintaining the confidentiality of your information.
Remember, employees are the biggest source of trade secret loss of companies.
Whenever an employee changes jobs, it is unavoidable that some of the employee’s previously acquired knowledge will be made available to the new employer. Contractual terms that prohibit post- employment competition or solicitation of customers may or may not be legal depending on the jurisdiction. The advice of an attorney should be sought.
Remember to enter into non-disclosure agreements with all those you engage with in the course of your business and to whom you disclose your confidential business information.
Expert tip – A trade secret may be protected forever as long as you keep the information secret. It is important to bear in mind, however, that:
With its main IP being nearly two hundred years old, Angostura Limited from Trinidad and Tobago has found that the best way to protect its product is through using trade secrets.
Although patents are the primary tool with which Thailand's National Science and Technology Development Agency protects its innovations, at times trade secrets are necessary, in particular for the protection of know-how.
American software company Tiatros Inc. protects its know-how and trade secrets to ensure its competitiveness.
(Icon illustration credits: Getty Images/Momento Design/DStarky/Enis Aksoy)