Theft of trade secrets is made more likely by factors such as the size and scope of investments and the amount of international competition. Particular manufacturing details that are not publicly available often qualify as protectable subject matter. For more on this, see Gates Rubber Co. v. Bando Chemical Industries Ltd., 9 F.3d 823 (10th Cir. 1993). The Commission held a workshop on cyber industrial espionage in October 2018, with the participation of representatives and experts from EU countries, EU agencies, individual businesses and business organisations, think tanks, academia, and experts on intellectual property, SMEs and cybersecurity. Other jurisdictions may treat trade secrets somewhat differently; some consider them property, while others consider them as an equitable right. The opinions expressed are those of the authors on the date noted above and do not necessarily reflect the views of Fish & Richardson P.C., any other of its lawyers, its clients, or any of its or their respective affiliates.

The subject matter of trade secrets is defined in broad terms and may include manufacturing processes, distribution methods, advertising strategies, sales methods, consumer profiles, and lists of suppliers and customers. In Morlife, the court ruled that information about customers that was “stored on computer with restricted access” which had been subject to “a confidentiality provision expressly referring to [] customer names and telephone numbers” fell under trade secret protection. According Morlife, information that is difficult and time-consuming to obtain will likely be more protectable than information than was neither difficult nor time-consuming to obtain. The Defend Trade Secrets Act of 2016 (DTSA) amended the Economic Espionage Act to establish a private civil cause of action for the misappropriation of a trade secret. This cause of action provides trade secret owners with a uniform, reliable, and predictable way to protect their valuable trade secrets anywhere in the country. The DTSA does not preempt existing state trade secret law, thus giving trade secret owners the option of state or federal venues.

Trade Secret Law

A patent is an exclusive right that prevents anyone else from using your invention for a set period of time. Intellectual property protection exists so creators have control over their work after they share it. Learn what’s at stake and how to safeguard your intellectual property and your success. As an example of enforcement under the Uniform Trade Secrets Act, under Texas’s adoption of the Act, a plaintiff who files trade secrets meaning for a preliminary injunction only needs to show that the defendant possesses the subject matter in question and has the opportunity to use it. This was confirmed in heard in Hughes v. AGE Industries Ltd., which was decided by the Texas Court of Appeals. Under §1832(a) of the Economic Espionage Act, misappropriating a trade secret used in interstate commerce or foreign commerce may result in fines or imprisonment.

Contracts, non-disclosure agreements, non-compete forms, and other documents that are very similar to one another are typically what are used to ensure the protection of trade secrets. These provide guidelines for individuals who may have been exposed to information regarding the trade secret, with the goal of discouraging those individuals from disclosing that information to anyone who might share it with the company’s competitors. Use of a trade secret belonging to another does not always constitute misappropriation. There are two basic situations in which obtaining the use of a trade secret is illegal; where it is acquired through improper means, or where it involves a breach of confidence.

Do you have a trade secret?

However, while large companies have the resources to manage a large portfolio of intellectual property rights, such as patents, smaller companies often cannot afford to do this – therefore their reliance on trade secrets is greater. Whether through laborious and costly research, decades of experience, or a sudden burst of creativity, companies constantly develop information which can help them to perform better, faster or at lower cost. Such knowledge can include new manufacturing processes, improved recipes, or information on whom to buy from and whom to sell to. Information protected through a trade secret can be strategic for decades (for example, a recipe or a chemical compound), or ephemeral (for example, the results of a marketing study, the name, price and launch date of a new product, or the price offered in a bidding procedure).

Ask the employee if he/she retained any information, documents, or physical objects (including computer programs, manuals, or design documentation) from his/her prior employer(s) after leaving such employment, and whether he/she signed a confidentiality agreement with prior employers. To be a trade secret, the subject information must not be generally known to the public or to persons outside of the company who are knowledgeable about the general subject matter of the information. To be a trade secret, information must be sufficiently secret to confer an actual or potential economic or business advantage or benefit upon one who possesses the information.

Trade Secrets

This document may not be copied, distributed, or otherwise disclosed outside of the Company’s facilities except under appropriate precautions to maintain the confidentiality hereof, and may not be used in any way not expressly authorized by the Company. A three-minute video produced by the USPTO provides a brief, yet informative introduction on what trade secrets are, why you should protect them, how they can impact a business’s bottom line, and their importance as intellectual property. U.S. courts can protect a trade secret by (a) ordering that the misappropriation stop, (b) that the secret be protected from public exposure, and (c) in extraordinary circumstances, ordering the seizure of the misappropriated trade secret. At the conclusion of a trade secret case, courts can award damages, court costs, reasonable attorneys’ fees and a permanent injunction, if warranted. One way of ensuring that information which might later be designated as a trade secret is kept secret is to implement an “information capture system”.

Visitors to the company’s facilities should be required to sign in and to sign out, should be escorted by a company employee at all times, and must wear “Visitor” badges at all times. The company employees with authorized access to secret areas may not take visitors to such areas unless such visitors have executed an appropriate confidentiality agreement. Instruct the employee that he/she may not use or bring into any future employer’s facilities or computers (by any means) any information, documents, or physical objects learned or obtained from the company or considered to be proprietary by any other person to which the company has any legal obligations.

Understanding a Trade Secret

Understanding how to maintain trade secrets and effectively enforce trade secret rights is crucial to effectively utilizing intellectual property. The company should have written trade secret policies and procedures, and employees should be educated and periodically informed of such policies and procedures. When appropriate, such documents should also maintained in a finite number of copies and authorized persons accessing such copies should be required to sign them out, sign them in, not make any copies, and maintain possession of such copies only for a finite period of time. Materials containing trade secrets must be marked, stored, and handled with sufficient care to maintain their confidentiality.

The company should also consider contacting an employee’s former employer(s) when, in the judgment of the appropriate officer of the company and legal counsel, such contact is likely to reduce the risk of a dispute between the company and any employee’s former employer(s). If the employee has signed a confidentiality agreement with a former employer, the company should review such agreement unless the terms of the agreement itself are confidential. All trade secrets are confidential information but business information that may not rise to the level of a trade secret may also be deemed confidential within the company.

What Is a Trade Secret?

Explain the company’s trade secret policy and provide the employee with a copy of the policy. The UTSA has been enacted by most states, but in states where it has not been enacted, infringement or “misappropriation” of a trade secret remains a common law tort. Keeping your invention as a trade secret can only bring financial benefits so long as you are “actively” commercially exploiting your invention yourself. However, for any number of reasons, it may be that you are not in a position to fully commercially exploit your invention after you have developed it. In this instance, a patent allows you to commercially exploit your invention in a more “passive” fashion. A granted patent enables you to issue licenses to other parties in exchange for a fee or a royalty.

What differentiates your product or service from others on the market is a quality that is not well known outside of your company. Visit the Trade Secrets section of Winston & Strawn’s Intellectual Property Practice for more information. Winston is well-positioned to help companies respond to theft of trade secrets; learn more by visiting our Privacy & Data Security Practice page. The secret formula for Coca-Cola, which is locked in a vault, is an example of a trade secret that is a formula or recipe.