Trade secrets can be extremely valuable – or completely worthless if not properly protected. Trade secret protection may vary depending on which state you’re in. But in general, trade secret protection may be available for information, know-how, equipment, drawings, materials, etc. that are maintained as confidential. Trade secret protection can be lost entirely if the information becomes public knowledge.
Unlike patents, trade secret protection does not require a costly application process. In addition, trade secrets can be protected indefinitely (unless it becomes public knowledge). Of course, not everything can be protected by trade secret law. For example, if your product can be reverse engineered, then it cannot be protected as a trade secret and you should consider applying for patent protection.
If you have an idea that can be protected as a trade secret, here are some tips for maintaining the trade secret status of your idea.
1. Keep the trade secret locked up. Don’t leave diagrams on a white board in your office. Don’t leave plans laying around for the housekeepers to find. Don’t leave important files in plain view in your car. Lock it up – at least in a locked file cabinet, but more preferably in a safe or vault.
2. Don’t give any single person access to the entire trade secret. Those who must know about the trade secret often do not need to understand the entire trade secret in order to do their job. Telling them only what they need to know and keeping the remainder a secret reduces the chances that your trade secret will be leaked.
3. Use a nondisclosure or confidentiality agreement. These agreements are often referred to as NDAs (nondisclosure agreements), CAs (confidentiality agreements), or CDAs (confidential disclosure agreements). It is best not to share your trade secret with anyone. Generally, discussions of your trade secret should be very general. If you must share your trade secret, for example, a potential investor, then make sure to have them sign a nondisclosure or confidentiality agreement before you show them anything. Even with a nondisclosure or confidentiality agreement in place, only those having a specific need to know should be given any details of your trade secret.
And don’t use a form agreement you find on the Internet – it may not be valid in your state!
4. Mark any information you share with others as “Confidential” or “Proprietary” or using a similar legend. If you share anything related to your trade secret under a nondisclosure or confidentiality agreement, make sure you mark it as “Confidential” or “Proprietary” so that the person or persons receiving this information understand its confidential nature and will not further disclose your trade secret. Go to Office Depot or Staples or your own favorite office supply store and invest in a $2 stamp so you can easily mark things Confidential.
But don’t go marking everything as “Confidential” regardless of its actual status as a trade secret. That is, don’t mark things that are clearly in the public domain as “Confidential” – doing so can be just as bad as not marking anything at all!
5. Follow up discussions, meetings, and tours, with a written summary reminding the attendees of the trade secret status of what they saw or heard. Not everything you disclose will be in the form of a paper, drawing, or photo. Be sure that any oral and visual disclosures are summarized in writing, either a formal letter or an email, as soon as reasonably possible, and generally within a few business days. Your nondisclosure agreement may specify a time in which such disclosures are to be summarized in writing. But be sure to do so regardless of the nondisclosure agreement. This will help ensure that the person who saw or heard about your trade secret understands its confidential nature.
* Remember, your nondisclosure or confidentiality agreement is only as good as the person or persons you are disclosing your trade secret to. Be sure to deal with reputable people and businesses when it comes to your trade secret.
These are just a few techniques you should keep in mind if you want to protect a trade secret. You should always talk to a patent attorney to determine if your idea qualifies as a trade secret, and if so, what steps you should take in order to maintain the status of your trade secret.
