No matter what industry your business is in, trade secrets are important. This confidential business information helps enterprises stay profitable and stay ahead of competitors. Business owners need to take the protection of their trade secrets seriously by understanding their rights and responsibilities. This post will cover what qualifies as a trade secret and ways that a business can protect itself.
What exactly is a trade secret?
A trade secret is a type of intellectual property that gives a business an economic advantage over competitors who do not know it. The definition of a trade secret is broad and can include programs, methods, techniques and/or other types of information. It is important to note that the business must keep the information secret for it to qualify as a trade secret.
Some common types of trade secrets include:
Project research and development
- Computer program source code and algorithms
- A recipe or formula for a product
- Production or manufacturing methods
- Customer lists and contact information
What can business owners do to protect their trade secrets?
Businesses must take precautions to secure intellectual property and prevent the theft of trade secrets. Employees are a common vector of trade secret theft, with many workers copying files upon termination. Employers should have policies and security in place to prevent theft and monitoring illegal copying.
Here are a few strategies that businesses can use to prevent theft:
- Secure information: Employees must be aware that the information they are accessing is restricted. Businesses can protect trade secrets with a password to prevent unneeded access and have warnings about information security.
- Explain trade secrets: Many employees may not know that the information they are sharing is a trade secret. Employers should define what a trade secret is and explain the consequences of trade secret theft in an employee manual.
- Use Nondisclosure Agreements (NDAs): While California has decided to prevent employers from enforcing noncompete agreements, employers can still use NDAs. An NDA lets businesses share a trade secret with the legal expectation that it will not be shared.
These are just three ways that businesses can protect their trade secrets. A knowledgeable attorney can give businesses many other techniques to protect their trade secrets.