Protecting Both Business Finances And Futures

What is a trade secret?

On Behalf of | Jul 8, 2022 | Business Litigation |

Businesses invest time, ingenuity, and resources to develop processes, equipment, designs, recipes, methods, practices, and other ideas to seek a competitive edge and attract clients or customers. California law helps protect these assets.

Trade secrets

Trade secrets underlie commerce and their theft can lead to business litigation. These are defined as processes, ideas and designs that are confidential information, and provide economic benefits to their holder. Their secrecy is actively protected.  

Trade secrets are comparable to top secret or classified documents held by government. Companies may require their employees to enter noncompete or nondisclosure agreements to protect this information.

Examples include the secret formula for Coca Cola, which is locked in a vault, was never patented, and was never revealed. Google possesses a search algorithm that exists as intellectual property in code and is regularly updated.

Trade secret protection is removed, however, if its holder does not safeguard the secret or if the secret is independently discovered or released or if it becomes general knowledge.

Federal law

The federal Economic Espionage Act of 1996 defines and protects trade secrets. In 2016, the Defend Trades Secrets Act was enacted and allows the federal government to take legal action for the misappropriation of trade secrets. States may also enact and enforce their own laws.

Federal law defines trades secrets as being comprised of the information that is financial, business, scientific, technical, and economic.  It may include patterns, plans, compilations, formulas, designs, prototypes, methods, techniques, processes, procedures, programs, and codes.

This information or asset can be tangible or intangible. It may be stored, compiled, or memorialized physically, electronically, graphically, photographically or in written format.

Reasonable measures

Federal law also requires that businesses take reasonable measures to keep this information secret. This information must have independent actual or potential economic value from not being generally known and accessible to another person through proper means.


California’s Uniform Trade Secrets Act also provides protection to the assets governed under the federal law and to more common information such as business plans, spreadsheets, customer lists, corporate meetings and agendas and bid specifications. State law protects this information from misappropriation or its use or disclosures.

Attorneys can assist businesses with protecting their trade secrets. They can also commence legal action when this information is stolen or misappropriated.



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