What is a trade secret?
Trade secrets can be your company’s most valuable IP asset, differentiating your products and services from your competitors.
Broadly, the term “trade secrets” deals largely with confidentially, or closely held information which can take the form of unpatented inventions, formulae, recipes, processes or designs. It is something your business would not want a member of staff to approach a competitor with. Assets which can be considered trade secrets may include ‘know-how’ databases, key organisational knowledge, recipes, technical designs, software code or even pricing matrices. For assets to be considered as trade secrets they must be protected via the implementation of a trade secrets policy.
What is the difference between patent and trade secrets?
Unlike patents, trade secrets are protected without registration; that is, trade secrets are protected without any procedural formalities. As a result, a trade secret can be protected for an unspecified period of time, thus proving at times more advantageous than patents, which have a protection limit of 20 years. This can be a particularly beneficial solution where a technological product cannot be easily reverse-engineered or, in fact, where a trade secret does not qualify for formal registrable protection.
There are, however, a handful of conditions for the information to be considered a trade secret (and enforceable as such), and compliance with such conditions may turn out to be more difficult and costly than would appear at first glance. While these conditions vary from country to country, some general standards exist which are referred to in Art. 39 of the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS Agreement):
- The information must be secret (i.e., it is not generally known among, or readily accessible to, circles that normally deal with the kind of information in question)
- It must have commercial value because it is a secret
- It must have been subject to reasonable steps by the rightful holder of the information to keep it secret (e.g., through confidentiality agreements)
How do trade secrets apply to me?
Your company may have certain forms of know-how or documented organizational knowledge which are critical to its competitive advantage, but which retain value only if they remain a secret. These can take a variety of forms, including a critical database, algorithm or software code, a technical attribute of a piece of equipment, a unique process, a recipe or secret ingredient in a product or other forms of potentially registrable IP which may be ill-suited to formal methods of protection. It is crucial to recognize that just merely having the policy, protocols, and password protections, etc. in place may not be sufficient, as an effective trade secrets policy needs to be recognized by all staff and embedded within the IP culture of a business.
Where do I start when it comes to protecting trade secrets?
Our advice to clients is to begin simply by creating your own internal register or list of your trade secrets. You can call it your trade secret register which then becomes a highly confidential record of the various trade secrets the business owns and relies on. It can be captured in different formats, maybe as simple as an internal Wikipedia or on a spreadsheet.
The trade secret register should include details like:
- when each trade secret was created,
- what format it’s in,
- where its located / stored,
- who has access to it (through password protection or restricted access to the server / cloud file).
Staff should be told that the trade secret register has been created and is being actively managed, and that the information or content contained within it is highly valuable to the business, protected by additional levels of security and confidentiality. Staff should be notified not disclose or share any such trade secret materials with any third parties, without prior approval of senior management. Read how our client implemented an effective trade secret policy Trade Secret Policy for Materials Science Company | Metis Partners
To Learn More
Read more about formal and informal IP by clicking hereintellectual property insightsor check out our intellectual property advisory services to learn how we can assist you in managing and leveraging the critical IP in your business. Active management and protection of your trade secrets will likely increase your intellectual property value.
To learn more about trade secrets, read our articles on trade secrets Trade Secrets Archives | Metis Partners
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