Sometimes a company’s most valuable assets are its best kept secrets. Trade secrets can be any confidential business information that provides a competitive edge for the company. They range from new products to customer lists, methods of doing business to research results, consumer profiles to advertising strategies. In other words, any valuable information that either cannot be protected with other forms of intellectual property or perhaps would be too costly to protect another way, particularly for small and emerging businesses, can be a trade secret.
One of the most famous trade secrets is the formula for Coca-Cola. Currently held in a vault at the World of Coca-Cola in Atlanta, Georgia, the vault exhibit allows visitors to learn about the origins of the more than 125 year old recipe, steps Coca-Cola has taken to protect the secret, and the lore that has developed around the famous secret. Just as Coca-Cola has taken significant steps to ensure their trade secret is maintained, any business looking to protect information as a trade secret should be aware of the necessary steps to do so.
There are some variations from country to country, but under the Trade-Related Aspects of Intellectual Property Rights (TRIPS) Agreement there are three general conditions that must exist for information to be considered a trade secret:
- The information must be a secret.
- The information must have commercial value because it is secret.
- Reasonable steps must be used by the holder of the information to maintain the secret.
The next logical question is what are reasonable steps? First, limit the number of people who know the information. It is easier to maintain a secret when only a few people know the secret. Second, make sure that for those who know the information, they also know that it is confidential information. This alerts them that the information is not meant to be shared. Taking this one step further, include confidentiality provisions within employees’ contracts. Finally, utilize confidentiality and non-disclosure agreements with business partners whenever disclosing confidential information.
Employing these steps and taking the right precautionary measures can preserve your trade secret for a considerable length of time. In the case of the Coca-Cola formula, the secret has been kept for over 125 years. Patent protection, depending on the type of patent, can only last up to 20 years and then the disclosed invention becomes a part of the public domain and can be used and practiced by anyone.
If you think trade secrets might be the right choice for protecting your intellectual property, speak with an intellectual property attorney to develop a strategy for ensuring you take the necessary steps to maintain your asset.