As a business owner, you may be curious about the law that governs trade secrets. As you might imagine, businesses have a strong commercial incentive to protect trade secrets. This article will examine how the law defines trade secrets and how to protect your trade secrets.
What Are Trade Secrets?
Trade secrets fall within the area of intellectual property and are usually intangible methods of doing things. As their name suggests, trade secrets relate to commercially confidential and sensitive information. Not only is the information itself financially valuable, but the value is partly derived because the information is confidential. In other words, if the information were to enter the public domain, your business would lose value.
Some famous examples of trade secrets are:
- KFC’s fried chicken recipe;
- Google’s search algorithm;
- Coca-Cola’s recipe; and
- the formula for WD-40.
A trade secret can therefore take many different forms and is not exclusive to one particular area of trade.
Further Considerations
There is no register or formal application process for the Intellectual Property Office (IPO), which is a distinct difference from other forms of intellectual property such as patents or trade marks.
A trade secret must be information that is not widely known by the public or easily ascertainable. The secret must also be something that is capable of remaining confidential. For example, if the trade secret is a recipe that is easily discoverable, your business cannot try and claim the law should recognise it as such.
Protecting Trade Secrets
Your business has a general obligation to take reasonable efforts to keep the trade secret confidential. Common ways businesses protect trade secrets include:
- ensuring as few individuals as possible have access to it;
- physically restricting access to where the trade secret is kept; and
- implementing IT and cybersecurity measures to protect any digital copies of the trade secret.
Where you determine other personnel require access to your trade secrets, you can have them agree to a non-disclosure agreement (NDA) as part of their employment contract. If they breach the NDA, you can claim against them for damages. This makes them powerful tools in protecting your trade secrets.
If any relevant persons are already employees, you should obtain the advice of an employment solicitor before having them sign an NDA. This will ensure that the NDA is effective in case the employee breaches the terms.
Limits to Protection
Unlike protection granted for other forms of intellectual property, the law will recognise trade secrets as such for as long as they remain secret.
This is why you should take all reasonable steps to ensure the trade secret remains confidential. If you fail to do so and it enters the public domain, by definition, it is no longer a secret. In this case, the law will not recognise any rights you may try and assert. However, if you have taken all reasonable steps to protect the trade secret and another person acts unlawfully in releasing its contents to the public, you may have a cause of action against them. This means you can sue them and the court will where possible order them to stop. Alternatively, the court can make a damages order if the damage is done.
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Key Takeaways
Trade secrets can take the form of processes, methods, designs or patterns and can be applicable in any area of trade or business. We commonly think of trade recipes in the context of food & beverage recipes like Coca-Cola’s recipe. But software algorithms or engineering processes are also capable of existing as trade secrets. As long as trade secrets remain confidential, the law will recognise your right to protect it from a third party disclosing it to the public. However, if you do not take reasonable steps and the information enters the public domain, the law is less likely to recognise your rights over the information.
If you need help protecting trade secrets, our experienced intellectual property lawyers can assist as part of our LegalVision membership. For a low monthly fee, you will have unlimited access to lawyers to answer your questions and draft and review your documents. Call us today on 0808 196 8584 or visit our membership page.
Frequently Asked Questions
How can I ensure my trade secret is protected?
You should take all reasonable steps to protect your trade secret and its commercial value. You can use physical barriers such as safes or locked doors and also only tell the necessary individuals that must know about your business.
Can I legally enforce confidentiality from my employees?
If employees with access to the trade secret in question have a non-disclosure agreement in their employment contract, they typically are obliged not to disclose the trade secret to a third party. To ensure the agreement is enforceable, you should consult an employment solicitor.
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