A trade secret is information of any type that is actually or potentially valuable to a business, not generally known or readily ascertainable by the public, and which the business has made a reasonable effort to keep secret. Trade secrets include data compilations such as customer lists (the more information contained, the more likely it will qualify for trade secret protection), manufacturing processes, formulas and ingredients, business plans, marketing plans, financial information, research and development, inventions and drafts of patent applications before publication.
A business must use reasonable precautions to keep information secret. Reasonable precautions may include limiting access to secret information, non-disclosure agreements and non-compete agreements with employees and third parties, using passwords and firewalls to protect computerized information, physical facilities security (locked areas, warning signs) and employee education programs.
Trade secret rights may be violated by unauthorized use or disclosure of the secret, or the misappropriation of a trade secret by improper means, for example, computer hacking, illegal surveillance, theft of documents, bribing a business’ employees and infiltrating secured facilities. Trade secret rights do not protect against reverse engineering of products that have been sold or independent discovery by a competitor.