Our attorneys advise and counsel clients on best practices for trade secret protection and enforcement, and litigate trade secret claims involving misappropriation, unfair competition, breach of contract, and non-compete agreements. Our trade secret services include:
- Counseling business and individuals regarding identification and protection of trade secrets, proprietary information and know-how.
- Development and negotiation of confidentiality and non-disclosure agreements with employees, consultants and suppliers.
- Development of internal trade secret policies, procedures, and agreements. Counseling pertaining to new idea outside submissions and preparation of outside submission agreements.
- Preparation of employee non-disclosure and pre-invention assignment agreements. Preparation of non-compete and non-solicitation agreements. Litigation of trade secret misappropriation claims and defending clients against allegations of trade secret theft.
Trade Secret FAQs
A trade secret is commercial information, not generally known or readily ascertainable by the public, that is actually or potentially valuable to a business and for which the business has taken reasonable measures to keep secret. A trade secret generally provides the business with an advantage over competitors who do not know or use it.
Commercial information such as financial, business, scientific, technical, economic or engineering information may be treated as trade secrets. Illustratively, trade secrets can include customer lists (the more information contained, the more likely it will qualify for trade secret protection), manufacturing processes, formulas, ingredients, bills of materials, specifications, computer codes, business and marketing plans, financial information, research and development, inventions, drafts of patent applications and pending patent applications before publication, and product prototypes.
Unlike a patent, copyright or trademark, a trade secret cannot be registered.
Several factors should be considered before deciding whether to apply for a patent or keep an invention secret. If the invention is embodied in a product to be sold in the marketplace, it may not be possible to maintain secrecy as the product may be reversed engineered, that is, taken apart to discover the secret. The invention may be kept secret if it cannot be easily reversed engineered or if a patent cannot be obtained or only very narrow patent protection is available. Some inventions may be kept secret for longer than the 20 year duration of a patent. The costs for obtaining a patent may be considered to be prohibitive. In some cases, patent protection may not be available for the subject matter of the secret, e.g., customer lists or marketing strategies, which can only be protected as trade secrets.
A business must use reasonable measures to preserve secrecy. Reasonable measures include limiting access to secret information, confidentiality agreements with employees and third parties (such as distributors, sales representatives, franchisees, licensees), using passwords and firewalls to protect digital information, implementing technical security such as antivirus protection, security patch management and data encryption of mobile electronic devices, laptop computers and flash drives, prohibiting use of personal electronic devices and personal emails for work-related tasks. Establish policies concerning what employees can discuss about the business on social media. Employ physical security measures such as fenced and locked areas, keycard access areas, locked cabinets, video surveillance and taping, alarming doors and windows, engage guard services, issue security badges, use sign in and sign out logs and visitor passes, limit and escort visitors. Use codes to identify secret documents and materials, transmit secret information in sealed packages and security pouches, label documents, including password-protected digital information, as “Confidential and Proprietary,” number copies, identify and track the distribution of secret materials, for example, by using bar codes, RF labels, holograms and GPS devices. Conduct new employee background checks. Implement and training education programs. Conduct employee exit interviews to underscore continuing confidentiality obligations, to obtain and confirm return of company storage devices and confidential materials. Use non-disclosure agreements to protect trade secrets that must be disclosed to other persons for business purposes.
A Non-Disclosure Agreement (“NDA”) is a contract providing that a recipient of another’s information will not use or disclosure the information in any manner except as may be authorized under the NDA’s terms and conditions. A NDA protects the confidentiality of information in situations where it may be desirable and necessary to reveal it, for example, in order to evaluate an invention, idea, business proposal or product for licensing, manufacturing or other purposes. NDAs are also referred to as confidentiality agreements, confidential disclosure agreements, proprietary information agreement and secrecy agreements.
In general, trade secret rights may be violated by unauthorized use or disclosure of the secret, or by obtaining a trade secret by improper means.
Improper means includes conduct which is improper such as illegal surveillance, theft, bribery, infiltrating secured facilities or electronic hacking. Improper means includes conduct which is improper under the circumstances, even conduct that might otherwise be lawful conduct, e.g., using a drone or airplane to obtain aerial reconnaissance to determine a competitor’s plant layout during construction of the plant, and dumpster diving if a dumpster is located on private property against a building or inside a fenced enclosure marked “No Trespassing.”
Trade secret rights do not protect against reverse engineering of products, that is, by starting with the known product and working backward to find the method by which it was developed, provided that have been sold or independent discovery by a competitor. Proper means, among other things, also includes the observation of an item in public use or on public display, or obtaining information from published literature and independent invention.
Most states have some form of the Uniform Trade Secret Act. US federal law provides various protection under the Defend Trade Secrets Act. Intentional theft of trade secrets can constitute a crime under both federal and state laws.
No. Trade secret will not prevent others from independently discovering the secret. It is not a violation of trade secret law to reverse engineer a lawfully obtained product and determine its secret.
Trade secrets are protected by keeping them secret. Thus, trade secrets can be protected for an unlimited amount of time so long as the secret is not disclosed (even accidentally), reverse engineered, or developed independently by others.
