Trade Secrets – Do they protect your Core Knowledge and Business Know-how?
Updated: Aug 25, 2020
Developing a significant patent portfolio is an expensive and lengthy process, and in many cases, significant know-how needs to be protected, yet is not patentable. So what are the options?
Many companies opt to protect their know-how by keeping it as trade secrets. They often use NDAs to enforce confidentiality. However, these agreements alone are not always sufficient to protect trade secrets.
A Trade secret is defined as:
Information that is considered a trade secret must be: commercially valuable because it is secret, known only to a limited group of persons and subject to reasonable steps taken by the rightful holder of the information to keep it secret, including the use of confidentiality agreements for business partners and employees.
If the trade secrets have been stolen or divulged it in an illegal manner, the owner will be entitled to court relief.
This definition make clear that using trade secrets to protect the company’s core know-how requires more than an NDA policy.
When NDAs are part of a trade secret protection policy, they require greater diligence.
Consider the following examples:
Hiring and Training New Employees –new employees are routinely required to sign a general NDA before participating in some form of training (orientation?). The job-specific training is likely to include information that the employer considers confidential. If the confidential information is not clearly identified and separated from common know-how, employees will not be able to know what are the trade secrets.
Customer Visits. Potential customers touring your company's facility are likely to speak with employees. If the employees are not clear on what information is confidential and what is allowed to be shared – confidential information may be compromised.
To protect know-how with “trade secrets”, a company must be able to demonstrate a comprehensive approach to its trade secrets policy, and include, for example the following components:
Identifying the information that needs to be protected as trade secrets
Marking the information as confidential
Periodic updating of the policy and trade secrets ledger
Developing a trade secrets protection policy – sooner than later – will ensure that sensitive information is not jeopardized. The cost of damage created by an information leak far outweighs the cost of protection.
A comprehensive strategy for guarding trade secrets is critical to safeguard against theft of business know-how.