Trade Secret Basics FAQ
What every business owner should know about trade secret law.
What is a trade secret?
What types of information can trade secrets protect?
What rights does the owner of a trade secret have?
» How can a business protect its trade secrets?
How can a business enforce its rights if someone steals or improperly discloses confidential information?
Is stealing trade secrets a crime?
How can a business protect its trade secrets?
Simply calling information a trade secret will not make it so. A business must affirmatively behave in a way that proves its desire to keep the information secret. Some companies go to extreme lengths.
Example: The formula for Coca-Cola (perhaps the world's most famous trade secret) is kept locked in a bank vault that can be opened only by a resolution of the Coca-Cola Company's board of directors. Only two Coca-Cola employees ever know the formula at the same time; their identities are never disclosed to the public and they are not allowed to fly on the same airplane.
Fortunately, extraordinary trade secrecy protection measures are seldom necessary. Although you should take reasonable precautions to protect any information you regard as a trade secret, you don't have to turn your office into an armed camp to do so. Sensible precautions include marking documents containing trade secrets "Confidential," locking trade secret materials away after business hours, maintaining computer security and only providing access to secret information to people with a reasonable need to know.
But the very best way to protect trade secrets is through use of nondisclosure agreements. Courts have repeatedly reiterated that the use of nondisclosure agreements is the most important way to maintain the secrecy of confidential information. For more information on using nondisclosure agreements to protect trade secrets, see Nondisclosure Agreements.
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