Trade Secret Basics FAQ

What rights does the owner of a trade secret have?

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Answer:

What rights does the owner of a trade secret have?

A trade secret owner can prevent the following groups of people from copying, using, or benefiting from its trade secrets or disclosing them to others without permission:

  • people who are automatically bound by a duty of confidentiality not to disclose or use trade secret information, including any employee who routinely comes into contact with the employer's trade secrets as part of the employee's job
  • people who acquire a trade secret through improper means such as theft, industrial espionage or bribery
  • people who knowingly obtain trade secrets from people who have no right to disclose them
  • people who learn about a trade secret by accident or mistake, but had reason to know that the information was a protected trade secret, and
  • people who sign nondisclosure agreements (also known as "confidentiality agreements") promising not to disclose trade secrets without authorization from the owner. This may be the best way for a trade secret owner to establish a duty of confidentiality. To learn more about using nondisclosure agreements to protect trade secrets, see Nondisclosure Agreements.

There is one group of people that cannot be stopped from using information protected under trade secret law. These are people who discover the secret independently, that is, without using illegal means or violating agreements or state laws. For example, it is not a violation of trade secret law to analyze (or "reverse engineer") any lawfully obtained product and determine its trade secret.

EXAMPLE

XCEL glue is comprised of a trade secret protected formula. Phil, a chemist, analyzes the contents of XCEL glue, determines its composition and recreates the formula. Phil can legally use this information to make and sell his own glue.

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