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Take Steps to Protect Your Company’s Secret Sauce

Take Steps to Protect Your Company’s Secret Sauce

Take Steps to Protect Your Company’s Secret Sauce

Trade secrets can be part of a company’s “secret sauce,” including business operations and intellectual property portfolios, that helps your company compete. Recently, misappropriation of trade secrets has become an economic, business and national security issue.

What is a trade secret?

The Uniform Trade Secrets Act (UTSA), which has been adopted by 47 of the 50 US states, defines trade secret as:

“Trade secret” means information, including a formula, pattern, compilation, program, device, method, technique, or process, that: (i) derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by, other persons who can obtain economic value from its disclosure or use, and (ii) is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.

Protecting your trade secrets

Many types of employer information, processes, business methods and techniques can benefit from trade secret protection. For example, software and digital information can be considered trade secrets. To ensure that software has proper trade secret protection, companies usually have employees and certain third parties sign confidentiality agreements. Companies may also wish to mark their materials “proprietary” and provide a definition of the term.

In the case of digital information, and in particular social media, trade secret protection becomes more complicated. This type of on line information is simultaneously proprietary and publicly visible and accessible. And, companies often do not maintain their own social media sites, so the information is transmitted through third-party platforms. Companies should take basic security measures when creating passwords, and prevent outsiders from gaining access to those passwords. Additionally, companies should be strategic about what customer information is available publicly through social media channels. If a company has taken steps to protect customer data, the courts will be more likely to treat the information as a trade secret.

Take proactive steps to protect trade secrets

Below are several considerations to help identify additional protections for your company’s proprietary information or trade secrets:

  • • Mark documents containing proprietary information as “confidential.”
  • • Control and limit access to physical files and documents containing proprietary information.
  • • Ask employees, vendors and business partners who have access to proprietary information to sign a non-disclosure agreement.
  • • Ensure key employees have signed enforceable, updated non-compete agreements.
  • • Password protect and encrypt proprietary on line information.
  • • Develop a social media policy for employees as well as a policy for sharing proprietary information via personal mobile devices.
  • • When an employee leaves the company, examine the hard drives and email activity to look for communications with competitors or the transmission of company files to a personal email accounts.
  • • Enforce non-disclosure and non-compete agreements whenever a violation occurs to discourage future breaches of contract.

These kinds of steps will go a long way to helping a court decide to grant trade secret protection.


To learn more, join us in our upcoming 27th Global Legal ConfEx, New Delhi, India 20th April, 2016

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