Strategies for Legally Protecting Your Company’s Trade Secrets
This article provides a comprehensive guide on how to legally protect your company's trade secrets under U.S. law. It offers insights and actionable strategies that can help you safeguard your confidential information, ensuring you maintain a competitive edge in the marketplace. Please note that this information is for general informational purposes only, and you should seek legal counsel for specific advice.
Understanding Trade Secrets and Their Protection
Trade secrets are among the most valuable assets a company can have. In the United States, trade secrets are regulated by both federal and state laws, which may vary depending on the location of your business and the states where relevant events occur.
What Constitutes a Trade Secret?
A trade secret can be any confidential information that provides a competitive advantage, such as formulas, patterns, compilations, programs, devices, methods, techniques, or processes. Unlike patents, trade secrets can remain valid and enforceable as long as the conditions are met, and no registration with any state or federal agency is required.
Proving Trade Secret Infringement
To enforce a trade secret, such as filing a lawsuit against someone for misappropriation, the company must demonstrate the following:
The trade secret is in fact secret and not generally known or readily obtainable without much difficulty. The company has undertaken reasonable steps to maintain the confidentiality of the trade secret. The trade secret has independent economic value and provides a competitive advantage to the company.It is essential to maintain documentation that can be used to substantiate these points in court.
Enforcement and Legal Protection
A trade secret does not protect against independent development. However, if others misappropriate a trade secret, legal action can be taken to prevent further unauthorized use or disclosure. Here are some proactive measures you can take to protect your trade secrets:
Documenting Trade Secrets
Document your trade secrets in a manner that includes as much detail as necessary for patent applications. Clearly mark all copies of the trade secrets to indicate their confidential nature. Store these documents in encrypted data files on password-protected systems, restricting access to those with a need to know.
Employee Training and Confidentiality Agreements
Provide comprehensive training on confidentiality and security policies to all employees who may have access to trade secrets. Inform employees of their status as holders of trade secrets and their obligations to maintain confidentiality. Require employees to sign agreements assigning ownership of any inventions or trade secrets they develop during employment to the company. Also, prohibit the use of trade secrets from former employers in your company.
Review and Documentation of Inventions
Encourage employees to submit written disclosures of their inventions or intellectual property creations related to their work. The company can review these disclosures and document them as trade secrets. This documentation can be used to pursue other forms of intellectual property protection, such as patents.
Confidentiality Agreements for All Parties
Ensure that all required disclosures of trade secrets to employees, contractors, clients, vendors, and business associates are made under appropriate confidentiality or non-disclosure agreements, obligating the recipients to uphold the confidentiality of the information.
Statutes of Limitation and Action Planning
Statutes of limitations apply to legal actions for misappropriation of trade secrets. Therefore, it is crucial to actively seek and promptly address any misappropriation of trade secrets. Continuous monitoring and reporting are essential to protect your company’s interests.