When you hear the words “trade secrets,” what comes to mind?
Many people think of super famous examples, such as the long-coveted recipes for Coca-Cola or KFC’s chicken. These top-secret formulas have managed to remain closely-guarded for decades and have allowed Coke and KFC to retain a unique edge over their competition. The mystery and attraction to these trade secret stories alone drive international brand recognition and sales!
Often, when I meet with business owners to create a plan to protect their intellectual property, they insist that they do not have trade secrets. That’s because they are only thinking about such glamorous and internationally-known examples while not recognizing the hidden value that lies at their own fingertips.
Identifying Your Own Trade Secrets
You don’t have to be sitting on the recipe for finger-lickin’ chicken to have a trade secret in your business. Any unique process, procedure, method, or formula that you use to function in day-to-day operations that sets you apart from your competition may be a trade secret to you.
For example, your customer list may be a trade secret in your business. A unique pricing formula could be a trade secret. A supplier list could be a trade secret. Your systems and methods of operations could be a trade secret. What are the things that you do in your company that, if competitors found out, would compromise your operations or hurt your bottom line? What is your competitive advantage? Look at your business and ask yourself these questions and what you uncover should be your company’s trade secrets.
But, the real value lies in keeping your trade secrets…well…a secret. Let’s discuss some ways to do just that.
How to Protect Your Trade Secrets from Theft or Disclosure
There is no formal federal registration or process that’s required to obtain legal protection of your trade secrets. The steps you must take to protect your trade secrets are really up to you. A wise first start is to mark any applicable documents, files, manuals, recipes, spreadsheets, etc. as “Secret and Confidential”. But, this alone is not enough. You must then take reasonable steps to keep your secrets out of the public eye, such as storing physical documents in a safe, requiring key-code access for private rooms, or limiting access to computers where your digital trade secrets are stored.
Your employees are your next best line of defense in safeguarding your trade secrets. You should train them in the culture of trade secret protection so that your private information stays that way. Create company policies and procedures to ensure protection of your trade secrets, including limits on the extent to which employees may transfer sensitive material to personal devices (e.g., rules against sending material to a personal email address). Employees should understand that the disclosure of a trade secret poses risks to the company’s revenue, reputation, earnings, share prices, and really, their own jobs. Remind them that it’s in their interest as well as yours to keep your secrets safe.
Get into the habit of having new employees sign nondisclosure and confidentiality agreements that forbid the sharing of the company’s confidential information, both while the person is employed with the company and after, so that they cannot take your secrets and start a competing business. Work with an intellectual property attorney for the peace of mind knowing that you are using an agreement that will hold up in court.
Similarly, establish policies, procedures, and written agreements with outside contractors/vendors that require them to maintain secret your business trade secrets and confidences if they have access to them in order to complete their job.
Finally, be aware that in the digital age, it’s possible that your secrets could be “intercepted” or hacked. Make sure that you and your employees are sharing information about your trade secrets in discreet and secure ways, because once a secret is exposed, it’s lost forever. It generally does not matter whether the disclosure was intentional or accidental, once that bell is rung, there is no “un-ringing” it.
Don’t forget to talk to an IP Attorney
An intellectual property attorney can help you conduct an audit of your “assets” to locate any additional trade secrets that you’ve missed. Likewise, he or she can assist you in creating solid non-disclosure and other agreements that will help deter others from sharing your secrets in the marketplace, and ultimately allow you to sue if your secrets are exposed. Whether you have yet to identify the trade secrets of your company, or you simply do not believe that you have adequate protections in place to safeguard the trade secrets that you do have, we invite you to contact our office for a complimentary consultation to discuss how we can help you. Simply call 888-666-0062 to schedule your appointment.
DISCLAIMER: The information contained in this article is for informational purposes only and is not legal advice or a substitute for obtaining legal advice from an attorney.
Law Office of Jason H. Rosenblum, PLLC © 2017 All rights reserved.