Trade Secrets are a type of intellectual property which a company owns, this is classified information that allows a company to retain certain economic advantages over its competition. Broadly speaking, this information is not available publicly.

A lot of companies will invest time, resources and money into generating this information, as it can have a great impact on their profits. Trade secrets remain so defined even when they are disclosed to agents and employees, providing it is made clear that the information is confidential, and any further disclosure is prohibited.

Theoretically speaking, the protection that covers trade secrets can last for an indefinite period, this is why it is advantageous compared with the type of protection that patenting offers, as this relates to a particular period of limited duration.

How Does a Trade Secret Remain Classified as a Trade Secret?

For a trade secret to remain so classified, the owner of the secret must be able to prove that he took reasonable steps to keep the information classified. If this can be proven, it remains a trade secret and retains its legal protection. If it cannot be established that reasonable steps were taken to keep the information classified, then the owner may lose the trade secret, even if the way it was gained was by using an illegal method.

How are Trade Secrets Protected?

Trade secrets are protected through the use of non-disclosure and non-compete contracts with employees of the owner of the trade secret. This agreement to confidentiality is normally in exchange for an employment contract. If these contracts are then breached the owner is entitled to place a financial penalty upon the individual who disclosed the trade secret. The owner of the trade secret may also be able to obtain an injunction, damages or an account of profits from the court if their secret has been stolen.

These methods are also used in agreements between the owner of the trade secret and other businesses with which that owner has to work with or is otherwise engaged in the course of the enterprise.

In some countries, the theft of trade secrets now constitutes a crime. The UK protects trade secrets by enabling an injured party to apply for a search and seizure order (injunction) to preserve evidence or to prevent it from being destroyed.

When are Trade Secrets Protected?

Trade secrets are only legally protected if they have not been obtained using illegal/improper methods. It is also illegal to get someone else’s trade secret if that person is aware of the fact that the trade secret has been obtained from another by unauthorised means. Unofficial means could include bribery, theft, the breach of duty to uphold secrecy, misrepresentation or by spying (espionage).

What Measures can be Taken to Maintain the Confidentiality of a Trade Secret?

As has been mentioned previously, the owner of the trade secret must have taken action to ensure the secret’s protection this could include incorporating warnings or notices on written documents, security measures that are physical (for example, regular security checks), installing CCTV and restricting access for individual employees to information or computers.

If reasonable steps are taken from the beginning, this provides the most cost-effective method of protecting a company’s trade secrets. As registration is not required to protect a trade secret, the costs involved in protection are typically made up of ensuring there are sufficient security measures and policies in place to prevent trade secret theft, as well as ensuring these are efficiently monitored. Costs will include any legal fees that need to be taken against those that have stolen trade secrets.