Protecting Your Company’s Trade Secrets

Trade secrets — information that has value because it is not generally known — are perhaps the most difficult form of intellectual property to protect.  This is due in no small part to the fact that the information must actually be kept secret, or at least its confidentiality maintained, for as long as trade secret protection is sought.  Owners of trade secrets should be aware, however, that if they maintain the confidentiality of their trade secrets, the law provides for injunctive relief halting unauthorized use and dissemination of those trade secrets, and recovery of damages, in the event those trade secrets are misappropriated by third parties.  Moreover, individuals who leak trade secrets can face criminal charges provided the owner of the trade secrets makes reasonable efforts to protect their confidentiality.

Some steps that can be taken to protect (i.e. maintain the confidentiality of) trade secrets include:

  • Allowing disclosure within the organization only when there is an actual need to know the information being disclosed.
  • Ensuring that all information disclosed is subject to a non-disclosure agreement which restricts the use of that information as a trade secret.
  • Including a section in the company’s employee manual prohibiting the disclosure of proprietary information.
  • Labeling all proprietary information as confidential.
  • Restricting access to research facilities to essential personnel.

When developing internal security programs, which can be invaluable in maintaining the confidentiality of trade secrets, business owners should work closely with auditing and information technology groups, research and development and marketing departments and business partners to create an infrastructure committed to protecting trade secrets.  In all circumstances, appropriate forms of non-disclosure agreements should be used.  Conversely, if approached by a third party with information suspected to be confidential and proprietary, businesses should take care to confirm that its disclosure is authorized and the information is treated in accordance with agreed upon terms and protocols.

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