When some people hear the term “trade secret,” they may think of popular food chains that tout unique formulas or secret sauces made from a mysterious list of ingredients prepared in a top-secret kitchen. In reality, a business’s trade secrets can cover a much broader spectrum. As long as the secret gives the company an advantage against a competitor and the secret is worth protecting, it can rise to a trade secret level.
As a result, the California Uniform Trade Secrets Act affords protection to a wide range of secrets, ranging from the most common information to the most highly prized. To understand the actions you can take to protect these trade secrets from getting out, you need to first breakdown what a trade secret is.
What are Trade Secrets?
In San Francisco, trade secrets often include sensitive marketing information, customer lists, software, unpatented inventions, techniques, recipes, formulas, processes, and other business details that help a company develop an edge in their industry.
Typically, for something to be considered a trade secret, the information has to be:
- Only known by employees and others that are involved in the organization
- Not known outside the particular organization
- Valuable
- Subject to reasonable measures that guard the secrecy of the information
- Difficult for others to obtain or independently duplicate it
Suppose a company can prove that its information is valuable and take reasonable measures to protect it and keep it secret. In that case, California’s courts will recognize that even every-day pieces of data can be afforded protection as a trade secret.
How to Protect Trade Secrets?
As a trade secret owner, you have a duty to use “reasonable measures” to safeguard your trade secrets. These reasonable measures often involve putting contractors, vendors, employees, and other personnel on notice that these trade secrets exist and that they must not disclose them to the public. To ensure that individuals working with the company stay secretive about the information, the company often includes confidentiality provisions in their offer letters, contracts, and even bid requests. However, there are other actions that a company can take to protect these trade secrets, including:
- Installing locks on filing cabinets that contain critical and confidential documents or restrict access to files that need to remain secret
- Issuing employee ID badges to monitor who has access to confidential information
- Creating specific security procedures regarding visitors, ensuring visitors are continuously escorted or making sure they sign in or out
- Requiring security passwords for networks and computers or only providing limited access
- Having employees, third parties, or contractors sign non-disclosure agreements
- Avoiding discussions about confidential information during public tours and interviews
- Classifying employees, contractors, or other third-parties depending on the degree of access they receive regarding sensitive information
- Monitoring the hard copies and duplicates of documents from particular departments
- Prohibiting employees from working on certain company materials from home
- Prohibiting the removal or distribution of certain types of records outside of work
- Assembling a trade secret team within the company that has overall responsibility for protecting confidential information
When a trade secret is involved, the company has likely invested a significant amount of money into protecting this information. Unfortunately, sometimes even with the best intentions and technical measures, confidential information is exposed. As a result, companies also need to ensure they have solid legal measures in place that can protect their trade secrets and, ultimately, their successes.