Trade Secrets: How to Protect Your Business’ Most Valuable Assets

Trade secrets are among many companies’ most valuable assets. But, unlike other forms of intellectual property (i.e., copyrights, patents, and trademarks), trade secrets are not eligible for registration in the United States. So, what can—and should—companies do to protect them?

While trade secrets are not eligible for registration in the U.S., companies can—and should—protect them through several means. Since trade secrets derive their value from their secrecy, protecting trade secrets generally involves working with a Florida intellectual property attorney to ensure that a company’s trade secrets remain tightly controlled.

What Is a “Trade Secret?”

Before we talk about the options for protecting trade secrets, we should first cover when information is eligible for trade secret classification. As the U.S. Patent and Trademark Office (USPTO) explains, for information to qualify as a trade secret, it must meet three specific requirements:

• The information must derive “actual or potential independent economic value by virtue of not being generally known;”
• The information must have “value to others who cannot legitimately obtain the information;” and,
• The company that owns the information must make “reasonable efforts to maintain its secrecy.”

As the USPTO also explains, if any of these three elements cease to exist, “then the trade secret will also cease to exist.” In other words, if a company fails to take adequate measures to protect its trade secrets, it can lose its exclusive rights. This makes implementing an effective trade secret protection program exceedingly important—and, as with all IP protection measures, companies must custom-tailor their trade secret protection programs to their specific intangible assets, risks, and needs.

5 Fundamental Means of Trade Secret Protection

Companies can use a variety of means to protect their valuable trade secrets. Crucially, not only can companies use these means of protection, but they must take all steps that are necessary to ensure that their trade secrets remain eligible for protection under applicable law. Since even a single inadvertent disclosure can be enough to trigger a loss of trade secret protection, it is imperative that companies work with their IP counsel to implement comprehensive protection measures that are well-suited to their specific circumstances.

With this in mind, here are five fundamental means of trade secret protection:

1. Identifying All Information That Qualifies as a Trade Secret

The first step toward protecting a company’s trade secrets is to identify all information that qualifies for trade secret protection. Numerous forms of information can qualify as a trade secret, including (but by no means limited to):

• Business methods, plans, practices and strategies
• Computer algorithms and source code
• Chemical formulas
• Customer lists and customer data
• Engineering information
• Financial information and analyses
• Patterns and designs
• Proprietary processes
• Recipes
• Research and development (R&D)

Again, these are just examples. As the definition outlined above makes clear, there are no substantive restrictions on the types of information that can qualify for trade secret protection. If information derives value from its secrecy—and if a company is taking adequate steps to maintain this secrecy—then the information can (and generally should) be protected.

2. Implementing Physical and Logical Access Controls

Implementing effective physical and logical access controls can be an effective—and essential—means of trade secret protection. The lengths to which companies must go to implement these controls will depend on their size, the nature of the information in question and the location(s) where the information is stored, among other factors.

Physical access controls can range from hiring security guards to issuing ID cards and implementing keycard access. Common logical access controls include passwords, personal identification numbers (PINs), multi-factor authentication systems, and cybersecurity applications. Generally speaking, the more valuable a company’s trade secrets, the more the company should do to restrict access, both internally and externally.

3. Implementing Internal Non-Disclosure Obligations

Adopting and enforcing internal non-disclosure obligations is another key means of trade secret protection. Companies should ensure that all personnel who have access to trade secret information are bound by non-disclosure obligations. Even when a company has general non-disclosure policies in place, it still can (and generally should) require employees to sign non-disclosure agreements (NDAs) before they receive access to high-value confidential and proprietary information.

4. Including Appropriate Protections in Contracts

Including appropriate protections in contracts with vendors, customers and other third parties can be essential for preserving companies’ trade secret rights as well. Trade secrets can be licensed, and licensing is one way that many companies generate revenue from their confidential and proprietary information. When licensing trade secrets, however, companies must be very careful to ensure that the terms of their licenses are appropriately limited and that they have clear enforcement rights and remedies in the event of unauthorized access, use or disclosure.

In many cases, other types of commercial contracts will need to include trade secret protections as well. For example, if an auditor, contractor or vendor will have access to a company’s facilities or computer systems, the relevant contract should include provisions that narrowly limit this access and that make clear that any information obtained pursuant to such access will be subject to all relevant protections and rights of enforcement.

5. Promptly Enforcing the Company’s Exclusive Rights When Necessary

Finally, enforcement is also a key means of trade secret protection. As soon as a company discovers actual or potential unauthorized access, use, or disclosure of its protected information, it should engage its IP counsel to determine appropriate next steps. Depending on the circumstances, immediately pursuing litigation may be necessary to enjoin an infringing use and preserve the company’s exclusive rights.

Talk to a Florida Intellectual Property Attorney at Lott & Fischer

Do you need to know more about what it takes to effectively protect your company’s trade secrets? If so, we invite you to get in touch. To schedule a confidential initial consultation with a Florida intellectual property attorney at Lott & Fischer, give us a call at 305-448-7089 or request an appointment online today.