How Do You Protect Your Trade Secret?

Every business has secrets. Whether a process, recipes or customer data, businesses have confidential information that is vital to their business. The release of this confidential information to the public can be disastrous for them. Such crucial information that derives its value from confidentiality can be termed as a trade secret. Trade secrets can be inventions, processes, patterns, devices, formulas, ingredients, lists of important clients or any other information that gives an edge over competitors.

So, how do you protect your trade secret?

Trade Secret Protection and Challenges

Unlike patents and trademarks, it is not possible to register a trade secret. Typically, trade secrets are protected until they remain a secret or by means of a non-disclosure agreement. A non-disclosure agreement is a contract where the parties agree to not disclose the secret information or use it in an unauthorized way. A trade secrets can be protected for an unlimited period of time provided it meets certain standards:

• The information must be a secret, i.e., it must not be generally known or readily accessible even to those who deal in such information.
• It must have commercial value
• The rightful holder must have taken reasonable steps to keep the information a secret.

Since a trade secret is not protected through registration and is, instead, protected by way of a confidentiality agreement, categorizing your valuable asset as a trade secret can be challenging.

The legal system cannot protect your trade secret from misuse. Although a confidentiality agreement helps to reduce the risk to a large extent, it does not provide everlasting protection. Since a trade secret is not publicly disclosed and known only to a few people, any third person can invent it independently and claim to be the owner. Furthermore, the situation could worsen if the third party obtains a patent or industrial design registration for the invention. In such a case, it becomes difficult to get back the ownership rights by way of litigation for various reasons:

• Since there is no legal protection from a third party, it would be difficult to retain rights in case someone files a patent or industrial design for the same invention
• You cannot sue if a third person infringes on your innovation
• The burden is on you to prove yourself as an inventor

So, is it preferable for one to opt for patent or industrial design protection over protection as a trade secret?

Considering the above-mentioned challenges, patents or industrial design are often preferable options. When you obtain an issued patent for your business asset, you gain a monopoly over it for up to 20 years. This can add value to your intellectual property but also eliminates the risk of losing exclusive ownership. You can also consider applying for industrial designs that provide up to 10 years of protection.

If you are confident that your secret will remain confidential, then a trade secret may be the best option for protection of your asset. The formula for both Coca-Cola and WD-40 have remained secret for an extensive time period. Had they chosen to file patent applications, they would have lost the exclusive rights to their formulas long ago. Since intellectual property law is a complicated subject it is best to consult a professional to help guide you through the best ways of protecting your valuable intellectual property assets.