While Trademarks, Copyrights and Patents get the all the glory, Trade Secrets are an often-overlooked area of intellectual property for many small businesses. This can be a costly mistake if you haven’t adequately protected your valuable trade secrets and find yourself on either side of a courtroom. What constitutes a trade secret? Most broadly, whatever you deem a secret. OK, maybe that’s overstating the matter, but it’s actually not far from the truth. The Uniform Trade Secrets Act (UTSA), a model law that’s been adopted by 45 states,1 defines it as follows: Information, including a formula, pattern, compilation, program device, method, technique, or process, that:
- derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by, other persons who can obtain economic value from its disclosure or use, and
- is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.
Now that we have the definition, let’s break that down info four components:
- Information – this is why we say, whatever you deem a secret can be a secret. It has to be some type of data or knowledge;
- Economic value – it must be worth something to you;
- Not readily ascertainable – this means that the public, your competitors, even those that work for and with you, don’t actually know the extent of this valuable data, or even that it exists;
- Reasonable efforts…to maintain its secrecy – this means that you’ve tried, in some fashion, to keep this valuable data secret.
So, even though the statute is pretty clear, let’s make it even simpler: A trade secret is valuable information you’ve tried to keep secret. But, just like everything else that simple on it’s face, there are layers of complexity that provide both opportunity for you to protect yourself and hazards for you to safeguard against. For example, what constitutes “reasonable efforts?” Do you need to keep everything under 128-bit encryption and lock-and-key? Not necessarily but we can help you there too. This is just one of many issues that surround this growing – and changing – aspect of the law. Contact us to find out ways to safeguard and exploit your valuable trade secrets and put your competitors in a more perilous position while placing your company in a more secure one. 1Notable holdouts being Massachusetts, New Jersey, New York, Texas, Washington DC, and the USVI. In these states, common law and state statutes apply.