You probably invest a lot of time and money protecting your intellectual property. You hire experienced attorneys to help you craft iron-clad patents, trademarks and copyrights, all in an effort to ensure your hard work isn’t subject to theft or misappropriation. But all of that work can be in jeopardy if you neglect the most common form of protection employed by business: secrecy.
Trade secrets, if they get out, can spell doom for your business. But trade secrets typically get less attention than the more common forms of IP. For one thing, secrecy isn’t in general subject to a government registration process, but simply a part of doing business. In addition, the regulations which cover trade secret law are not uniformly enforced from one state, or one country, to another. Finally, disagreements involving trade secrets usually take place behind closed doors and are not part of a public debate.
But that doesn’t make trade secrets any less important than patents or copyrights. Consider what is arguably one of the best kept trade secrets ever—the formula for Coca Cola, which interestingly has never been protected by a patent, trademark or copyright. Instead, Coke protected this valuable piece of intellectual property with some simple, best practice strategies which every business should emulate.
To protect your trade secrets, you should follow these 4 rules:
- Don’t tell anyone: sounds like a no-brainer, but keeping your secrets a secret means being vigilant and having clearly spelled out rules for yourself and all of your employees. Neither you nor they should share your trade secrets with anyone--not friends, relatives or customers--unless a confidentiality agreement goes with it. Remember, when you voluntarily share a trade secret, to whomever and by whatever means, it’s no longer legally protected.
- Add a confidentiality warning: every document which includes a trade secret should have “confidential” clearly visible on the main or title page. Entrepreneur suggests the following language:
“This item/document/material contains CONFIDENTIAL TRADE SECRET INFORMATION owned by [THE LEGAL NAME OF YOUR COMPANY] and/or its affiliated companies. This information is protected by applicable state law and may be protected by the federal Economic Espionage Act OF 1996 (18 U.S.C. Sec. 1831), which provides for criminal penalties of up to 15 years in prison and/or a $5 million fine for stealing, receiving, possessing and/or duplicating any information contained herein.”
- Keep it safe in a safe: don’t leave important trade secrets lying around on your desk. Put them in a safe and resist the temptation to share the combination with anyone. If you have a trade secret on your laptop, make sure it’s protected with an unassailable password. If you throw documents with trade secrets into the trash, shred them first.
- Employ confidentiality agreements: sometimes it’s necessary to let outsiders in on your trade secrets. When you have to share a trade secret, protect it with a robust confidentiality agreement, and make sure the person you give it to signs on the dotted line. Be sure to press confidentiality agreements with everyone who has access to trade secrets, from employees to consultants, partners and contractors.
Finally, you need to know that trade secret law can be confusing and varies from one state to another. Unless you’re confident that you know and understand trade secret law in your state, your best bet is to work with a firm which specializes in intellectual property.