Trade Secret Law - A General Overview

Trade secrets are essentially any information that has independent value as a result of it being kept confidential by its creator.  For example, a trade secret is defined under California law as (1) information (such as a formula, method, technique, or process) that has value by virtue of being not well known, that (2) is the subject of reasonable efforts to maintain secrecy.  Trade secrets can apply to a wide variety of confidential, proprietary information, including client and supplier information, financial information, manufacturing knowhow, chemical formulations, internal business methods, future business plans, product development information, proprietary software code, and many more forms of valuable confidential information.  As implied by its name, trade secret information must remain confidential in order to maintain its protected status.  Publication of trade secret information destroys its status as trade secret and eliminates its protection under the law.  

It is therefore prudent for anyone involved in research and/or development of new inventions, business plans, and other innovations to be conscious of the need to maintain secrecy, in case the avenue of trade secret protection is chosen. Tools like non-disclosure agreements, encrypted files, secrecy protocols, administrative access rules, and related tools should be used when possible to prevent unwanted disclosure of trade secret information.

As long as the innovation, invention, or other valuable, confidential information is kept secret, trade secret protection is available, which could potentially last much longer than patent protection by comparison. A good example is the formula for the popular soft drink Coca Cola®, which was developed nearly a century ago and is still secret. If a patent had been obtained on this formula, it would have expired long ago and anyone would now be able to make the soft drink.

Whenever a new invention is developed, especially a new formula or technique, one of the first questions that must be addressed is how best to protect it. For new inventions, one way to obtain protection is with a patent; another possibility is by treating the invention as a trade secret.

Although a patent provides many significant protections, there are sometimes reasons why patent protection is not available or is not the best course. For example, the new formula or technique may have already been commercialized for more than one year, which could potentially act as a time bar to patent protection. Also, it must be remembered that a patent has a limited term (a maximum of 20 years from the filing date), that cannot be renewed or extended. This is a substantial period of protection, but the commercial viability of the invention could be longer. In addition, a patent is a public document that may be viewed by anyone. Because of this, it is possible for a competitor to review and learn from the patent, especially a patent on a formula or technique, and then practice the invention after the patent expires. In these and other situations, trade secret protection may be considered as an alternative form of protection where feasible.

The attorneys at Sierra IP Law, PC - Patents, Trademarks & Copyrights have a wealth of experience assisting and guiding their clients with the protection of trade secrets, including the use of confidentiality and non­disclosure agreements, employee handbooks, and other documentation, as well as developing appropriate secrecy protocols, facility visitation rules, and other practical steps.