Understanding trade secrets

Glenn W. Peterson

For many California businesses, the need to protect a suite of intellectual property is an everyday reality. While most people think about things like patents, copyrights and trademarks or service marks when they consider what might be intellectual property, there is actually another type of IP to consider: trade secrets.

As explained by the World Intellectual Property Organization, trade secrets are less clearly defined than the other forms of intellectual properties. They are also not subject to any particular time limit or formal registration process, but they are nonetheless very important and the leaking of these secrets may expose companies to serious financial or brand damage.

There are a few factors that should be evident in order for something to qualify as a trade secret. According to the United States Patent and Trademark Organization, one of these factors is that the secret must be something designed to provide that business a type of financial gain or competitive advantage. It must also be actively used in the business operations. A company trying to defend a trade secret should also be able to show the steps taken to maintain the secrecy of the information.

A trade secret may pertain to a range of essential business functions from product development through to sales and marketing. Examples include a manufacturing method, a customer or prospect list or a high-level marketing strategy. The lack of clarity around what might be deemed a trade secret may necessitate conversations with an experienced attorney to ensure a company is properly protected.