What is a trade secret

Glenn W. Peterson

If you have confidential business information that is central to your company’s success within your industry, that information may be considered a trade secret by California law. California is one of many states that has adopted the Uniform Trade Secrets Act, and it is this law that determines whether or not your business information may be protected. According to the statutes, this can include anything as unique to your business as a formula, or something as commonplace as your company’s customer list. In California, this may include any proprietary information that your employees may create.

An important part of trade secret law is that your business must take reasonable steps to ensure that the information remains confidential. Additionally, the information must have value to your company because it is not commonly held knowledge throughout your industry. While this may initially seem like a large limiting factor, in reality, your company’s business plans, marketing information, corporate minutes, spreadsheets and other important but seemingly common documents can receive protections under this law in certain situations. This law may also apply to any obvious sensitive information, such as software, recipes and processes that your business uses to ensure it retains a competitive edge in the industry.

This law is particularly helpful if your business has information that could be misappropriated, whether unintentionally or on purpose, by another company for its own benefit. This means that your information may be protected even if it is not misappropriated illegally. For example, if your business has a list of materials it uses to manufacture a product, and that list is accidentally disclosed to another business, that disclosure may not automatically grant the competing business the rights to use your protected information. It is important to remember that trade secret misappropriation cases are complex and individual, and this information is for educational purposes only.