A unique idea in a business is, arguably, impossible nowadays when it seems everything has already been invented. A trade secret, however, is a different type of intellectual property.
Your business may have a particular secret you need to keep hidden from competitors. Is it a particular recipe in your restaurant? Perhaps it’s a technical patent achieved for a tech product that you produce. Or maybe it’s a particular shopping procedure unique to your business.
Whatever that trade secret is, you need to protect it. How do you do this? And what really qualifies as a trade secret nowadays?
Do you really have a trade secret?
To qualify as a trade secret, it first has to be a commercially valuable idea. Does it really make a difference in whether you make a profit? Not all ideas in your business may necessarily matter in how much profit you make.
Another qualification to a trade secret is whether it’s known to only a small group of people. Only you and your employees should have this knowledge. If other businesses are using it, you can’t really designate it as a trade secret.
A trade secret is also something that a business owner is trying to protect via confidentiality agreements signed by employees or those in the know.
Anything that gives you a competitive edge over your competitors is a more succinct definition of a trade secret. Your next big step is taking action to protect your secret, including ways to ensure that it never gets leaked.
Creating confidentiality agreements
While confidentiality agreements are sometimes controversial, they’re imperative to prevent trade secrets from getting into the wrong hands. Your employees and other staff may have access to your trade secret at all times. What happens if one of those people leaves and leaks your trade secret to a competitor?
A signed agreement enables you to have legal protection and have unlimited protection of your secret as long as it exists. It’s a good idea to have everyone who knows about the trade secret sign the agreement (or agreements) and have those forms available for quick reference. Placing them digitally in the cloud is a good idea for easy retrieval 24/7 on a mobile device.
Keep in mind a confidentiality agreement is also commonly known as a Non-Disclosure Agreement, or NDA. Each agreement has to provide a definition of what’s being protected, what might be excluded, what the signer’s obligations are, how long the agreement lasts and any provisions.
Once you get that NDA signed and stored, various laws are available to help protect your trade secret further if it ever becomes stolen.
Federal and state laws to protect trade secrets
The Uniform Trade Secrets Act (UTSA) is a law in use nationally, though individual states adopt their own versions. All 50 states have a form of the UTSA, with Washington State the first state to enact it in 1981. Massachusetts is the most recent state to use it in 2018.
Other laws apply to protecting trade secrets. A major one is the Economic Espionage Act of 1996. If someone tries to steal your trade secret, those who attempt to could be prosecuted by the U.S. Department of Justice using this law.
Defend Trade Secrets Act of 2016 is another law that you can apply, and it’s an appendage to the EEA above. Here, you can take private civil action against someone who compromised your trade secret recently.
Check your state laws to see where you can bring the most solid trade secret protection, and be sure to have legal steps in place to protect your business.