You probably know that intellectual property consists of trademarks, copyrights and patents. But how much do you know about trade secrets? And do you know that trade secret is also an intellectual property?
Trade secrets are valuable assets proprietary to businesses. Recipes, formulae, marketing techniques, customer lists, business methods or anything that gives the business an opportunity to obtain an advantage over competitors who do not know it or use it, all constitute trade secrets.
When I was practicing as a litigation attorney, I once handled a very interesting case involving trade secret misappropriation. The Kati Roll Company, Inc., an Indian restaurant serving kati rolls, sued Kati Junction, Inc., another Indian restaurant serving kati rolls. Kati Roll Company claimed that its recipes were trade secret and were not known to anyone except its owners and employees. The Kati Roll Company alleged, among other claims, that Kati Junction had employed Kati Roll Company’s employees and thereby stole its recipes. Kati Junction counter alleged that the recipes were commonly known and publicly available and therefore Kati Roll Company did not have a trade secret. Both sides fought fiercely through the course of over a year. Unfortunately, we will never know if Kati Junction did in fact misappropriate Kati Roll Co’s trade secret or if Kati Roll Company’s recipes were in fact trade secret, because the case settled and did not go to trial. Employees represent only one of the many ways business owners can lose their intellectual property to theft. Emails, external hard drives, flash drives, are some of the other tools that are used to steal confidential information. In order to protect your trade secret, you need to take steps to keep it secret. Here are some ways you can prevent misappropriation of your trade secret:
1. Regularly Identify and Label Trade Secrets
Identifying your trade secret means asking yourself what valuable information does my business keep secret to give it a competitive edge in the marketplace? It could be a process, method, formula, customer list, recipe or technique. Once identified, take steps to safeguard it by labeling it as “confidential”, and set restrictions on your computer and files containing the confidential information .
2. Use Non-Disclosure Agreements
Employees, agents, independent contractors or any other person who regularly work with your trade secrets play a key role in maintaining confidentiality of your trade secrets. Business owners should have employees and others who have access to their trade secret sign a non-disclosure agreement prohibiting them from disclosing the trade secret during or after employment.
3. Employee Training and Manuals
Mere signing of a non-disclosure agreement may not be enough if the employee does not understand what they are agreeing to. Take the time to explain to your employees the importance of the confidential information, how to safeguard such information, and consequences of disclosing the information.
These are just some of the steps you can adopt to protect your trade secret. If you are unsure whether you have a trade secret that needs to be protected, contact an attorney immediately.