You may think that trade secrets are primarily owned by corporate giants who jealously guard their formulas for making things like soda pop and special sauce. However, the definition of a trade secret is quite broad, and even if you are a small business owner, you likely have at least one or two of your own.
Trade secrets fall under the category of intellectual property and may include lists of customers and suppliers, pricing information and formulas of various kinds. You could have a process or technique, a device, pattern or program you do not want competitors to have. If you are in the food business and own a restaurant, microbrewery or bakery, your original recipes are trade secrets.
The Defend Trade Secrets Act
With the exception of New York and Massachusetts, every state has laws adapted from the Uniform Trade Secrets Act (UTSA) that prohibit the theft of trade secrets. Under such laws, you can sue to stop disclosures. In 2016, the Defend Trade Secrets Act (DTSA) was enacted. This law, which is helpful to companies that deal in interstate or foreign commerce, enables the owner of a trade secret to file a civil lawsuit in federal court. However, the DTSA and UTSA are similar in terms of definitions of trade secrets, the three-year statute of limitations and remedies for theft, which include injunctive relief and compensatory damages.
Take steps to protect your valuable assets
Stamping "confidential" on a document will not be enough to offer protection if what the document contains is indeed a trade secret. Instead, put the document away in a filing cabinet you can lock. If you have a computerized version, limit access to the electronic file. You should also educate your employees on any proprietary information or item. New hires should sign nondisclosure agreements that will remain in force during their term of employment and thereafter.
Famous and not-so-famous trade secrets
Will your trade secrets one day rival these?
- Coca-Cola, Kentucky Fried Chicken and Mrs. Fields Cookies are examples of famous recipe trade secrets that are scrupulously protected.
- Developed by a chemist in 1953, the formula for WD-40 has been kept in a bank vault for more than 50 years.
- Lena Blackburne's Rubbing Mud is the substance that dulls the surface of new baseballs. The exact location of the mud hole near the Delaware River has never been brought to light.
- The methodology that goes into preparing the New York Times Best-Seller List has been a trade secret since the list originated in 1942.
Helping you manage trade secrets
Do you wonder whether some of your business assets constitute trade secrets? Are you concerned about the possibility of theft? An attorney experienced with a wide range of business matters can answer those questions and help you understand the protections available to you under the law.