How to Protect Your Trade Secrets
Updated: Mar 23, 2019
We’ve discussed in previous posts what to do when you think your company’s trade secret has been stolen, so it’s only logical to address how to keep trade secrets safe in the first place. Texas has joined 46 other states in adopting the Uniform Trade Secrets Act (UTSA), which is designed to eliminate much of the confusion surrounding trade secrets. The Act does not, however, answer the question of how keep your trade secrets from being stolen. Here are some tips:
1) Identify what is and is not a trade secret.
The definition of a trade secret per the UTSA is: “information, including a formula, pattern, compilation, program, device, method, technique, or process that derives independent economic value, actual or potential, from not being generally known … and not being readily ascertainable by proper means by other persons who can obtain economic value from its disclosure or use and is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.”
Examples of trade secrets are the spice recipe for Popeye’s or the formula for Coca-Cola. Both provide enormous value to their owners and the owners take extraordinary steps to keep them secret.
It is very possible that you have a method, process, recipe, or formula being used in your business that meets this definition. Confidential business information such as client lists, pricing information, production manuals, and other similar items qualify as well.
2) Determine out who has access to it, and who really needs access to it.
The fewer people that know a secret, the better. This goes for trade secrets as well. Once you have identified your company’s secrets, determine which employees really need to know them, and don’t provide access to anyone who does not need to know. This leads to step three.
3) Get confidentiality agreements.
For those employees who do know the content of the secret, it is a good idea to get them to sign a confidentiality agreement specifically agreeing not to disclose the secret, even to future employers should they leave your company. This is also known as a non-disclosure agreement. Consider having all employees sign such an agreement, to protect you in case they accident learn the information your are trying to protect.
4) Limit access going forward.
As stated above, make sure that only those employees who absolutely need to know the content of the secret are allowed to see it. Then take all necessary steps to actually secure the confidential data. Make sure digital copies are encrypted and password protected, with access only being give to those who need to know, and who have signed non-disclosure agreements.
Likewise, documents and other “hard versions” of confidential information should be kept locked away, and copies should be limited.
Ultimately a court or jury may have to decide whether your company’s confidential information actually qualifies as a protected trade secret. The cardinal rule is that the more your company does to protect your secrets, the more likely a court is to deem it a secret and provide you relief if a competitor illegally learns the information.
As always, contact us at (832) 284-4013 if your business needs help with trade secret issues.