There are several different types of intellectual property designed to protect your work and enforce your rights. Though the differences between each type can be confusing, understanding what each protection does can help protect your business from losing valuable proprietary information. Here, we’ll focus specifically on trade secrets, how they differ from other types of intellectual property, and general best practices to protect your business’ trade secrets from competitors.
What is a Trade Secret?
A trade secret is a type of intellectual property that consists of confidential or proprietary information that is not generally known or readily accessible to others. Trade secrets can include a wide range of information, such as formulas, processes, techniques, designs, patterns, software codes, customer lists, and business strategies.
Trade secrets are valuable assets to your company, as they provide a competitive advantage over other companies, and detail the specific know-hows and processes that make your business unique and successful. Unlike patents, which require disclosure of the invention in exchange for legal protection, trade secrets are kept confidential and can be protected indefinitely as long as the information remains confidential.
Trade secrets are protected under both federal and state law in the United States. Your business can take various measures to protect their trade secrets, such as requiring employees to sign confidentiality agreements and limiting access to sensitive information. In the event of a breach of a trade secret, your business can legal remedies, including injunctions and monetary damages. However, it’s best to proactively seek outsourced legal services in the early stages of your business to ensure that your trade secrets are protected.
How is a trade secret different than a trademark?
A trade secret and a trademark are two different types of intellectual property protections. A trade secret is confidential information that provides a business with a competitive advantage, such as a secret recipe or a confidential manufacturing process. A trademark, on the other hand, is a symbol, word, phrase, or design that identifies and distinguishes the source of goods or services of one company from those of another.
Trademarks can include logos, brand names, and slogans, and need to be registered with the United States Patent and Trademark Office (USPTO). By registering a trademark, the USPTO provides the owner with exclusive rights to use the trademark in connection with specific goods or services. Trademarks can be renewed indefinitely as long as the owner continues to use the mark.
Essentially, trade secrets are confidential information that provides a competitive advantage, while trademarks are distinctive symbols or words used to identify and distinguish the source of goods or services. Both should be protected to for your business to thrive.
How is a trade secret different than a copyright?
A copyright is another type of intellectual property protection and is granted to the creators of original works of authorship, such as literary works, music, movies, and software. Copyright protection gives the creator the exclusive right to reproduce, distribute, and display the work, as well as to create derivative works based on the original. Copyright protection is automatic upon creation of the work, and it lasts for the life of the creator, as well as a given number of years past the creator’s death.
Trade secrets generally apply to the current operation of a business, whereas a copyright is granted to a completed work.
How is a trade secret different than a patent?
A patent is a legal protection granted to inventors for novel inventions or new ways of doing something. A patent gives the inventor the exclusive right to make, use, and sell the invention for a limited period of time, typically 20 years from the date of filing. In exchange for this exclusive right, the inventor must publicly disclose the invention, which enables others to learn from it and build upon it after the patent expires.
Trade secrets are similar to patents, as they both protect innovations. However, trade secrets apply more to a business’ individual processes, information, data, or software rather than only inventions or innovations.
How Can You Protect Your Business’ Trade Secrets?
If your trade secrets fall into the hands of a competitor, it can cause your business to lose market share and allow competitors to capture some of your business. And, of course, a loss of trade secrets undermines the hard work it took to build your business in the first place. There are several strategies that your company can take to protect its trade secrets, discussed below. However, a good first step to take is to contract a fractional attorney that can identify the best procedures to protect your business’ trade secrets. An outsourced attorney can also develop a full-fledged plan to ensure each aspect of your business is safe through intellectual property protections.
Identify and classify trade secrets: You cannot protect your trade secrets unless you first know what they are! Conduct a comprehensive inventory of all of your company's confidential information and identify what information is critical to your business—and consequentially needs protection.
Implement physical and technological safeguards: Implement physical safeguards, such as locked cabinets, access control, and security cameras, and technological safeguards, such as password protection and encryption, to protect your company's confidential information.
Develop protective policies and procedures: Develop and implement policies and procedures for employees to follow when handling confidential information. This should include trainings, both during the onboarding period and annually, on the importance of protecting trade secrets and the consequences of disclosing them.
Use non-disclosure and confidentiality agreements: Require employees, contractors, and third-party vendors to sign non-disclosure and confidentiality agreements that prohibit them from disclosing or using your company's confidential information. An outsourced attorney can help you draft these agreements before you hire additional employees to work for your business.
Limit access: Limit access to your company's confidential information to those who have a need to know and ensure that they are aware of their responsibilities for protecting the information.
Monitor and enforce: Monitor access to confidential information and take swift action to enforce your company's policies and legal protections if there is any suspected or actual misuse or unauthorized disclosure of confidential information.
By taking these steps, your company can help to protect its trade secrets and prevent unauthorized disclosure or use of its confidential information. Once your trade secrets are legally protected, you can take legal action if any infringement occurs.