Trade Secrets

Trade Secrets – A trade secret is “a secret formula or process, not patented, known only to certain individuals who use it in compounding or manufacturing some article of trade having commercial value.” Other common terms for trade secrets are “proprietary” information, or “anything that you don’t want your competitor to know.” No federal registration is required to protect a trade secret. If a court can be persuaded that a secret formula or process, etc. is a trade secret, then it will normally protect the trade secret against unauthorized disclosures.

Trade secrets differ from patents in four basic ways:

  • patents are of a predefined, limited duration; trade secrets may be of unlimited duration
  • easily reverse-engineered inventions are not practical to protect as a trade secret, because the “secret” is lost on the sale of the invention
  • patents can be enforced against subsequent independent inventors; trade secrets cannot (if the invention is truly independent and not the result of unauthorized disclosure)
  • in many jurisdictions, a trade secret need only be marginally removed from common knowledge to be protected; to be patentable, an invention must meet exacting standards of non-obviousness.

If the trade secret has been disclosed without authority, a court will generally grant the aggrieved party monetary compensation. In general, one who discloses or uses another’s trade secret, without a privilege to do so, is liable to the other if:

  • the secret was discovered by improper means, or
  • the disclosure or use constitutes a breach of confidence of the rightful owner of the secret, or
  • the secret was learned from a third person with notice of the fact that it was a secret and that the third person’s disclosure of it was otherwise a breach of his or her duty to the rightful owner of the secret, or
  • the secret was learned with notice of the fact that it was a secret and that disclosure was made by mistake.

In summary, inventors and producers should develop and implement trade secret protection programs. Such programs should address a variety of issues, including: document and records control to protect against improper disclosure; control of access to the physical facilities where invention/production is conducted; training for employees and contractors; and contractual agreements with all parties to create a right of action against violators of the disclosure rules. The best trade secret protection programs are tailored to the particular operation involved.

Foreign Rights – Because we are now truly a world-wide economy, international protection of intellectual property has become of paramount importance. Patents, trademarks and copyrights are affected by various international treaties and laws. Prompt filing of patent, trademark and copyright applications in the United States based on or claiming priority from foreign applications is critical in these circumstances. It is also important to develop the business strategies necessary to secure foreign intellectual property rights. Furthermore, it may be advisable to associate with a network of foreign solicitors and attorneys when dealing with issues of Intellectual Property protection in foreign countries.