According to Reuters, studies reveal that 80% of senior executives are aware of how essential trade secrets are to their business. Further, 50% of the same senior executives also believe that trade secrets have more importance than their trademarks and patents.
Many organizations look to a business attorney for guidance. After all, trade secrets give organizations a competitive advantage, a way to edge out other companies and make their own brand the number one pillar.
Losing your trade secrets could prove detrimental to your profits. It could even cause you to close up shop one day.
Here is what to know about trade secrets and protecting them.
Why Companies Have Trade Secrets
When you create something, you are more than just proud. You want ownership and control. After all, the idea is your idea.
Therefore, there is such a thing as the protection of intellectual property. It exists as a safeguard for inventors, innovators, and entrepreneurs like you.
Intellectual property protects trade secrets. When you have this kind of protection, you have the power to enforce a trade secret. This is like how you would protect a copyright or patent.
What Is a Trade Secret?
This is a process or a practice that assigns your organization a distinct advantage over competitors. However, not all business secrets are “recipes” worthy of a trade secret designation.
According to the USPTO (the United States Patent and Trademark Office), such information must meet the following three criteria points for consideration as a trade secret.
- It is not general knowledge to the public, and therefore, the information possesses potential or actual independent economic value
- For others who cannot legitimately get this information, it would provide them with the value which they did not earn
- To keep the information a secret, you must take reasonable efforts
There are many famous examples of trade secrets. The formula for Classic Coke and the search algorithm for Google are a few. Although, designating information as a trade secret can extend to other kinds of intellectual property, too. This includes information like client lists, inventions, manufacturing techniques, R&D information, and recipes with ingredients.
How a Trade Secret Differs From a Patent
Now, if you have intellectual property that needs protection, you may wonder which type of protection you need. There are important aspects to consider.
A trade secret is something that you can keep in a vault, with a lock and key, and hide from the world forever. A patent for an invention, on the other hand, has information that you must make public.
With a patent, the patent owner has exclusive rights to prevent others from making, using, and selling their intellectual property for a timeframe of 20 years. Meanwhile, the information is still out in the open. Once the patent expires, there is no more protection for your idea or invention.
To get a patent, you must apply for it. This is an expensive process. The process includes examination, great technical detail, and a lot of paperwork.
Before they can award you a patent, you must wait years.
Trade Secrets Are Easier
With a trade secret, it is unnecessary to file for protection. No government agency oversees them. There are no hassles with compliance.
The designation of a trade secret is immediate. It is your responsibility to guard your secret.
Still, many people want to know if you could patent a trade secret. To answer the question, consider this.
The definition of what you can protect under trade secret law is broad. With patent protection, there are many limitations. A good example would be a client list because you cannot make a client list a patent.
Therefore, often the owners of intellectual property will choose to file a patent for parts of their invention but keep other parts of it a trade secret. The best solution depends on your business model and the industry. You would need to analyze the benefits and applicability of each type of protection for intellectual property.
We also recommend that you consult with an IP attorney.
What Is Trade Secret Law?
Before, only the state courts would handle trade secret theft cases. Now, there are three pieces of legislation to offer more strength for trade secret protection. Not only that, but today, you could seek to recoup damages in a federal court.
First published in 1979, but also amended in 1985, the government created the Uniform Trade Secrets Act. It aligns with the various state laws. It also supports organizations that conduct business in multiple states.
The Economic Espionage Act
Enacted in 1996, this covers economic espionage which could give benefit a foreign agent, foreign instrumentality, or foreign government. Plus, if the trade secrets were in commercial use, it criminalizes such theft.
The Department of Justice can prosecute such crimes. These crimes are punishable by fines and/or imprisonment.
Congress enacted the Defend Trade Secrets Act in May 2016. It was an amendment to the Economic Espionage Act. The DTSA allows a civil cause of action when there is trade secret theft.
This does not affect the current state trade secret law. It does, however, give owners of a trade secret the option for federal or state venues.
Talk to Your Business Lawyer
Trade secrets are crucial for ensuring that your business is successful. While it increases your profits, keeping them safe ensures only you can profit, and no other person or entity can do the same. Whether you need help with trade secrets, or you need to file for a patent, a business lawyer will provide you with the best guidance.
Whenever you want to learn more about business, technology, education, or more, we publish new articles daily. Stay informed, and stay on top!
Don’t leave just yet. Keep clicking for the best tips and tricks today.