Trade Secrets Explainer
A trade secret is information that has actual or potential independent economic value because it is not generally known, provides value to others who cannot properly obtain it, and is subject to reasonable efforts to keep it secret. All three elements must remain present.
Potential trade secrets include formulas, processes, source material, product designs, customer information, pricing methods, manufacturing techniques, and business strategies. Unlike a patent, trade-secret protection is not obtained through registration and can continue indefinitely while the requirements remain satisfied.
Reasonable protection may include identifying sensitive information, limiting access by role, physical and digital security, confidentiality agreements, vendor controls, employee training, clean offboarding, and incident response. Controls should match the information’s value and risk rather than labeling every document confidential.
Trade-secret law does not prevent independent discovery, lawful observation, or reverse engineering where permitted. Disclosure without safeguards can destroy secrecy. Businesses should inventory critical knowledge, document protection decisions, and coordinate legal, security, human-resources, and operational controls before a dispute occurs.
The information must be valuable because it is secret, not readily knowable, and reasonably protected.
Losing any element can end protection.
Protection arises from the information and the owner’s secrecy measures.
It can last indefinitely if those conditions continue.
Access, contracts, security, training, and offboarding should match the risk.
Blanket labels without actual controls are weak evidence.
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