How to Protect a Trade Secret

Trade secrets are anything that is not known in the industry or not revealed in public that can give your business a competitive advantage. Some of the most famous trade secrets include the formula for Coke and the recipe of Kentucky Fried Chicken.

Trade secrets are commonly not patented because doing so will force you to reveal the trade secret in your patent application. If your business has a trade secret, the main question is how do you protect it?

Leonard DuBoff in his book “The Law (In Plain English) for Small Business” gives several ways you can protect your trade secret:

1. Physical security = restrict access to the area where your trade secret is used. Employee access should be on a need to know basis and carefully review the credentials of workers who deals with processes that require knowing and handling the trade secret. Don’t give automatic free access to workers, and be very careful in terms of data handling and storage (e.g. you don’t want a laptop that contains your trade secret to get lost).

2. Employee access = establish procedures to control employee access to the documents. Clearly label all documents, pictures or sketches containing trade secrets

3. Fragmenting information = Prevent employees to knowing all parts of your trade secret. Fragment the information where one person handles one part and another person handles another part. That way, a single person cannot hurt you.

4. Confidentiality agreements = Always have employees sign non disclosure and confidentiality agreements. Get the help of a lawyer to draw up confidentiality agreements, including outsiders who need to know the trade secret (e.g. a person thinking of engaging in a licensing agreement with you to further develop your trade secrets).