Is it a Trade Secret? How Do I Protect it?

September 24th, 2013

 Trade secrets are often accompanies most important intellectual property assets. Too often, companies fail to protect their trade secrets in a way which will give them legal status. If you don’t treat your proprietary information, process, devices or formulas as secret, then the law will not recognize them as trade secrets.

Matt:  Thank you for being here. Now Mark, say an employer files a lawsuit claiming that an employee or any other individual has stolen a trade secret. What constitutes, Mark, a trade secret?

Mark:  Well Matt, more often then not, the issue of weather a trade secret was taken arises in the employer/employee context, but not always. But we’ll talk about what constitutes a trade secret in the context of an employee who’s been accused of taking a trade secret from his former employer for purposes of our discussion. Matt, the many states, including Michigan where I’m sitting today, have adopted the uniform trade secret act.  And, the uniform trade secret act provides a definition of trade secret. A trade secret, under the uniform trade secret act, is some data or information that, number one, derives independent economic value not being known to the public, number two, is the subject of a reasonable effort to maintain the secrecy of the information trade secret, under the act, can be defined to include a business formula, compilation, pattern, program, device, method, technique, or process which, though not copyright or patented, is used in the owners business and not disclosed to the public, and finally, provides the employer with some competitive advantage in the marketplace. Now, it’s easy for employer under most circumstances to claim that information fits the definition of trade secret that we just discussed and defined. Nevertheless, there are factors that court will use in order to determine weather a claimed trade secret made by an employer actually exists. The court will consider some of the following factors to determine weather a claimed trade secret is really a trade secret. One, the ease of difficulty with which the data or other information can be acquired by others in the marketplace. Two, the economic value of the information to the employer, three, the amount of funds or other efforts spent by the owner to develop the proposed trade secret, the extent take by the employer to label and guard the secrecy of the information. This would include simple labeling the information trade secret or confidential information. Next, the extent to which the alleged trade secret is known by employees or others within the company, and finally, the court will look at the extent to which the information is known outside of the employers company. So, in order for an employer to not only claim, but establish, in court that claim to a trade secret is a trade secret, the court will test that claim using the factors that we just discussed. It is more difficult then not under many circumstances for the employer to ultimately establish the existence of a trade secret as it must meet the test that we discussed. So that is, in a nutshell, how a court will determine weather a claim to trade secret by an employer is, in fact, a trade secret as determined by the court.  And that is the initial and sometimes the most difficult hurdle for an employer o get over is the mere establishment that the employee or some other individual has taken a trade secret. Often employees depart their employment with information not only in their head, but with them and known to them during the employment. he difficult part for the employer is to establish ultimately that, in fact, that information is a trade secret that would provide the employee some unfair advantage in the marketplace should the employee chose to take employment with a competitor.
Matt: Well Mark, I had a long list of questions here and I think you’ve answered them all in one fell swoop, so I want to say thanks again for being with us today and talking with us about this, and we hope to work with you more in the future.
Mark: Thank you Matt, It’s always a pleasure speaking with you.
Matt: And this is Matt Plessner speaking once again for Trade Secret Law Radio.
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One Response to “Is it a Trade Secret? How Do I Protect it?”

  1. admin says:

    Many companies have trade secrets. Most companies don’t know how to protect something as a trade secret. In order to be recognized under law, trade secret has to be treated in a way that is appropriate. You would not leave your jewels in an unlocked car and convince anyone that you believe those jewels are valuable. If you leave your trade secrets laying around just anywhere, where just about anyone can see them, then they are hardly secret. In short, a secret needs to be treated as a secret.

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