Loose Lips Sink Small Businesses: Protecting Your Trade Secrets

confidential trade secret

Think you don’t have trade secrets?  Anything that gives you a competitive advantage and you wouldn’t want a competitor to know is a trade secret, so you must have at least one!  

For a restaurant or bakery, that might be a recipe. For a manufacturer, that might be production specs. Customer data, business plans, marketing analyses, special arrangements with certain vendors or customers, training materials – they’re all trade secrets!

Legal Remedies

Trade secrets are primarily protected under state law, which provides both civil and criminal remedies. Although it wasn’t designed to protect trade secrets, the federal Computer Fraud & Abuse Act is often invoked when the dispute involves alleged employee misuse of the employer’s computer system.

The bottom line is that trade secrets are protected as long as they remain secret and reasonable efforts were made to maintain secrecy.  Once your secret recipe is spilled, it’s fair game for anyone.  And if you carelessly left that recipe on the counter while getting your morning coffee, all bets are off!

Proactive Protection

What are ‘reasonable efforts’?  For a start:

  1.  If you haven’t already, identify your trade secret(s).
  2.  Ensure you have the appropriate agreements (confidentiality, nondisclosure, noncompete, nonsolicitation of customers) with employees, contractors, vendors and others when they start and when they part ways with you. Routinely remind them of their responsibilities.
  3. Treat confidential information properly by securing it and limiting and/or tracking those who have access to it.
  4. Create a corporate culture of confidentiality with training and clearly defined policies and procedures. Don’t forget protections governing data on business equipment used on and off the premises (e.g., laptop, cell phone) and company information on personal devices (a telecommuter’s home computer, for example).
  5. Establish social media policies clarifying who owns social media accounts created by and for your company as well as which postings are acceptable and which aren’t.
For encouragement and guidance, check out these resources:

Trade Secret Basics for Small Business and Start-ups  UCEDC Seminar presented by Patricia P. Werschulz, Esq.
Protecting Your Bacon: Patent versus Trade Secret DuetsBlog.com
Think your small business doesn’t have trade secrets to protect? Think again.
Trade Secrets – the important “free” IP  IPNexus.com

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