Trade secrets refer to intellectual property that contains formulas, practices, processes, designs, instruments, patterns, or compilations of information that have inherent economic value because they are not generally known or readily accessible to others, and which the owner takes reasonable measures to keep secret.
While the jurisdiction of what is and is not considered a trade secret can vary, the bottom line is that a trade secret is information that:
- Is not generally known to the public
- Confers economic benefit on its holder because the information is not known publicly
- Where the holder makes reasonable efforts to maintain its secrecy.
Why are Trade Secrets so important?
Trade secrets are an important, but invisible component of a company's intellectual property (IP). Their contribution to a company's value, measured as its market capitalization, can be major. Unlike other publicly ascertainable information, such as patents, copyrights and trademarks, trade secrets are completely restricted and invisible. Being invisible, their contribution to a company’s bottom line is hard to measure, however it may very well be that information that is the determinate for the success of a business.
How are Trade Secrets protected?
Contrary to patents, trade secrets are protected without registration, that is, trade secrets require no procedural formalities for their protection. A trade secret can be protected for an unlimited period, unless it is discovered or legally acquired by others and disclosed to the public. For these reasons, the protection of trade secrets may appear to be particularly attractive for certain companies. There are, however, some conditions for the information to be considered a trade secret. Compliance with such conditions may turn out to be more difficult and costly than it would appear at a first glance.
What are the requirements to protect a Trade Secret?
- The information must be secret (i.e., it is not generally known among, or readily accessible, to circles that normally deal with the kind of information in question).
- It must have actual or potential commercial value because it is secret.
- It must have been subject to reasonable steps by the rightful holder of the information to keep it secret (e.g., through confidentiality agreements).
If you have intellectual property that needs to be protected, please don’t hesitate to reach out or visit our website today!