A trade secret consists of any valuable business information.
The business secrets are not to
be known by the competitor.
There is no limit to the type of information that can be protected
as trade secrets; For Example: Recipes, Marketing plans, financial projections, and methods
of conducting business can all constitute trade secrets.
There is no requirement that a trade
secret be unique or complex; thus, even something as simple and nontechnical as a list of
customers can qualify as a trade secret as long as it affords its owner a competitive advantage
and is not common knowledge.
If trade secrets were not protectable, companies would no
incentive to invest time, money and effort in research and development that ultimately
benefits the public.
Trade secret law thus promotes the development of new methods and
processes for doing business in the marketplace.
Protection of Trade Secrets:
Although trademarks, copyrights and patents are all subject to
extensive statutory scheme for their protection, application and registration, there is no
federal law relating to trade secrets and no formalities are required to obtain rights to trade
secrets.
Trade secrets are protectable under various state statutes and cases and by contractual
agreements between parties.
For Example: Employers often require employees to sign
confidentiality agreements in which employees agree not to disclose proprietary information
owned by the employer. If properly protected, trade secrets may last forever.
On the other
hand, if companies fail to take reasonable measures to maintain the secrecy of the
information, trade secret protection may be lost. Thus, disclosure of the information should
be limited to those with a “need to know” it so as to perform their duties, confidential
information should be kept in secure or restricted areas, and employees with access to
proprietary information should sign nondisclosure agreements.
If such measures are taken, a
trade secret can be protected in perpetuity. Another method by which companies protect
valuable information is by requiring employee to sign agreements promising not to compete
with the employer after leaving the job.
Such covenants are strictly scrutinized by courts, but
generally, if they are reasonable in regard to time, scope and subject matter, they are
enforceable
