Privacy, Business and Law

Trade secrets are commercially useful ideas or information not generally known in the trade. They include technology and business information, and may consist of an intricate product design, a business plan, or knowledge of an important customer’s favorite baseball team.

A basic definition of a “trade secret” is (1) information, (2) that has value because it is not generally known, and (3) that is maintained in secrecy.

Examples of information that might be classified as worthy of protection include formulae, plans and drawings, process, methods and techniques, know-how, cost and pricing information, business strategies, employee salaries, and employee job duties and performance levels.

To analyze whether company information is a trade secret, answer the following questions:

1. Is the information in question known outside your business?
2. Is the information in question known by employees and others involved in your business?
3. What measures are you taking to safeguard the secrecy of the information?
4. How valuable is the information to you and your competitors?
5. How expensive was it to develop or compile the information?
6. How difficult would it be to acquire the information legally?

Information is not a trade secret if it is discovered through reverse engineering or independent development; nor does it protect matters of common knowledge in an industry or market.

Once an employer identifies the information which may qualify for trade secret protection, there are a number of steps which should be taken to ensure that the information is protected as a trade secret.

• Periodically identify the specific information considered confidential and proprietary to the company;
• Periodically notify employees, both verbally and in writing, that specifically identified information is confidential and should not be disclosed. More senior management should create document and material controls — access to and circulation of trade secret materials and confidential documents should be limited to those employees with a legitimate need to know;
• Use selected secured areas within the facility to house trade secret information;
• Separate the research and development area from production facilities;
• Limit access into computer systems to those with passwords and limit access into files of departments where confidential information is stored, such as marketing, finance and human resources;
• Implement appropriate physical security and internal policing measures, such as locked doors, fenced premises, guards, television cameras, sensors, safes, computer controlled access systems;
• Review information intended for disclosure and discussion at trade shows, publication in magazines, etc.;
• Limit visitor access to the facility;
• Require all vendors, licensees and customers to sign confidentiality agreements;
• Remind departing employees of their obligations.