Trade Secrets: Protecting Confidential Information

Although they generally remain unseen (by design!), trade secrets can make significant contributions to the overall value of a given company. A trade secret is typically defined as any confidential information that is secretly held by a business to gain an economic advantage over its competitors. Some common trade secret examples are designs, blueprints, formulas, machine processes, business and manufacturing methods, cost information, office techniques, customer lists, and computer programs, to name a few.   Protecting trade secrets is fundamentally different from protecting other forms intellectual property, such as patents, trademarks, and copyrights. Governed by the Uniform Trade Secrets Act (UTSA), trade secrets do not require any form of registration or procedural formalities. Instead, since trade secrets are designed to provide for the protection of secret information, they require that the trade secret owner take “efforts that are reasonable under the circumstances to maintain” the secrecy of the trade secrets.   Here are some of the most standard legal protections available to trade secret owners:

• Non-disclosure agreements (NDAs) – NDAs are legally binding contracts between at least two parties that serve to explicitly identify confidential information and establish a confidential relationship between all parties involved. The purpose of an NDA is to not only maintain confidences, but also protect non-public information, such as sensitive government data, information regarding a new invention, or even trade secret skills learned by employees while working on certain jobs. There are many different situations that call for NDAs, including: disclosing an invention to potential investors, sharing recently developed technology with prospective buyers, and allowing employees to access proprietary information related to your business. It’s also important to note that there are two different types of NDAs: unilateral agreements and mutual agreements. In a unilateral NDA, only the party receiving confidential information is bound to protect the information. In a mutual NDA, both the receiving and transmitting parties are bound to protect confidential information.

• Non-compete clauses (NCCs) – Also referred to as non-compete agreements, these clauses are recommended if you plan to share your business practices with employees, partners, and contractors, but also want to prohibit them from competing with your business for a specified period of time. Some key components of a legally binding NCC are the agreement start date, the pertinent names and addresses, the reasoning for the agreement, the designated geographic area, the terms of compensation, and the signatures of each party to the NCC.

• Work for hire agreements – Typically reserved for employees or independent contractors, work for hire agreements prevent contractors from claiming ownership over the work once it is completed. Instead, the owner of the work is the person who commissioned the work to be performed by the employee or independent contractor. These agreements also set forth any job expectations for the work to be performed by the employee or independent contractor.

Even though drafting an NDA, NCC, or work for hire agreement doesn’t have to be a complicated process, the agreement, at the very least, should identify the parties involved, indicate the scope of confidentiality, declare any exclusions, determine relevant limitations, and specify any other terms of the agreement. The Concept Law Group has prepared countless agreements of these types, and can help you ascertain whether your information, design, device, process, composition, technique, or formula can be afforded protection. The Concept Law Group can also help you ascertain any possible recourse that you may have if the information subject to a trade secret has been, or will be, misappropriated in any way. In addition to enforcement, the Concept Law Group can also help in defending any person alleged to have misappropriated another’s trade secret.   If you are concerned with protecting, enforcing, or defending a trade secret, then you are encouraged to contact the intellectual property attorneys at The Concept Law Group, who will not only listen to you, but also develop a plan to accomplish your goals.