Trade Secret
What Is a Trade Secret?
The term trade secret generally relates to the rights to confidential information. These secrets could be hugely beneficial to companies and enterprises, as they often have financial implications.
What Defines a Trade Secret?
Trade secrets can be defined as rights to confidential intellectual property that can be sold or licensed to an individual or entity. These secrets can help a company gain an advantage in the market.
Unlike a trademark or patent, trade secrets remain private.
Some examples of a trade secret include:
- A recipe of a fast food chain
- The formula for a certain product
- The algorithm of a search engine
Components of a Trade Secret
To recognize the difference between trade secrets and other types of intellectual property agreements, it’s important to understand what the elements are.
Trademarks and copyrights work differently than trade secrets, as they protect images and information that is publicly available.
Trade secrets have the following elements:
- Information that has or could have economic value by not being publicly known
- Valuable information to anyone who cannot rightfully obtain it
- Information that is kept secret through a conscious effort
Any individual or entity that wants to keep a trade secret confidential usually does so with non-disclosure agreements
Get a Non-Disclosure Agreement Template here
This helps to prevent an employee or partner from exposing the information that would take away that advantage on the market.
What Is a Trade Secret Under Federal Law?
The U.S. Code - Unannotated Title 18. Crimes and Criminal Procedure (18 U.S.C. § 1839) defines a trade secret as:
“All forms and types of financial, business, scientific, technical, economic, or engineering information, including patterns, plans, compilations, program devices, formulas, designs, prototypes, methods, techniques, processes, procedures, programs, or codes, whether tangible or intangible, and whether or how stored, compiled, or memorialized physically, electronically, graphically, photographically, or in writing if-
- the owner thereof has taken reasonable measure to keep such information secret; and
- the information derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable through proper means by, the public.”
If someone obtains a trade secret without authorization, it will be seen as a violation of trade secret protection.
The Economic Espionage Act of 1996 made trade theft a criminal offense if the theft was committed knowingly or used for the benefit of anyone but the owner.
How to Probe a Trade Secret
If a company feels that a trade secret has been leaked due to a violation of a confidentiality agreement or by other means, an investigation should be done.
In any type of investigation, it will also be critical to not break any privacy laws or harass individuals in the process.
The head of a company or business can launch a probe through in-house or external resources. A company’s IT experts or hired professionals will be helpful.
IT professionals can monitor if any employee has been suspicious activity on an employee’s:
- Email account
- Cloud storage account
- Other types of digital storage
Interviewing and monitoring employees, especially those with an exit interview, could help you find someone responsible for a trade secret violation.
Helpful resources:
Congress - Economic Espionage Act Of 1996
Red Points - What is a trade secret violation and how can it be prevented?
What Is a Trade Secret?
The term trade secret generally relates to the rights to confidential information. These secrets could be hugely beneficial to companies and enterprises, as they often have financial implications.
What Defines a Trade Secret?
Trade secrets can be defined as rights to confidential intellectual property that can be sold or licensed to an individual or entity. These secrets can help a company gain an advantage in the market.
Unlike a trademark or patent, trade secrets remain private.
Some examples of a trade secret include:
- A recipe of a fast food chain
- The formula for a certain product
- The algorithm of a search engine
Components of a Trade Secret
To recognize the difference between trade secrets and other types of intellectual property agreements, it’s important to understand what the elements are.
Trademarks and copyrights work differently than trade secrets, as they protect images and information that is publicly available.
Trade secrets have the following elements:
- Information that has or could have economic value by not being publicly known
- Valuable information to anyone who cannot rightfully obtain it
- Information that is kept secret through a conscious effort
Any individual or entity that wants to keep a trade secret confidential usually does so with non-disclosure agreements
Get a Non-Disclosure Agreement Template here
This helps to prevent an employee or partner from exposing the information that would take away that advantage on the market.
What Is a Trade Secret Under Federal Law?
The U.S. Code - Unannotated Title 18. Crimes and Criminal Procedure (18 U.S.C. § 1839) defines a trade secret as:
“All forms and types of financial, business, scientific, technical, economic, or engineering information, including patterns, plans, compilations, program devices, formulas, designs, prototypes, methods, techniques, processes, procedures, programs, or codes, whether tangible or intangible, and whether or how stored, compiled, or memorialized physically, electronically, graphically, photographically, or in writing if-
- the owner thereof has taken reasonable measure to keep such information secret; and
- the information derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable through proper means by, the public.”
If someone obtains a trade secret without authorization, it will be seen as a violation of trade secret protection.
The Economic Espionage Act of 1996 made trade theft a criminal offense if the theft was committed knowingly or used for the benefit of anyone but the owner.
How to Probe a Trade Secret
If a company feels that a trade secret has been leaked due to a violation of a confidentiality agreement or by other means, an investigation should be done.
In any type of investigation, it will also be critical to not break any privacy laws or harass individuals in the process.
The head of a company or business can launch a probe through in-house or external resources. A company’s IT experts or hired professionals will be helpful.
IT professionals can monitor if any employee has been suspicious activity on an employee’s:
- Email account
- Cloud storage account
- Other types of digital storage
Interviewing and monitoring employees, especially those with an exit interview, could help you find someone responsible for a trade secret violation.
Helpful resources:
Congress - Economic Espionage Act Of 1996
Red Points - What is a trade secret violation and how can it be prevented?