Trade Secret

What is a trade secret?

To qualify as a trade secret and be legally protected intellectual property, the information must fulfill the elements defining secrets that are outlined by the U.S. Patent and Trademark Office:

• The information is not publicly known, giving it either actual or potential independent economic value.
• It holds value to those who cannot get the information legally.
• Reasonable effort is taken to ensure confidentiality.

Trade secrets encompass many areas, such as financial, business, scientific, and technical information. They might range from manufacturing processes and engineering information to client lists and even recipes. For instance, The Coca-Cola Company has maintained trade secret protection of its Coca-Cola formula for more than 130 years, helping it obtain economic benefits over competitors.

Legal trade secret protection is enforced by both state and federal law. State laws typically use a version of the Uniform Trade Secrets Act. Federal trade secret law typically governs misappropriated trade secrets on the interstate or international levels, deferring to either the Economic Espionage Act of 1996 or the Defend Trade Secrets Act of 2016.

Learn more about trade secrets in this detailed guide.

FAQs 

How long does a trade secret last?

Trade secret protection can last indefinitely, as long as it includes the elements outlined by the U.S. Patent and Trademark Office: The information derives independent economic value because it's not generally known to the public or cannot be obtained legitimately, and reasonable measures have been taken to keep the information secret.

What happens if you reveal a trade secret?

If you reveal a trade secret, there may be legal consequences. For example, if a company’s new business partners signed a confidentiality agreement to protect and not share the company’s trade secrets, unauthorized disclosure may instigate legal action by the trade secret holder (the company). 

Can you sue over trade secrets?

Yes, you can sue over trade secrets that have been misappropriated, but you will likely need to prove that the information was, indeed, a trade secret; that it was accessed and used or revealed illegally; that you are the legitimate trade secret owner; and that the economic value of the trade secret has been lowered since its misappropriation.

Are trade secrets cheaper than patents?

Trade secrets are cheaper than patents. Unlike patents, the trade secret process does not require any formal registration or payment; trade secrets only need to fulfill the criteria outlined by the U.S. Patent and Trademark Office.