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What You Don't Know about Trade Secrets Could Hurt Your Business

Although you may not think that your business owns any "trade secrets," they are probably used every day. Businesses of every kind, large and small, have information that can be protected as a trade secret. Unfortunately, the failure to properly protect trade secret information may place your valuable business information in the hands of the competitors.

Q: What is a trade secret?
A: A trade secret is something not generally known or readily discoverable by people outside your business that gives you an advantage over your competition. Although most people think of trade secrets as exotic formulas and processes, more common things may also be trade secrets, such as customer lists, marketing plans, sources of supply, assembly processes, dimensional tolerances for parts, and future product concepts.

Q: Are there any advantages in protecting something as a trade secret instead of with a patent?
A: Yes. In some circumstances, you can protect non-patentable concepts and information as trade secrets. In addition, while patent protection may last for a maximum of about 20 years, trade secret protection will last for as long as the information remains secret. It is also sometimes less costly to protect a trade secret than to acquire a patent.

Q: Are there any drawbacks in using trade secret protection?
A: The major drawback is that you must always be careful that the information remains secret. An accidental "public" disclosure may result in the loss of protection. Having adequate protection may require having your employees and contractors sign "confidentiality agreements." It may also require keeping doors and files locked to prevent customers and delivery people from having access to the information. Unfortunately, anything that can be readily "reverse engineered" (re-created by looking at a final product and determining how it was created originally) cannot be protected as a trade secret. However, patent protection may be available to protect your rights.

Q: Can I legally enforce the rights in my trade secrets?
A: The owner of a trade secret may obtain an injunction in court to prevent the wrongful use of his or her trade secret. Damages may also be awarded. It may also be a crime to steal someone else's trade secret, and criminal charges may be brought against the wrongdoer.

Q: How can I be sure that my trade secrets are protected?
A: The best way to make sure your trade secrets are protected is to have an "intellectual property audit." This usually involves working with an attorney who can identify your trade secrets and determine the steps that can be taken to better protect them. The audit may also uncover ways to better protect your other intellectual property. Is it a good practice to have an audit conducted every few years to ensure that your trade secret protection continues as personnel and business practices change.


Law You Can Use is a weekly consumer legal information column provided by the Ohio State Bar Association. This article was prepared by Ralph E. Jocke, a patent and trademark attorney with a worldwide practice, and a principal with Walker & Jocke, L.P.A., located in Medina, Ohio.

Articles appearing in this column are intended to provide broad, general information about the law. Before applying this information to a specific legal problem, readers are urged to seek advice from an attorney.

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