In today’s competitive business environment, information is power. For many companies, that information takes the form of trade secrets—confidential processes, formulas, customer lists, or strategies that give them a competitive edge. Unlike patents or trademarks, trade secrets are not registered with the government. Their value lies in their secrecy, which means protecting them requires careful planning.
What Is a Trade Secret?
A trade secret is any confidential business information that:
- Provides economic value because it is not generally known or easily discoverable.
- Is subject to reasonable efforts to keep it secret.
Famous examples include the Coca-Cola recipe, Google’s search algorithms, and KFC’s spice blend. But trade secrets don’t have to be world-famous—they can be as simple as a client list, a marketing strategy, or a unique software process.
How to Protect Trade Secrets
Since trade secrets rely on secrecy, protecting them is a proactive process. Common steps include:
1. Use Non-Disclosure Agreements (NDAs)
NDAs are a cornerstone of trade secret protection. Employees, contractors, and business partners should be required to sign NDAs before gaining access to sensitive information. An NDA legally binds them to keep that information confidential and not use it for their own benefit.
2. Limit Access
Only give access to employees or contractors who need to know. The fewer people who have access, the easier it is to maintain control.
3. Implement Security Measures
Physical and digital safeguards are essential. Examples include password-protected files, encrypted databases, locked file cabinets, and surveillance for secure areas.
4. Employee Training
Educate employees about what qualifies as a trade secret and how to handle it properly. Misunderstanding often leads to accidental disclosure.
5. Exit Interviews and Reminders
When employees leave, remind them of their continuing obligations under NDAs or employment agreements. This step is especially important in industries where insider knowledge is valuable.
What to Do If a Trade Secret Leaks
Even with the best precautions, trade secrets sometimes fall into the wrong hands—especially if a former employee joins a competitor. If that happens:
1. Act Quickly
Delay can weaken your legal position. Investigate immediately to determine the scope of the leak and whether the competitor is actively using your trade secrets.
2. Review Contracts and Policies
Check the NDAs, employment agreements, and internal policies the individual may have signed. These documents will form the basis of your legal claim.
3. Send a Cease-and-Desist Letter
An attorney can issue a cease-and-desist letter to stop further use or disclosure of your trade secret while preserving your rights.
4. Seek an Injunction
Courts can issue injunctions—orders that prevent a competitor from using the trade secret—before the case is fully resolved. Injunctive relief is one of the most powerful remedies available.
5. Pursue Damages
If your business suffers financial harm, you may be entitled to damages for lost profits or unjust enrichment gained by the competitor. Under federal law (the Defend Trade Secrets Act), willful misappropriation can even lead to double damages and attorney’s fees.
Final Thoughts
Trade secrets can be among your company’s most valuable assets—but only if you protect them. Strong contracts, access controls, and immediate action in the event of a leak are critical. If you believe your trade secrets have been stolen or misused, working with an experienced attorney is the best way to safeguard your rights and stop the damage.
Call Landry Legal, PLLC at 888-914-0011 or email us at contact@landrypllc.com to discuss how we can help protect your trade secrets.