A trade secret is confidential business information which provides a company a competitive edge. Trade secrets may be manufacturing secrets or commercial secrets.
In a capitalist society, every business must find its own competitive edge if it is to be successful. It may be a particular formula or a special recipe—think MacDonald’s “special sauce” on its Big Mac. Or it may be a unique process, a formula, a process, a customer list, a marketing strategy, an as yet unpatented invention, research results, a bid on a contract, data, non-public financial information, or any other information that, as long as it remains undisclosed, gives the company an edge over its competition.
Characteristics of a Trade Secret
A trade secret has three characteristics:
- It is not knowledge that is available to the public.
- It gives the company that possesses the information an economic benefit that it would not otherwise have if the secret were known.
- The company makes a diligent effort to preserve the secrecy of the information.
Specifics of the law governing trade secrets are determined by each state.
Trade Secret Law in Texas
The Texas legislature passed a law that went into effect in 2013, the Texas Uniform Trade Secrets Act or TUTSA, that provides expands the definition of trade secrets from the previous law and gives added protection from actual and threatened misappropriation of trade secrets in the form of injunctive relief. The law also allow the court to award legal fees in legal actions involving the misappropriation of trade secrets, and eliminates the requirement of the old law that the secret must have been in continuous use at the time of its misappropriation. This gives much more legal clout to companies whose trade secrets have been stolen and used wrongly by someone seeking to gain a financial advantage or to harm the competitive position of the owner of the secret.
Legal Measures to Protect against Misappropriation of Trade Secrets
Trade secrets are part of a business’s intellectual property and may be an extremely valuable asset. Companies need to take steps to protect themselves.
Before misappropriation of trade secrets ever becomes a problem, a company should consult an experienced intellectual property attorney to help create safeguards against theft of proprietary information. For example, your IP attorney may draft agreements to be signed by employees, licensees, vendors, board members, or even principles of a company who have access to information that affects its competitive position, which could present a disclosure problem if the relationship should end. Carefully drafted and legally binding non-compete, non-disclosure, or work-for-hire agreements (assigning the company the rights to that employees work product) as a condition of employment can go a long way toward mitigating the risks of disclosure of trade secrets.
In some cases, certain types of trade secrets can be protected by patents. However, patents are of limited duration and require public disclosure, whereas trade secrets are indefinite in duration and not disclosed. You should discuss the various means of protecting your company’s intellectual property with an attorney who specializes in this highly complex and demanding area of law to determine the type of legal protection that best meets your company’s needs.
Getting the Advice and Assistance Your Company Needs to Protect its Intellectual Property
If you are engaged in a business where innovation, research, or other types of confidential information are an essential element of your financial success, you need to have a plan and system in place to prevent the misappropriation of your trade secrets and other intellectual property. At the law firm of Yee & Associates in Dallas, Texas, we specialize in helping business owners create a system of security and legal safeguards to protect these valuable business assets. We pride ourselves in delivering personalized service, solutions customized to your business’s unique needs, and top quality work, performed on time and at a reasonable price. Call Yee & Associates for a free phone consultation with one of our registered intellectual property attorneys to learn more about how we can help you secure your intangible assets, in order to protect the ongoing success of your company.