Intellectual property can be a confusing field through which to navigate. Intellectual property lawyer Fred Wilf, of law firm Morgan Lewis, explains trade secret law.

“Trade Secret laws varies from state to state,” says Wilf, “though most states have adopted the Uniform Trade Secret Act. Some trade secrets are also protected under federal law.”

“Unlike copyright or patent law, which require that the intellectual property be more than an idea, trade secrets can be raw ideas. What constitutes a trade secret? It must be information, including a process, and reasonable steps must be taken to keep it secret. It must have some value, even if the value is negative, such as confidential information about how not to do something. If you have tried five processes to implement a technology, and you know that four of those processes don’t work, then the fact that four processes don’t work may be protected as a trade secret along with the one process that does work, ” explains Wilf.

“Trade secret laws specifically protect information that is kept reasonably secret,” he continues. “Trade secret laws are violated when someone obtains trade secrets through illegal or improper means. Business owners should know that trade secret law generally does not protect information that is shared with others without a confidentiality or non-disclosure agreement. It is the responsibility of the trade secret owner to take precautions to protect confidential information.”

Wilf advises businesses to “get it in writing.” “If you are sharing trade secrets or confidential information with an employee, you may not need a specific non-disclosure agreement to protect the information, but it is recommended. If you are sharing confidential information with a contractor, client or business partner, it is imperative that both parties sign a confidentiality or non-disclosure agreement.”

Without a contract signed by both parties, it’s very easy to lose protection of trade secrets, warns Wilf. For example, if you submit a business plan that contains trade secrets to someone who is a potential investor, you may have some protection if the potential investor understands that the business plan is confidential and if the potential investor has said orally or by email that the business plan will be kept confidential. But you should make sure that a non-disclosure agreement is signed before confidential information changes hands.

Questions about this article? Visit the 247advisor.com forum for free, expert advice.

© Copyright 247advisor.com

Top of Page