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There is a lot of confusion around Trade Secrets. What exactly IS a trade secret? Why do you need to protect trade secrets? How do you protect them?
Florida law doesn’t help much. Under Florida law, a Trade Secret is, “information, including a formula, pattern, compilation, program, device, method, technique, or process that: (a) derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by, other persons who can obtain economic value from its disclosure or use; and (b) is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.”
Perfectly clear, right? Wikipedia, of all places, has a better definition: “A trade secret is a formula, practice, process, design, instrument, pattern, commercial method, or compilation of information not generally known or reasonably ascertainable by others by which a business can obtain an economic advantage over competitors or customers.”
Basically, a trade secret is your business’s “secret sauce.” It’s that something special that makes you different from your competitors that they just can’t figure out how you do it. Whether it’s a referral source that gives you lots of business, or your customer list, or a proprietary way of running your business, or a manufacturing technique you invented, or a literal recipe for success, it can be anything you use in your business that gives you an edge.
Recently the Florida legislature added financial information to the list of things that may be trade secrets. That may include any non-public financial information, but really it’s just the information that gives you a competitive advantage over others in your same line of business that is trade secrets.
The key word here, though, is “secret.” The business owner claiming that something is a trade secret has to take reasonable steps to ensure that their trade secrets stay secret. That may mean having employees and independent contractors sign non-compete and/or non-disclosure agreements. It may mean that you only share certain information on a “need to know” basis. It may mean establishing and sticking to a document retention and destruction policy. It might be as simple as keeping your marketing plans private until you launch. Or it may mean that you don’t patent an invention and instead keep it private and proprietary to your business. It definitely means securing your computer network and email systems.
The next step in protecting your rights in your trade secrets, unfortunately, is litigation. Once someone discloses or threatens to disclose your trade secrets to a competitor, you have to take action to stop it from being disclosed. That usually means seeking an injunction from the court against the person making the disclosure. It is always easier to get the injunction if you can show the court all the steps you took to protect your trade secrets in the first place.
If your business has trade secrets (and what business doesn’t?), call us to help you protect them before it gets to litigation.