Estimated annual loss due to corporate espionage
The number of Trade Secret registrations filed last year.
They’re secrets, so they’re not registered!
KFC’s recipe, Coca-Cola, WD-40, Listerine, Twinkies, Google algorithm, New York Times’ Best Seller List criteria, Big Mac Special Sauce, Auto-tune, Starwood (Westin) Hotels “recipe” for luxury
Don’t Give Away the Secret Sauce!
Protecting what is special about your business is the key to long-term success. So let’s talk about confidential material:
- What is a Trade Secret?
Essentially, it is almost any information that you take steps to protect and has economic value (present or future) because it is not known by the public. This can be, for example: financial, business, economic or technical information; designs, plans, methods, techniques, programs or codes.
- What’s new?
There are both Federal and State laws regarding Trade Secrets. The Federal Law, Defend Trade Secrets Act (DTSA), was just enacted last year and changes the law significantly. Specific language is now required in agreements that protect Trade Secrets.
- How can you protect your Trade Secrets?
A well-written Non-Disclosure Agreement (NDA) that also contains an enforceable Non-Compete clause is usually the best way to go. This can be a stand along agreement or part of a larger contract or policy manual. It is critical that this agreement meets the requirements of the new law. If not, the company can lose out on significant protection and damages. Also, educate your employees on the importance of protecting trade secrets.
- Who should sign an NDA?
Partners, employees, independent contractors, and anyone else who might come in contact with your business’s confidential information. Once your Trade Secret is out, it’s not a secret anymore and no longer protectable!
- Beware of forms and templates.
Since the DTSA is fairly recent, it’s highly unlikely that any forms or templates you come across would comply with the new rules. As such, they could be full of loopholes that leave you unprotected. Likewise, if your documents were drafted before 2016, they should probably be updated.