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Trade Secrets - Basic Principle and Some Best Practices

Posted Monday, March 16, 2015 by Daniel Mills

When most people think of Intellectual Property they think of Patents, Trademarks, and Copyright. While each of these elements of protection for IP have their place and merits, I want to provide an overview of the other element of IP – Trade Secrets and offer a few best practices about how to protect them.
First, Trade Secrets protection is a matter of state laws. The Uniform Trade Secrets Act that has been adopted by 47 states, and Washington’s version is found in RCW 19.108. Under the statute, Trade Secrets are defined as 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.
In simpler terms, there must be information that has value only if kept secret and it must be treated accordingly. The last part of the definition creates a duty in the owner of the trade secret to take reasonable means to protect it. Once a trade secret is disclosed, reverse engineered, or becomes part of public domain it ceases to be a trade secret, so it is critical to guard them carefully.
Consider Coca-Cola for example. The formula for Coke is one of the most valuable trade secrets in existence and it has been a secret for over 100 years. While a patents provide robust protection, they have a limited lifespan, while properly protected trade secrets can last indefinitely. In addition, trade secrets can provide protection to things that aren’t patent eligible.
In order to guard trade secrets there are several factors that contribute to successful protection. The first is that it has to be a priority for someone. If you are an inventor just starting out, that person is you. If you have a company with trade secrets, then someone with leadership authority should have trade secret protection as part of their accountabilities. Another factor is that it takes effort to create policies and procedures that will lead to appropriate protection. This is why it has to be a priority to someone, it is not a simple one time thing, but it takes a careful and detailed understanding of what to do and how to do it. Finally, another key factor is discipline to follow the proper procedures, monitor policies, and insist on compliance within your organization.
Below is a list of policies and practices anyone with trade secrets should consider putting into place:
•Clearly identify the most valuable confidential information as trade secrets
•Distribute this information on a “need to know” basis
•Require confidentiality and non-disclosure commitments from employees
•Insist that customers and potential customers execute non-disclosure agreements
•Control employee access to information
•Use “Confidential” designations on all documents relating to trade secrets
•Employ copy protection and embedded codes to trace copies
•Restrict downloading of company information
•Regulate visitor facility and premises access
•Enforce employee compliance with prior confidentiality obligations

Trade Secrets - Basic Principle and Some Best Practices ›› Ruttler Mills PLLC