What is a trade secret? What is considered a trade secret?

What is a trade secret? What is considered a trade secret?

Any practise that is not known outside of the organisation and is confidential information just like the Intellectual property rights is known as Trade secret. It can be valuable for the company’s growth. The owner attempts to keep it a secret which is not known to the public. A Company needs to ensure that the confidential information and processes are protected to get economic advantage from their competitors as well.

Example of a Trade Secret:
  1. Coca-Cola’s secret recipe or formula is a great example of trade secret. The recipe has never been revealed since it hasn’t been patented. This is a type of ‘process’ trade secret.

If the process used to manufacture a product can be discovered simply by looking at the product‚ the process will not qualify for trade secret protection as it is easily ascertainable. In that case‚ the inventor would be advised to seek patent protection.

What is considered a trade secret?

Anything that offers an advantage to a business and provides value to customers over their competitors is considered a trade secret. Method, recipe, pattern, design etc. are different forms of Trade secret. A company needs to get their employees to sign non-compete or non-disclosure agreements (NDA) to protect to protect its trade secret. Financial, Business, Scientific, etc. are the forms and types of trade secrets defined by the federal law. If the secret is independently discovered, released, or becomes general knowledge and the holder fails to safeguard it, the secret gets removed.

Following are the key takeaways and common characteristics of a Trade secret:
  • They are not public information.
  • The confidentiality provides an economic benefit to their holder over its competitors.
  • May differ across jurisdictions but have three common traits: not being public, offering some economic benefit, and being actively protected.
  • Their secrecy is actively protected.
  • Since the information is a secret, it must be commercially valuable as well.
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