Trade Secret: A Competitive Advantage

Maintaining a secret can sometimes be quite a difficult task.  However, when it comes to profiting and enhancing your business, you might want to think twice and consider keeping valuable information undisclosed.  Trade Secrets are another type of Intellectual Property (“IP”) protection which are available for owners to protect valuable information.  Please note that we will be discussing general information regarding trade secrets in the United States only, and know that other laws, rules and regulations may apply internationally.

Trade Secrets and your Business

Trade secrets can include almost anything in the world, from a small cooking recipe to the most advantageous technological development.  However, there are three (3) elements that are required for a trade secret to exist: (1) “it is information that has either actual of potential independent economic value by virtue of not being generally known”; (2) “has value to others who cannot legitimately obtain the information”; and (3) “is subject to reasonable efforts to maintain secrecy” (available at The United States Patent and Trademark Office, www.uspto.gov (last visited March 30, 2022).  Note that, in comparison with patents, trade secrets have no limit on the amount of time for protection.  Even customer lists and other business information may qualify for trade secret protection.  Nonetheless, in Morlife Inc. v. Perry, 56 Cal. App. 4^th 1514 (1997), a California court noted that three (3) factors should be considered in determining a trade secret: (1) how an entity/organization stores the information; (2) who has access to such information; and (3) whether the information was subject to confidentiality provisions.

Your Responsibility

You are responsible to identify your trade secret and keep it protected using effective security measures so no one can access the information.

Stealing Trade Secrets

Be aware that misappropriation of trade secrets is considered a federal crime, in addition to being subject to civil liability.  The Economic Espionage Act of 1996 (“EEA”) criminalizes trade theft and such crimes are prosecuted by the Department of Justice, punishable by imprisonment and/or fines.  Also, the Defend Trade Secrets Act of 2016 amended the EEA to establish a private civil cause of action.

IP Law plays a really important role, not only in protecting an individual’s or a corporation’s intellectual property, but also the economy as a whole.  Trade secrets are also important and beneficial to an entities’ financial health and competitiveness in the marketplace.  This blog contains basic information you should consider when deciding which intellectual property protection to seek. 

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