What is a trade secret and how is it protected?

A trade secret is information that has economic value by virtue of not being generally known.

For example, the recipe for Coca Cola is a trade secret that is closely held by the Coca Cola company. Trade secrets are subject to a party’s reasonable efforts to maintain their secrecy. If a party freely discloses information, this information would not be eligible for trade secret protection.

Why are trade secrets important?

Trade secrets are important because they protect information crucial to a company’s survival and profitability. In other words, trade secrets allow a company to make and sell valuable products that only they know how to make. The accidental or intentional disclosure of a trade secret could cost a company its trade secrets. A company may use a strategic combination of trade secrets and patents to retain an advantage over its competitors even after the patents expire.

How long do trade secrets last?

Trade secrets last as long as the secret can be kept. Unlike patents, which typically have a shelf life of twenty years, trade secrets last indefinitely. If the secret is leaked or disclosed to an unauthorized party, the trade secret would likely no longer qualify as a secret.

What happens if a trade secret is leaked?

The leaking of a trade secret could potentially lead to the information becoming public or no longer being protected. Depending on how central the secret is to a company’s operations, the disclosure of a trade secret could threaten the viability or existence of a company. For example, if Coca Cola’s recipe for its soft drink were leaked, it could constitute a blow to its ability to make a profit.

Attorney advertising. The material contained on this page is only a general review of the subjects covered and does not constitute legal advice. No legal or business decision should be based on its contents.