4 Tips for Protecting Your Company’s Trade Secrets

If you are an accomplished business owner in the manufacturing industry, you likely owe your success to a unique, original invention or an outstanding design. For example, you might have created an innovative product that filled an important market niche. Or maybe you have come up with a way to substantially cut manufacturing costs of an already-popular type of device. Whatever the nature of your proverbial “secret sauce” is, however, there is no doubt that it gives your company and your product a competitive advantage over the competition.

But there’s the rub. For your trade secret to provide your business with an edge over your rivals, it must stay, well, a secret. The more successful your product is, the higher the stakes and the harder your competition will work to discover the ingredients of your “secret sauce.” Their efforts may range from completely legal – such as reverse engineering or competitive analysis – to those that are unethical or even outright illegal – like industrial espionage or bribery. As a business owner and manufacturer, you must realize that the danger is real and it is out there.

However, you should also realize that there are things you and your company can do to protect your trade secrets. In this article, we will present 4 practical tips that will help you keep intellectual property thieves at bay.

  1. Know What a Trade Secret Is

To be able to protect your trade secrets, you need to know how the law defines a trade secret and how it is different from your company’s other IP assets. In the U.S., a legal definition of a trade secret can be found in the Uniform Trade Secrets Act – a piece of federal legislation that has been adopted in some form by 47 states.

According to Colorado’s version of this law, a trade secret is “the whole or any portion or phase of any scientific or technical information, design, process, procedure, formula, improvement, confidential business or financial information, listing of names, addresses, or telephone numbers, or other information relating to any business or profession which is secret and of value.” The law also adds that a trade secret is only considered such if the owner of a trade secret – be it a person or a company as a whole –  has “taken measures to prevent the secret from becoming available to persons other than those selected by the owner to have access thereto for limited purposes.”

Such a broad definition of what a trade secret is makes intellectual property of virtually any kind – for example, design, pattern, data, physical device, and so forth – fall into the protected category as long as it gives a business a competitive advantage over its competition. However, it is important to note that in the eyes of the law, your company’s intellectual property can be recognized as a trade secret only if you have made an effort to keep it secret and confidential.

  1. Identify Your Company’s Trade Secrets and Treat Them As Such

The key to providing your company’s trade secrets with effective protection lies with isolating the specific pieces of information that need protection. Being too general in defining trade secrets can be counterproductive and even stifle the manufacturing process. Instead, you should only focus on your company’s most valuable IP assets.

KitKat chocolate bar’s famous recipe can be a good example. The ingredients of this beloved piece of English confectionary aren’t at all a secret – they appear on every individual bar’s packaging. However, according to some specialists, there are at least half a dozen difficult stages in the waffle’s manufacturing process. The details of those stages are kept secret and carefully protected. Focusing on just six pieces of information helped KitKat’s successive manufacturers sabotage any attempts to copy the iconic bar’s texture and flavor.

  1. Develop Policies for Your Staff

Trade secrets can be leaked unintentionally by staff members who lack proper training and education on how to handle confidential information. Therefore, develop clear policies regarding the handling and protection of trade secrets. Additionally, have a lawyer prepare non-disclosure agreements to sign for every employee who has contact with confidential information.

Of course, such measures are effective only as long as you are able to enforce them. Regular audits will help you identify any potential security breaches and instances when information has been mishandled by an employee. Be prepared to take disciplinary actions against workers who intentionally divulged trade secrets or engaged in industrial espionage for personal gain.

  1. Know When to Call a Lawyer

While reverse engineering of trade and industrial secrets can be legal, engaging in industrial espionage is not. If one of your company’s trade secrets has been mishandled and misappropriated using illicit means, it’s time to call a lawyer. Our attorneys at BRADFORD, LTD have experience in dealing with various aspects of intellectual property laws and protection. We are ready to provide you with guidance, advise you with regards to the best course of action in the view of your circumstances, and courageously represent your interest all the way to a courtroom. Contact us today to schedule a consultation.

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Bradford LTD specializes in IP protections and maximization for startups and small businesses. We also provide scaled legal services to our clients, including fractional legal counsel and value-based rates. From trademark, copyright and service mark protections to patent protection and outside inside counsel, we help position entrepreneurs and owners for long-term success.

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