What is a trade secret?
Trade secrets include any valuable business information that derives its value from the secrecy. Trade secrets can be very valuable to you whether you have developed new technology, designed original products, created the perfect recipe, or have a gold mine of customer data. One of the most famous trade secrets is the Coca Cola formula—a well-guarded secret for over 100 years. The business value of the formula is why the company goes to extremes to keep it confidential.
How are trade secrets protected?
In Canada, there is no formal intellectual property process for protecting a trade secret. To protect and benefit from trade secrets, a business must:
- Obtain business value from the secret;
- Keep the business information a secret; and
- Take all possible measures to ensure that the business information remains a secret.
How are trade secrets used?
Generally, trade secrets are used to:
- Ensure an invention or design is not disclosed to the public before applying for a patent or an industrial design.
To obtain a patent for an invention, the invention must be new to the world and not known to the public. Similarly, industrial designs can only be registered if they are original in the world and aren’t known to the public. This can be difficult for inventors and designers especially when trying to commercialize products, test products, launch a business, find financing or seek partners because they usually have to disclose the invention to other people (the public). To ensure confidentiality prior to obtaining patent protection, inventors will guard their new inventions as trade secrets.
- Protect an invention through means other than patent protection.
Because securing a patent can be costly and time consuming, some businesses and inventors choose to rely on trade secrets instead. This strategy is often used when the invention has a short lifespan or when the invention is difficult to reverse engineer.
- Protect valuable business information that is not formally protected through other intellectual property rights.
Businesses that have a wealth of consumer data, recipes for food products, or cutting-edge market research and analysis want to ensure that competitors do not get their hands on that information. This type of confidential information (intellectual property) is generally not protected through patents, trademarks, industrial designs or copyright. To protect this confidential information, businesses use trade secrets.
How long does trade secret protection last?
Trade secrets can potentially last forever provided the information actually remains a secret. Once the secret is out, the business value is usually lost and the trade secret protection ends.
How do you keep trade secrets secret?
There are numerous ways to keep your valuable business information a secret including:
- Non-disclosure or confidentiality agreements: When disclosing your business information to anyone, have them sign a non-disclosure agreement;
- Confidentiality clauses: Include confidentiality clauses in employment agreements;
- Encryption: Encrypt any valuable business information;
- Password protection: Use passwords to access valuable business information;
- Lock and Key: Lock up any valuable business information in a safe.
Remember, once your secret is out, it is impossible to make it secret again. The list above includes only a few ways to keep information secret. It is in your best interest to use all methods possible to ensure your secrets stay secret!
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