A trade secret is a piece of information which is confidential, can be legally protected, and gives your company a competitive edge. Lots of the most famous examples involve recipes: the formula for Coca Cola, McDonald’s Big Mac “secret sauce”, or that Mrs. Field’s chocolate chip cookie recipe that caused such a legal stir in the 90s. But you don’t need to be a food purveyor or a mega-corporation to have a unique approach that sets you apart from your competition—and if you can legally keep it a secret, you should.
Here are four steps you can take to keep trade secrets safe:
- Make a list: The first step in protecting trade secrets is knowing that you have them. Look across your business and think about any types of information you possess that are both confidential and critical to your success. Trade secrets could be product designs, customer lists, marketing plans, sales forecasts, or processes. For software developers, proprietary code obviously needs protection and for restaurants and food stores, it’s the secret recipe. Conduct a “trademark audit” to identify the information you have a legal right to keep private and wouldn’t want your competitors to find out.
- Stake your claim: Once you know what your trade secrets are, it’s essential to start treating them like secrets. Stamp or watermark “confidential” on sensitive documents. Get confidentiality and non-disclosure agreements in place with employees and vendors. These will put the people who learn your secrets on notice not to usurp them and lay the basis for a legal claim, if necessary.
- Lock it up: Take whatever steps are reasonably available to you to secure your trade secrets from access. Digital files and systems should be encrypted and password protected. Physical files should be kept locked. Establish rules around access to sensitive files. If possible, use a badge system to control access to your facility and posted signs to designate areas where access is controlled.
- Train your troops: Many disclosures of trade secrets are inadvertent slips by an employee who simply did not know better. That may make it easier to forgive, but the negative impacts on your business are still there. Prevent this with good training and education for your employees on what your company considers confidential and what employees’ obligations are. Back the training up with strong written policies. And when an employee leaves, take steps to shut down their access to your files and systems right away to ensure that your secrets don’t leave with them.
Whether your trade secret is a treasured family recipe, a brilliant string of code, or a closely guarded customer list, it won’t be a secret for long unless you are careful. Taking the steps above is a great first step toward a solid trade secret strategy. For even further assurances of security, consider retaining counsel for a professional security audit. Business attorneys like us can be great partners in protecting your trade secrets and your business.
If you are interested in learning how we can assist you, your family, and your business dreams with comprehensive business planning, please contact Legacy Law Firm, P.C. at (605) 275-5665 to schedule a free consultation today.