The protection of your trade secrets is essential to maintaining a competitive advantage.
How can a start-up business protect its Trade Secrets?
As the name suggests, the subject of a trade secret must remain secret and there must be adequate measures to protect the secrecy. That means it must not be public knowledge or of general knowledge in the trade or industry.
If the secret is disclosed through authorized means or there are not adequate measures to guard the secrecy competitors can take advantage of the trade secret. But if there is an unauthorized disclosure and use of a trade secret, there are strict criminal and civil penalties.
(Note: If you are an employee, it is important not to disclose a trade secret, here is a summary of the criminal risk)
What are adequate measures for protecting a Trade Secret?
While there are no fixed rules as to what are “adequate” measures, there are best practices that must always be followed:
1. Never disclose confidential information, to anyone who has not signed a nondisclosure agreement or without a confidential relationship.
2. Have password protection on all software that contains Trade secrets and limit an employee or contractor’s ability to place the trade secrets on a personal computer.
3. Maintain a policy that all business records must be returned after separation with an employee or contractor.
4. Never disclose any aspect of the trade secret publicly.
The best practice to ensure your trade secrets are protected is to conduct an annual audit. Through this process, you can identify your trade secrets, determine the steps that can be taken to protect their secrecy, update your company passwords, and test your security measures.