A trade secret is the term given to a process, pattern, compilation of information, practice, formula or design, which is not generally known, and that can generate economic advantage for the person using it. Trade secrets can be very valuable and so it is important that owners are aware of their rights and legal protection. If you have a trade secret or want to invent one, it is advised that you consult with a reputable consultancy firm that specializes in all areas of trade secrets and intellectual property law.
Trade secret explained
The terminology and legal protection for trade secrets vary from one jurisdiction to another and so it is vital that the holders are aware of their country of domicile’s legal framework regarding intellectual property. Many countries worldwide, the term trade secret is redundant, and the work ‘classified information’ is used in its place.
Although each country adopts varying regulations regarding the use and classification of trade secrets, there is certain criterion that most jurisdictions use to establish the validity.
The trade secret criteria is as follows:
- A trade secret is not generally know to the public or recognized
- It must provide a form of economic benefit for the holder and user
- It requires and is subject to secrecy
Trade secret protection can be considered relatively difficult to protect. However, the secrecy and confidentiality surrounding the use and knowledge of a trade secret can be up held through the use of non-compete and non-disclosure contracts.
The law protecting trade secrets enables a perpetual monopoly meaning it is protected for an unlimited period of time, which is a benefit for owners who will not have to renew their rights over the secret. In many countries including the USA, trade secrets do not attain protection under law and are therefore exposed to risks. Countries that permit the legal protection of trade secrets prevent risks of third party claims, unwanted disclosure of confidential information and unauthorized use.
In cases where trade secrets are duplicated by a third party – who can prove good will and due diligence in creating the trade secret – cannot prevent the third party from using the trade secret they created.