The term “trade secret” is often tossed around without a true understanding of what it is and why it is important — especially for small, online businesses. Trade secrets protect your valuable, and often confidential, information from getting into the wrong hands and being used inappropriately. Every entrepreneur can benefit from knowing these important details about trade secrets.
Not all of the information pertaining to your company can be considered a trade secret. Trade secrets generally are information that you reasonably want to remain confidential and is valuable because of its confidential nature. Trade secrets can also provide their owners with a competitive advantage in the marketplace.
Another way to look at trade secrets is that they can be treated in a way that competitors or the general public are prevented from learning about them, unless they’re doing something illegal or nefarious. Trade secret law usually covers, but isn’t limited to, both technical and non-technical data, formulas, programs, methods, lists and presentations.
Remember, just because you consider something to be a trade secret does not automatically make it so. You need to treat it in a way that makes it clear you want to keep the information a secret (such as keeping a formula locked in a safe). So, take some extra precautions to protect any information you consider to be a trade secret. It is not difficult to do. Your best course of action is to follow these simple guidelines:
When you have a trade secret, you also need to prevent misappropriation of the secret, which means preventing others from using it inappropriately. Usually this happens when someone:
If anyone violates your rights to a trade secret, you may be able to seek an injunction against the perpetrator. In some cases, you will even be able to seek monetary compensation.
Trade secrets can protect information that is not otherwise protected under other types of intellectual property law, such as copyrights, trademarks and patents. Trade secrets also perform the following functions:
When you own a trade secret, you can prevent groups of people from using, copying or benefiting from it, or letting others know about it, without your permission. These groups include:
The only group of people who cannot be prevented from using trade secret information are those who discover the information on their own without using any illegal means.
Every state has laws preventing people from stealing or disclosing trade secrets. So, if you believe someone has violated your trade secret rights, you can seek an injunction against the person or group.
Intentionally stealing someone’s trade secret is, indeed, considered a crime under both state and federal law. It is covered under the Economic Espionage Act of 1996. This act gives the U.S. Attorney General sweeping powers to prosecute any company or individual involved in trade secret misappropriation. Violators of this law can be subject to a fine of up to $500,000 for individuals or $5 million for corporations. Violators may also face up to ten years in prison. The penalties are even stiffer if the theft was done on behalf of a foreign government or agency.
Bobby Klinck is an intellectual property attorney, but he’s not your typical lawyer. Sure, he went to Harvard Law School and worked at some of the most prestigious firms in the country, but if you look at the big whiteboard in his office, you won’t see much about the law. His whiteboard is filled with tasks related to platform building, inbound marketing, and sales-funnels. Bobby is a full-fledged online entrepreneur, whose area of expertise is the law.