Part 1: Trade Secret Law

Chapter List

Chapter 1: Overview
Chapter 2: Definitions Trade Secret Law
Chapter 3: Statutes Trade Secret Law

Chapter 1: Overview

The most important point to understand about trade secrets is that there is no crisp, clear definition of what they are. Rather, the context in which a dispute over ownership of information arises will determine whether a court will treat the information as a trade secret. As a general rule, information that has commercial value and that has been scrupulously kept confidential will be considered a trade secret; the owner of the information will be entitled to court relief against those who have stolen or divulged it in violation of a duty of trust or a written nondisclosure agreement.

1. What kind of information qualifies as a trade secret?

A trade secret may consist of any formula, pattern, physical device, idea, process, compilation of information or other information that both:

provides the owner of the information with a competitive advantage in the marketplace , and
is treated in a way that can reasonably be expected to prevent the public or competitors from learning about it, absent improper acquisition or theft.

Trade secrets often comprise customer lists and other sensitive marketing information. Other specific items that may be trade secrets include:

biological inventions (unpatented)
chemical inventions (unpatented)
computer hardware
computer software
cosmetics
electrical inventions (unpatented)
electronic inventions (unpatented)
fabric
food inventions
formulas—chemical
formulas—cosmetic
formulas—food
machines
machines—internal parts
magic tricks or techniques
manufacturing processes
mechanical inventions
medical devices—mechanical
movie plots (not written)
movies—script
movies—treatment
musical composition
odors/processes
photographic processes, and
project designs.

The one element that these items of information have in common is that they have the potential to make money for their owners if they are kept secret from would-be competitors and are used to make money in the marketplace.

Related terms: business information as trade secret; customer lists; databases as trade secrets; formulas as trade secrets; GATT (General Agreement on Tariffs and Trade); ideas as trade secrets; know-how; industrial secret; methods and techniques as trade secrets; patterns and designs as trade secrets; processes as trade secrets; software and trade secrets.

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2. What makes something a trade secret?

As mentioned, a trade secret is any information that both benefits a business commercially and is kept a secret. More specifically , when deciding whether something qualifies as a trade secret, courts will typically consider the following factors:

the extent to which the information is known outside of the particular business entity
the extent to which the information is known by employees and others involved in the business
the extent to which measures have been taken to guard the secrecy of the information
the value of the information to the business, and
the difficulty with which the information could be properly acquired or independently duplicated by others.

Related terms: competitive advantage; compilation of information as a trade secret; copyright and trade secret law compatibility; head start rule; in-house trade secrets; notice to employees of trade secret; novelty and trade secrets; parallel research; patent application, effect on trade secrets; physical devices, ability to maintain as trade secrets; read-only memories (ROMs) and trade secrets; reasonably precautionary measures to protect trade secrets; source code as trade secret; trade secret, defined; trade secret owner; Uniform Trade Secret Protection Act.