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.