The Secret of the Tradesecrets

18.12.2020

The most mysterious form of intellectual property is the trade secret. A trade secret consists of any type of information that has economic value. Trade secrets can include business practices, recipes, models and formulae. Information classified as a trade secret is not made known to the general public. Its value lies in its confidential characteristics. A company in possession of trade secrets will also endeavour to keep these secrets from their own employees, lest their workers use the information to set themselves as commercial competitors.

What is the Purpose of a Trade Secret?

The main purpose of having a trade secret is to enable a business to protect itself from the economic damage that would ensue if a commercial competitor acquired a valuable piece of information, such as details of a key technological procedure. From a legal perspective, trade secrets are part of the general concept of protecting businesses from unfair competition. The protection of trade secrets is based on the jurisprudence associated with the protection of confidential information.

How Do Trade Secrets Differ?

There are three conditions that need to be met for a piece of information to be deemed a trade secret. First, the trade secret must have economic value. Secondly, the information must not be generally known, or easy to discover. Thirdly, and most importantly, the holder or holders of the trade secret must make considerable efforts to keep it confidential.

The protection of trade secrets is not a process that is governed by official registration or evaluation. Subjecting the process to evaluation would entail revealing the trade secret to an evaluator, thus defeating the original purpose: keeping the trade secret confidential. This means that there is no supervisory body making sure that trade secrets are not divulged. In fact, companies tend to only reveal the existence of a secret if they are forced to undertake measures to protect the confidential information.

Last Considerations

To ensure that trade secrets are protected, companies are advised to implement certain essential measures. These include: classifying documents as confidential; restricting access to sensitive business locations; password-protecting any computers that hold sensitive information; and – most importantly – making sure all company employees sign confidentiality agreements.

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