Are Trade Secrets Intellectual Property?
The Technical Expert Solution for IP Teams
A trade secret is a way to protect information from being used by competing companies. The best examples of this are how Coca-Cola has kept their recipe a secret for many years and how KFC protects their 11 herbs and spices recipe. These secrets have allowed both of these companies to keep going strong without any other company emulating their product because they have no way of knowing exactly how it is produced.
Many different types of business have trade secrets and they are not always related to the way that the product is produced, they can also include things like customer lists, for example. In order to qualify as a trade secret, information must meet certain criteria:
Its commercial value must be dependent on it being secret – Using the example of Coca-Cola, their product would not have value if every other soft drinks manufacturer knew how to make it.
It must only be known by a select group of people.
The company must take reasonable steps to keep it a secret. – This includes things like using confidentiality agreements for employees or business partners, for example.
Many people are unsure where the law stands on trade secrets and they wonder, are trade secrets intellectual property?
Intellectual property is an area of law that deals with the rights to creative work. This can include things like copyrights, trademarks, and patents. There are laws in place to protect your intellectual property and prevent other businesses or entities from using your ideas.
The idea of a person owning a creative work is not new. In the United States, ideas that are considered intellectual property begin as works made for hire by employees under contract with their employer or as “original works of authorship” if they’re created outside of employment. The law generally protects any creative work an individual has produced if it meets certain qualifications.
Intellectual property can be protected in several ways: copyrights, trademarks, and patents. A patent grants an inventor the right to exclude others from making, using, or selling an invention for a limited time in exchange for public disclosure of the invention when the patent is granted. Trademarks and service marks offer exclusive rights to use certain words, names, symbols, or devices used to identify goods or services. Trademarks and service marks may be registered with the Patent and Trademark Office. And copyrights protect original works of authorship such as books, music, artwork, and films, etc., both published and unpublished.
As far as the law is concerned, trade secrets are considered part of the intellectual property of the company. The law which protects trade secrets is called the Uniform Trade Secrets Act (UTSA).
The definition of a trade secret varies by state, but generally includes information that derives value from not being generally known to others and not being readily ascertainable by proper means. Examples include a company’s customer list, the formula for a chemical compound, or the manufacturing process. A company has the right to protect its trade secrets from competitors.
If those trade secrets are stolen, businesses have the same legal options as they do if another intellectual property, like their logo or company name was stolen.
If you suspect that a trade secret has been stolen from you, the first step is to determine what state’s laws govern your company. If you can file suit in that state, then it is advisable to do so.
The Uniform Trade Secrets Act (UTSA) governs many of the cases involving trade secrets, but some states have their own version of this law. Whichever option you use, always keep good records and document everything – dates, people involved, meetings attended, conversations held – anything that could be relevant should be kept. A written record makes it easier to win your case by proving ownership of the information if there are any legal disputes regarding its disclosure or theft.
It is down to you to prove that your trade secrets have been stolen. You have to prove that your trade secrets have been willfully misappropriated and not merely independently developed by a third party. In some cases, this can be a challenge and the cases are rarely black and white.
Once you have dealt with the initial breach, look into how the trade secrets were leaked in the first place. Was it a mistake or was there an internal source? You may have to make some changes to ensure that this doesn’t happen again.