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How to make sure a trade secret is actually a secret

| Mar 25, 2020 | Uncategorized

The theft and misappropriation of a business’ trade secrets can be extremely harmful, potentially resulting in millions of dollars in damages. It’s important for anyone involved in operating a business to understand what actually constitutes a trade secret. Just because information is valuable to your enterprise does not mean it has the legal protections afforded to trade secrets.

While this area of the law can be quite complex, there are two key principles you should be familiar with. Both underscore an important trait: a trade secret must be secret.

1. You need to treat your trade secret as a secret

In Colorado, a trade secret is defined as any type of information – be it technical designs, a process or formula, a customer list, financial figures, anything – that is “secret and of value.” In order for something to be secret, it’s important you treat it as such.

Under the law, you must have taken steps to prevent the information from becoming available to those who shouldn’t have it. That might include:

  • Keeping the information on a secure server, or in a secure room
  • Restricting access to a very limited number of people
  • Implementing policies that ensure these rules are followed

If you consider a potential customer list a trade secret, but print it off and leave it on workers’ desks, visible to anyone that walks by, you may have trouble proving to the courts your information is in fact a trade secret.

2. The information is not public knowledge

This may sound obvious, but in order for something to be considered a secret, it can not already exist as public knowledge. It doesn’t quite end there, however. During litigation over alleged trade secret misappropriation, the plaintiff may have to clearly demonstrate their trade secret was significantly different from publicly available information.

The trade secret may utilize public information, but there must be a differentiator – maybe the process it goes through is proprietary, or the elements are combined in a unique way.

As mentioned above, trade secrets litigation is a complex legal area and requires a deep understanding of relevant laws. This post offers a brief, simplified overview of one aspect that business owners should keep in mind.

When so much is at stake, sometimes taking action to protect your prized information is the most reasonable path forward.