Trade secrets
Trade secrets are, like the word implies, the secrets behind your business. Secrets that provide a company with a unique market position can be an important business tool.
Trade secrets can be various kinds of information that is valuable to a company and should be kept secret. The information could pertain to strategies, expertise or processes, or e.g. algorithms for software solutions. Trade secrets can also extend to manufacturing processes or technology that can be kept secret.
A piece of information can classify as a trade secret if it meets all of the following requirements:
- It is a secret in the sense that it is not known or readily accessible to a wide circle of persons.
- It has commercial value because it is secret.
- It has been subject to reasonable steps, by the person lawfully in control of the information, to keep it secret.
Note: The EU Directive on the protection of undisclosed know-how and business information (trade secrets) has been approved by the EEA Joint Committee but is yet to be incorporated into the EEA Agreement.
To prevent your competitors from attaining your important and valuable information it is important to define and keep track of what information could qualify as trade secrets and take the necessary steps to keep them secure.
This can also help a company define what they can talk about when they are talking to outside parties or what information they can disclose publicly.
It is important to limit access to this information so that it is only accessible by those that need to. If it is important for a person to access your trade secret you might want to consider the use of a non-disclosure agreement (NDA). It might also be useful to consider a secrecy clause in employment contracts for employees that work with trade secrets.
A non-disclosure agreement (NDA), otherwise called confidentiality agreements, are private contracts whereby valuable information is kept safe. It states that should the person break the legal agreement on confidentiality they can be held legally accountable. An NDA can, therefore, be a useful tool to keep a trade secret secure.
It might also be useful to consider a secrecy clause in employment contracts for employees that work with trade secrets.
An NDA can protect information on all development stages of innovation, even after it has reached the market. It is always recommended that you seek the services of an IP lawyer to assist you in drafting an NDA and secrecy clauses in employment contracts.
It is often problematic for companies to get other parties to sign NDAs. Many larger companies will not consider signing an NDA unless they have considerable interest in the idea. It is therefore important to define what information is an integral and valuable part of the idea and could actually qualify as a trade secret. Only then should they attempt to limit access to that specific information and make sure that it is kept safe. This can also help a company define what they can talk about when they are talking to potential partners, investors or other outside parties.