If you run a small business, you might think that trade secrets are only for big corporations or high-tech startups. The truth is that trade secrets can be any type of information that gives you a competitive edge and that you take reasonable steps to keep secret.
This means that your small business likely has trade secrets too, and you need to protect them, now.
What are trade secrets?
Trade secrets are defined by the Texas Uniform Trade Secrets Act as information that meets two criteria. First, the trade secret must have value or provide value that is secret. Second, you must make reasonable efforts to keep that information secret.
Trade secrets can be almost anything, such as formulas, recipes, techniques, processes, designs, customer lists, marketing plans, software, inventions or business strategies. The key is that the information is valuable because it is not widely known and that you take measures to prevent unauthorized disclosure or use.
What are the benefits?
Trade secrets can give your small business a competitive advantage in the market by allowing you to offer something unique, innovative or superior to your customers. Trade secrets can also help you attract investors, partners or employees by demonstrating your expertise, creativity or potential.
Trade secrets can also protect your investment in research and development by preventing others from copying or exploiting your results.
Unlike other forms of intellectual property, such as patents, copyrights or trademarks, trade secrets do not have government protection. They do not require registration, disclosure or expiration. You must protect your trade secrets on your own, through the use of non-disclosure agreements and other tactics.
Trade secrets can last indefinitely as long as they remain secret and valuable. Trade secrets are also relatively inexpensive to maintain compared to other intellectual property rights.
How can I identify them?
The first step to identifying and protecting your trade secrets is to conduct a business audit to determine what qualifies as a trade secret.
Ask yourself how valuable the trade secret is to your business — and how valuable it would be to your competitors. How difficult or costly is it to obtain or duplicate the information by legitimate means? How widely known is the information within your industry or field?
How much effort or money have you spent to develop or acquire the information? How easily can the information be reverse-engineered or discovered by observation?
The second step is to implement reasonable measures to safeguard your trade secrets from unauthorized disclosure or use. Use confidentiality agreements with anyone who has access.
Mark your trade secrets as confidential or proprietary. Limit access to your trade secrets to those who need to know them. Use physical and electronic security measures to prevent unauthorized access to your trade secrets. Monitor and enforce compliance with your confidentiality policies and agreements.