6 Steps for Protecting Trade Secrets

Trade secrets vary among industries, but regardless of whether the secret is a formula, a blueprint, a database, or something else entirely, it is critical to the success of your business. Without the metaphorical (or sometimes literal) secret ingredients, you will lose your competitive edge. It is imperative that you take the proper steps to secure confidential information from start to finish in order to preserve your advantage.


The first step to protecting a trade secret is to identify what information or material is worth protecting. Look at your business model, your designs, or your marketing, and establish what proprietary pieces are involved. By definition, this is information that is not available to the public, is unique to your company, and gives you an edge.


Once you have determined your company’s trade secrets, you need to make sure everyone is aware that the information is confidential. At a minimum, documents should be labeled as such and kept in a private, secure location. It is very difficult to argue that something was a trade secret if it was never treated as a valuable asset worth protecting.


The natural next step after identifying and isolating your trade secrets is to limit who has access to them. More people with the knowledge means more that can leak it or let it slip. Only share confidential information with people who absolutely need to know it and restrict access so others cannot accidentally discover it. Password protect devices and if possible have different portions of formulas or recipes spread among different employees so that only a select few know the entire process.


One of the most critical parts of protecting trade secrets is ensuring that employees are familiar with the expectations. Developing a policy surrounding trade secrets, and educating your workforce about the policy, conveys that this is a matter of high-level importance. Trade secret protection should also be addressed during new hire orientation and in exit interviews, in addition to during an employee’s tenure.


Confidentiality and/or nondisclosure agreements are the backbone of legally ensuring your trade secrets are kept safe. New employees should be asked to sign one when they join your company and ideally all employees should re-sign annually. This keeps it in the forefront of their mind as well as confirms that you have up-to-date legal proof that everyone has agreed to protect your sensitive information. Any third parties your business deals with should also sign a confidentiality agreement to cover any details they may learn in the course of your partnership.


If you find that your trade secrets have gotten out, or you want to be absolutely positive that you have put all the proper protections in place, contact an attorney who deals with trade secret protection. He or she can help draft nondisclosure agreements and, if necessary, take a case to court.

In trade secret litigation, the case often rests on whether or not the company took preventative measures to keep the information confidential. Following the guidelines above will keep your business on the right path should a situation require legal action.