What is Trade Secret Protection in CA?

“Trade secrets” are a form of intellectual property protection that is separate from patents, trademarks, and other formal protections. Trade secret protection can be beneficial in different ways, including it does not require the disclosure of the protected information (like a patent) and it can apply to many types of information that may not qualify for formal patent registration. To learn more about whether your business could benefit from trade secret protection, discuss your specific circumstances with an experienced California IP attorney. In the meantime, the following is some basic information about trade secrets in California.

Protecting Your Trade Secrets
California has adopted the Uniform Trade Secrets Act (UTSA) to govern ownership rights of trade secrets. In order for something to qualify as a trade secret, it should meet the following requirements:

•   It is confidential business information
•   The information gives the company a competitive advantage
•   The information is valuable because it is kept confidential
•   The company takes reasonable actions to preserve the secret

Some companies choose to protect formulas and designs as trade secrets instead of by obtaining a patent due to the continued confidentiality. However, trade secret protection can apply to other information, as well, including:

•   Business plans
•   Manufacturing processes
•   Corporate agendas
•   Corporate minutes
•   Customer and client lists
•   Bid specifications
•   Operational spreadsheets or information

The above information will generally be shared with many people inside your corporate organization, though you want to ensure that employees and former employees do not reveal the information to anyone outside the organization. Therefore, you want to take steps to ensure your information is protected as trade secrets.

First, you should have employees sign non-disclosure agreements (NDAs) regarding the specified information. These agreements can serve as proof that you took reasonable measures to protect the information and notify employees of its confidentiality. Other measures can include ensuring you have fully secured networks, limiting the access of certain employees to the information, setting up firewalls, tracking the actions of employees, having complex passwords, and more.

Remind employees of your confidentiality policies and non-solicitation agreements when applicable. If you suspect that an employee or former employee misappropriated a trade secret, you should take immediate action in order to maintain future protections. There are two main types of misappropriation that may occur:

•   Someone acquires the confidential information by improper methods
•   Someone wrongfully discloses the trade secrets

Misappropriation can happen by someone who already has access to the information or by an outsider who wrongfully gained access. Some improper means of accessing trade secrets include bribery, misrepresentation, theft, espionage, and more. Many misappropriation cases involve a former employee who takes information or uses their memory of information to benefit themselves or a new employer. This can include exposing more efficient processes or unique formulas to a competitor, soliciting customers based on the prior employer’s customer lists, and more.

Trade secret protection can be extremely important and valuable to many businesses. Make sure that you take the necessary steps to create protections and take action when you suspect the misappropriation of your trade secrets.