What is Trade Secret Protection?

There are different types of legal protections for the intellectual property (IP) of California business owners. Choosing the most effective protection for your IP is critical, as the very success of your business can be on the line if certain information is misappropriated. Many companies choose to protect sensitive information as trade secrets. California adopted the Uniform Trade Secrets Act, which governs how and when such information can be protected.

What Qualifies as a Trade Secret?

Generally speaking, trade secrets can be any confidential information relevant to the competitiveness of your business. Companies can protect different types of information as trade secrets, including the following:

● Customer lists
● Invention designs (that are not patented)
● Processes and formulas
● Recipes
● Software
● Marketing information
● Methods or techniques

Under California law, the two major requirements for trade secrets are as follows:

● The information derives actual or potential economic value on its own, specifically by not being disclosed to the public or others who can use the information for competitive economic gain; AND
● The company makes reasonable efforts under the circumstances to keep the information secret

Often, companies use nondisclosure agreements (NDAs) to protect trade secrets, which is often considered to be a “reasonable effort” to maintain secrecy.

Why Choose Trade Secrets Protection?

There are different reasons why a company may protect its intellectual property as trade secrets instead of by obtaining a patent or another type of legal protection. First, some types of information will not qualify for a patent, copyright, or trademark protections. For example, you cannot obtain formal protections for customer lists, as they do not qualify as an invention, a brand, or a creative work. Therefore, having employees with access to confidential customer lists sign an NDA and treating the lists as trade secrets can be the best option.

If you have a process or an invention design, it can be possible to protect the IP with a patent. However, the patent application process can be lengthy and costly. This process also requires that you reveal the details of your design to the public, which can lead to others making improvements on the design. Many companies choose to protect designs and formulas as trade secrets to avoid revealing the details. Famously, the formulas for both WD-40 and Coca-Cola were kept a mystery as trade secrets instead of the companies obtaining patents.

If someone misappropriates a trade secret, the law gives your company the right to take legal action. You can seek an injunction to prevent the disclosure of a trade secret by someone who improperly obtained the information. A business can also seek financial compensation for lost profit or other damages incurred due to the misappropriation.

Contact Our California Intellectual Property Lawyers for More Information

At Jafari Intellectual Property Law, our experienced IP attorneys represent clients in California to help them protect their property and seek legal relief after the misappropriation of their property. If you have questions or would like to learn more about trade secret protections, please call 949-362-0100 or contact us online to set up your free consultation today.