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It might be valuable to your company, but is it a trade secret?

On Behalf of | Nov 18, 2020 | Commercial Litigation |

Here are two scenarios from the intellectual property realm that are presented for the consideration of Pennsylvania business principals.

Imagine in the first instance that a key employee recently left your company and commenced employment with a business rival. That enterprise almost immediately began to profit from a process that was developed within your company and that you know your ex-worker revealed to the new employer. You deem that process a trade secret and seek legal protection to safeguard against its disclosure and unlawful use.

There’s a catch, though: There is no convincing evidence to objectively confirm that your enterprise deemed that process particularly important and made efforts to safeguard it from outside use and exploitation.

Here’s scenario two, with the same essential fact pattern but featuring this material twist: You can back up your concerns with ample proofs that the process is a proprietary asset that has always been rigorously safeguarded. And you can point to multiple legal steps that were timely taken to always keep it private and off limits to competitors.

In which of those two cases do you think a court might deem the process a trade secret that qualifies for legal protection?

What type of information qualifies as a company trade secret?

The trade secret realm is vast and varied. Although there is no precise definition that neatly defines what a trade secret is, there is ample statutory and case law that fleshes out the concept.

An in-depth article addressing intellectual property law underscores that.  And it stresses that, “When you have information that has economic value as a result of its secrecy and you use reasonable efforts to keep it secret, you have a trade secret.”

Courts have routinely identified the following kinds of assets as trade secrets:

  • Developed software programs and algorithm applications
  • Processes used in manufacturing
  • Product recipes and formulas
  • Business plans
  • Customer lists
  • Selectively employed techniques, devices and methods

How can a business team safeguard a trade secret?                                                                                    

“Show me” is a mantra that might reasonably come to the fore when it comes to judicial consideration of whether proprietary company data exists and merits legal protection against infringement. One authoritative online source discussing trade secrets duly notes that. It states that courts can often be influenced to rule in favor of a company seeking an injunction and other remedies when they see existing contracts such as these:

  • Nondisclosure (often termed NDA or secrecy/confidentiality) agreements
  • Noncompete agreements
  • Nonsolicitation agreements

Those contracts can bar former employees from revealing important information, seeking to siphon off an ex-employer’s customers and/or work staff and directly competing in the same line of business and over specified territory for a set period.

The presence of such agreements indicates reflective and timely company action prompted by the perceived need to identify and safeguard key data and information. A proactive protective strategy can be highly dispositive to a court.

Understandably, close scrutiny will attach to whether attempts to limit an ex-worker’s actions and prerogatives are reasonable. Timely and tailored input from a proven pro-business legal team can help ensure that they are.