Trade Secrets: What They Are and How to Protect Them

Trade secrets are quite common in the business world. How might we define a trade secret? In non-legal terms, trade secrets are pieces of information that are of value to a business and unknown to its competitors, thereby giving that business an advantage in their field of expertise. It is understandable then, that these trade secrets need to be clearly defined and well protected.

What steps should business owners take to create and protect their company’s trade secrets? To answer that question, we should first examine the legal definition of a trade secret. Please keep in mind that while other states may have similar regulations, this particular discussion is specific to Florida law.

Legally Defining the Term “Trade Secret”

Section 688.002(4), Florida Statutes, gives this definition:

(4)… information, including a formula, pattern, compilation, program, device, method, technique, or process that:

   (a)    Derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by, other persons who can obtain economic value from its disclosure or use; and

   (b)    Is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.

This definition leaves us with two main questions:

  • How can a business owner determine whether a piece of information derives economic value from being kept secret?

  • How do Florida courts define “efforts that are reasonable” to maintain secrecy?

Determining Economic Value

Countless types of information qualify as trade secrets. These might include, but are certainly not limited to business methods, plans and forecasts, product information, personnel information, pricing information, designs, patterns, formulas, ingredients, machine processes, customer lists and manufacturing techniques. The easiest way for a business owner to determine if a piece of information is of economic value is to ask themselves two key questions: Was this information obtained and kept private as a result of my company’s efforts? Would my competitors derive economic income from this information if it was available to them?

Reasonable Efforts to Maintain Secrecy

Once a business owner determines they have a trade secret worth protecting, they must take measures to protect the information not only to maintain the competitive advantage, but also to improve their protectability arguments in case a trade secret litigation becomes necessary.

For example, if a company offers escorted tours of their facilities, access to machines containing trade secrets should not be granted. Sensitive departments and processes might also need to be separated from central facilities. Trade secrets should also be withheld from any employees that do not need to know them. In some cases, companies may need to appoint a security officer to implement predetermined security measures.

Certainly, each case is different and security measures will depend on the size of the company as well as the type of trade secret involved. Still, Florida courts will expect businesses to determine and implement some kind of plan designed to protect trade secrets.

Kelly G. Swartz is a patent attorney licensed to practice in front of the United States Patent and Trademark Office and in the state of Florida.  She limits her practice to intellectual property law including patent, trademark, copyright, and trade secrets.