One way to protect your valuable intellectual property (and prevent other traders from using it) is to protect it as a ‘trade secret’. A trade secret is essentially just information which is kept confidential, usually by implementing a careful combination of practical and legal safeguards to protect the confidentiality of the information. This article will consider what a trade secret is, how it can be used, and some of the advantages and risks.
How a trade secret works
The essential requirement for a trade secret is that it must be confidential in nature. It cannot be something which is already in the public domain. Virtually any type of information can be protected as a trade secret, so long as it is confidential. Some examples include recipes, manufacturing techniques, customer details, business strategies and algorithms.
Unlike some intellectual property rights such as patents, registered designs and trade marks, there is no system of registration for trade secrets. So long as a trade secret is kept confidential, it will remain protected.
What is required to keep your trade secret confidential will depend on what it is, and your specific business requirements. The following are some key types of protections for maintaining the confidentiality of trade secrets:
- Access protections: The less people who have access to a trade secret, the easier it will be to keep it a secret. Access should be strictly limited to those who need to have access. Similarly, if your trade secrets can be accessed in your facilities (e.g. your office, warehouse, factory, etc), then access to those facilities should be strictly limited to those who need to have access, with strong security measures in place.
- Technological protections: If your trade secrets are saved digitally, then you should ensure that you have the strongest possible digital security measures in place to protect that.
- Legal protections: In order to commercialise your trade secrets it is unavoidable that some of your staff, and possibly some third-parties in certain cases, will need to have access to your trade secrets. It is critically important that before providing them with access, you ensure that all of these staff and third-parties have signed a binding non-disclosure agreement (also referred to as a confidentiality agreement). Please see our article ‘What is a confidentiality agreement and when do I need one?’ for more information.
What can I do if someone reveals my trade secret?
If someone publicly discloses or uses your trade secret without authorisation, you may potentially be entitled to take legal action against them for (a) breach of contract (assuming they have signed a non-disclosure agreement or similar), and/or (b) breach of confidence.
In some circumstances it may be possible to take action against someone who has revealed a trade secret even if they have not signed a non-disclosure agreement – for example, if it was clear from the circumstances of the disclosure that that the information was confidential and must be kept confidential. However, it will generally be harder to establish that there has been a breach of confidence without some sort of written agreement, which is why it is better to have a signed non-disclosure agreement.
Advantages of trade secrets
One of the main advantages of trade secrets is that they can theoretically be used to protect almost any type of information. By contrast, other intellectual property rights such as patents, registered designs, copyright and trade marks can only be used to protect certain types of information. If these other intellectual property rights are not available for the information which you want to protect, then trade secret protection may be your best option.
Another advantage of trade secrets is that protection can theoretically last indefinitely, so long as it is kept confidential. By contrast, other intellectual property rights such as patents, registered designs and copyright only provide protection for a limited period of time.
NOTE: Other intellectual property rights such as patents, registered designs, copyright and trade marks generally require your information to be published before protection is granted, which means that once the protection has expired other traders will have access to your information. It also means that once you have applied for any of these intellectual property rights you will generally be unable to protect your information as a trade secret.
Trade secret risks
The biggest risk with trade secrets is that once they are no longer confidential, the protection afforded to them is generally lost forever. In addition, a trade secret provides a more narrow scope of protection than many other intellectual property rights – for example, a trade secret will not provide protection if someone else comes up with the same idea on their own. As a result, other intellectual property rights may be more useful in many cases, if they are available.
Key takeaways
Trade secrets can be a useful tool to protect a virtually unlimited range of valuable business information. Protecting your information as a trade secret does have some key advantages over other intellectual property rights such as patents, registered designs, copyright and trade marks. However, it also comes with some risks, and requires a lot of careful planning and diligent work to maintain the confidentiality of your trade secret. As a result, it is best to carefully consider and seek advice on what form of intellectual property protection is most appropriate for your information, before publicly disclosing it.
Actuate IP has a team of intellectual property experts who can assist with Protection of Confidential Information. If you require assistance, you can contact our team on 1300 851 138 or info@actuateip.com.au and our friendly staff will make sure you are directed to the best person to assist you with your matter.
FAQs
Do I need to register a trade secret?
No, unlike some intellectual property rights such as patents, registered designs and trade marks, there is no system of registration for trade secrets. So long as a trade secret is kept confidential, it will remain protected.
What can I protect as a trade secret?
Virtually any type of information can be protected as a trade secret, so long as it is confidential in nature and not in the public domain. Some examples include recipes, manufacturing techniques, customer details, business strategies and algorithms.
Is a trade secret the best way to protect my invention?
Protecting your information as a trade secret does have some key advantages over other intellectual property rights such as patents, registered designs, copyright and trade marks. However, it also comes with some risks, and requires a lot of careful planning and diligent work to maintain the confidentiality of your trade secret. As a result, it is best to carefully consider and seek advice on what form of intellectual property protection is most appropriate for your information, before publicly disclosing that.
