What Are Trade Secrets ?

You are a business owner. You are making investments into your business, most often time and money. You want to protect your investment from thieves. You know that thieves are all around you.  If you are a smart and savvy business person you know that you employees are potentially thieves, your partners are potentially thieves and your competitors are almost definitely thieves. That awareness is the first step in protecting your business. What, exactly, is it that you want to protect and how do you protect it? What is a trade secret and what will the Courts allow you to protect as a business owner.

The first thing we need to do is to define what is a protectable trade secret. The most common example, and perhaps the most easily understood, is the recipe for Coca – Cola. Let’s face it, there is only one Coca-Cola and nothing else tastes quite like it. How do you feel when you are in a restaurant and you order a Coke, or a Diet Coke, and the waitperson asks: “Is Pepsi alright?” Most people think, or actually say, “No, it’s not.” Why? Because it is not the same thing. There is only one Coke and everyone knows it.

The fact that you can only but Coke from Coke is not an accident. It is part of a well-considered plan, conceived of by Coke, to keep their Coke recipe a secret. A “secret” means that almost no one can know what it is. Do you think that the average person on the Coke assembly line knows how to brew up Coke in their basement? I doubt it. Those employees don’t know the secret recipe for Coke because that recipe is likely locked away in vault somewhere.

So let’s assume that the product you create in your business is not Coke. Is it entitled to protection?

The elements of a claim for misappropriation of trade secrets under Florida’s Uniform Trade Secrets Act, Fla. Stat. § 688.001 et seq are: “(1) the plaintiff possessed secret information and took reasonable steps to protect its secrecy and (2) the secret it possessed was misappropriated, either by one who knew or had reason to know that the secret was improperly obtained or by one who used improper means to obtain it.” Del Monte Fresh Produce Co. v. Dole Food Co., Inc., 136 F.Supp.2d 1271, 1290 (S.D.Fla.2001). “To qualify as a trade secret, the information that the plaintiff seeks to protect must derive economic value from not being readily ascertainable by others and must be the subject of reasonable efforts to protect its secrecy.” Id.

 

  1. What is secret information ?

 Many things can be considered secret information – for example, design specifications for a computer system are considered trade secrets. Confidential customer lists compiled by a business can be considered a trade secret provided that the company undertook efforts, which can be documented, to compile the list. It is not enough to just log into Google and pull up a list of names; anyone with a computer can do that. In order to be a protectable trade secret, it is the effort which matters, not just the result.

 

How do you protect your trade secrets ? Have your employees sign a Confidentiality Non-Compete Agreement. The Agreement should specify what the company considers its trade secrets to be, that the company intended to, and did, create those secrets and has taken steps to protect them. Consider including something in the employee manual, which all employees must sign, which reiterates this. In this way, if there is ever a dispute about the terms of the contract, or even whether the Confidentiality Agreement or non-compete was signed, the company has a ready fallback position  – the signed employee manual. This document makes the company’s position clear and makes it known that the company’s position on trade secrets applies to everyone – from the folks that work in the factory to senior management. In this way, if something slips through the cracks, and there is no signed Confidentiality Agreement, at least the company policy is expressed somewhere in writing. The bottom line is that the company must do something, and be able to prove that it did something to actively protect its trade secrets. The best remedy is a written agreement coupled with a clearly expressed corporate policy.

 

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