Trade Secrets

The subject of trade secrets arises often in business, especially when employees move from one company to another – sometimes to a competing company.

Depending on the position formerly held, an employee may be privy to information considered proprietary and a trade secret. Disclosing the information may not only damage the former employer but subject the employee and his new company to litigation and significant liability.  

In order for a company to enforce its trade secrets, it must first take steps to protect the secrecy of its information. If not properly handled, the information will not qualify as a trade secret. For information to be considered proprietary and a trade secret, several factors must be considered, including:

  • the extent to which the information is known outside of the business;
  • the extent to which the information is known by employees and others involved in the business;
  • the extent of measures taken to guard the secrecy of the information;
  • the value of the information to the business and its competitors;
  • the amount of money or effort expended in developing the information; and
  • the ease or difficulty with which the information could be properly acquired or duplicated by others.

Reverse engineering is a defense to an allegation of trade secret infringement.

At a minimum, the policy should state that trade secret information is maintained on a need-to-know basis, and those privy to the information will be informed that the company considers it a trade secret. Also, the information is kept under lock-and-key, and password protection is afforded electronic information.

Finally, the policy should also reference the appropriate use of non-disclosure agreements, include procedures for having visitors sign a general non-disclosure agreement before touring a facility, and contain provisions for keeping trade secret equipment, products and/or processes from general view.

MKG, LLC (formerly Michaud-Kinney Group, LLP) has extensive experience in helping companies develop and maintain an effect trade secret policy.

In general, information can either be maintained as a trade secret, or be the subject of a patent application, but not both. The rules of the United States Patent and Trademark Office require complete disclosure of an invention. As a result, information cannot generally be withheld from a patent application and designated a trade secret.

Patents have a useful life of 20 years from the earliest patent application filing date. Theoretically, trade secrets last indefinitely. However, if a trade secret is publicly disclosed, even inadvertently, it is gone forever.

Please call (860) 632-7200 or contact us to see how we can help you today.

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