What is a Trade Secret?

What is an Enforceable Trade Secret?

Generally speaking, a trade secret is proprietary and confidential information that is valuable and provides a competitive advantage for as long as it’s kept secret. But, typically, we’re not talking about any small competitive advantage. To be a trade secret, the competitive advantage must be big enough that you’re willing to go to greater lengths to keep it secret than other proprietary and confidential information.  It would be nice to have one worldwide trade secret law to quote here on this page. But, trade secret laws are typically governed state by state and nation by nation. And, it would be impossible to describe each and every trade secret law in the few hundred words we have here. So, here is a general definition that seems to touch the laws of most states and nations: A trade secret is a formula, practice, process, design, instrument, pattern, or compilation of information with which a business can obtain a meaningful economic advantage over competitors….as long as it remains secret. Now, it’s worth mentioning that information is only enforceable as a trade secret if three things are in play.First, the owner took reasonable measures to keep the information secret and those measures were commensurate with the value of the trade secret. In other words, if the owner of that information did not believe it was important enough to go to great lengths to keep it secret, it will not be considered an enforceable trade secret. Second, the information is not known or readily ascertainable by competitors and the general public. In other words, it hasn’t been made public and it’s not the kind of information that can be legally discovered by buying the product and reverse engineering it. And, third, the information derives actual or potential independent economic value from not being made known to the public…in other words, being kept secret.

Back to all Faqs