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The Secret to Protecting Trade Secrets isn’t Really a Secret.

Technology Escrow

The Secret to Protecting Trade Secrets isn’t Really a Secret.

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Did you know trade secrets can be formulas, budgets, recipes, client lists, processes, plans, procedures, records, economics forecasts, or designs? …

Did you know a trade secret can be a formula, budget, utilization, recipe, client list, process, plan, procedure, record, economics forecast, or design? Trade secrets are an important part of a company’s intellectual property (IP) and contribute to a company’s value.

According to the World Intellectual Property Organization (WIPO), a trade secret is defined as any confidential business information which provides an enterprise a competitive edge. As legally detailed in 18 U.S. Code, section 1839, a critical component of a trade secret is that “the owner thereof has taken reasonable measure to keep such information secret.” There’s the catch – once the information becomes easily accessible, it’s no longer a trade secret and it carries no commercial value. When you consider the threats posed by hackers, cybercriminals, and current or former employees, it is critical for you to prove that all reasonable steps were taken to protect the information.

Today, legislation around trade secrets is stronger than ever. In 2016, The Defend Trade Secrets Act (DTSA) was signed into law with sweeping changes to the nation’s IP laws; for the first time, there was a federal cause of action for misappropriating trade secrets. (You can learn more about what the DTSA means for IP owners in this blog post.)

Since the passage of DTSA, the federal courts have been trying trade secret cases. Here are some of the lessons learned along the way:

  • Every company has trade secrets to protect. As outlined in this article in Crain’s Detroit Business, it’s not only the Silicon Valley companies or Fortune 500 companies that have trade secrets. Any company with confidential information that derives independent economic value because it is kept confidential has trade secrets.
  • If you don’t protect your trade secrets, neither will the courts. This article by Jackson Lewis PC about the Art and Cook, Inc. v. Haber case discusses how a company brought suit against an employee who was transferring valuable client lists and other material to a personal email account. However, the company was not able to win its case because they did not do enough to keep the information a secret.

How can my organization protect its trade secrets?

Unlike patents and copyrights which are registered forms of intellectual property, trade secrets are not disclosed to the world at large. This can make it more difficult to protect them; however, on the flip side, trade secret information does not expire as do patents and copyrights.

Legal protections for safeguarding trade secrets include defining corporate trade secret policies to your workforce, allowing access on a “need-to-know only” basis, securing computer networks, protecting files with passwords, requiring employees and third-party partners to sign nondisclosure agreements (NDAs), and requiring non-compete agreements from employees.

The cost of trade secret theft exemplifies the importance of taking on protective measures. Research published by PwC and the Center for Responsible Enterprise and Trade ( estimates the value of trade secret theft in the U.S. to be roughly $200 billion to $550 billion per year. Interestingly, fewer than one-third of companies have taken basic measures to protect their trade secrets.

Legal protection is not always enough

Although these methods of protection are a good start, they are not always enough. To effectively protect trade secrets, forward-thinking enterprises look to the protection of Iron Mountain’s IP Development Protection Agreement (IPDPA). This smart approach to trade secret protection enables businesses to safeguard their intellectual property assets and demonstrate due diligence in protecting trade secrets.

Because Iron Mountain dates and timestamps all materials deposited into your account, an IP audit trail is created which provides independent validation of the ownership of your trade secret. As an independent third party, Iron Mountain earns the trust of the courts and can vouch for the existence and ownership of your IP.

In addition, Iron Mountain’s comprehensive security framework includes deposit security, storage security, facility security, and deposit retrieval security – in other words, your intellectual property is protected from intake to retrieval by the global leader in storage and information management services.

The bottom line is that there are often-overlooked tools available that can protect your trade secrets, and other IP, in addition to any legal protections you may put into place. So, make sure you look at all your options and choose the right tools for the job.

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