Trade secrets are in use all around you, and yet you may not be aware of them. Granted, the term “trade secret” doesn’t exactly trip off the tongue. Nevertheless, trade secrets are a valuable form of intellectual property. In fact, some of the largest and most profitable companies in America base their entire competitive positions on the use of closely-guarded trade secrets.
Don’t believe me? Consider these famous trade secrets that you may encounter, without realizing until now, on a day-to-day basis:
The formula for the soft drink COCA-COLA;
The exact composition of Colonel Sander’s famous “11 herbs and spices” recipe for making KFC fried chicken;
The formula for WD-40 lubricant;
The source code for MICROSOFT WORD software; and
The recipe for KRISPY KREME doughnuts.
These are just a few of the higher-profile examples. There are a great many more out there, of course – including some that you yourself may unknowingly own.
What is a trade secret?
So, what exactly is a trade secret? To some extent the answer varies from state to state, because state law defines trade secrets. There is no overall federal statute governing the subject, though there is a “uniform” trade secret law proposed by scholars in the field. Many states have used all or part of that Uniform Trade Secrets Act in their own statutes.
In Illinois, where I live and practice law, the state trade secrets act is almost identical to the uniform act I mentioned earlier. Here in Illinois, any piece of information you possess that has value because it is unknown to the general public and to your competitors potentially can be a trade secret. But there is a condition: you must have taken (and continue to take) reasonable steps to ensure that the information remains secret.
This means that if you have any information that gives you a competitive edge because your competitors don’t know it, you may have a trade secret – provided you take the necessary steps to maintain its secrecy. From the list above, it should be clear that things like customer lists, product formulas, recipes, production techniques or methods and the like, can all potentially be trade secrets.
In some cases, even the knowledge of what doesn’t work can be a form of trade secret, since you may get a competitive edge by having that information when your competitor does not. This is especially true if your competitors would have to go to significant expense to learn it through trial and error.
Get Legal Advice
If you think you may have a trade secret and want to protect it, it is a very good idea to consult an attorney with experience in trade secret law. That attorney can help you set up the appropriate safeguards, precautions, employee agreements, and other steps that will help maintain the all-important confidentiality of your trade secret.