What Is a Trade Secret?
Trade secrets can sometimes take a backseat to other forms of intellectual property. However, a company’s economic viability often hinges on this proprietary information. This article explores what constitutes a trade secret in Colorado and how a trade secret attorney can help you keep those secrets.
How Safe Are Your Secrets?
Our Intellectual Property Team has the skills to help individuals looking to protect valuable company information. Call 303-688-0944 to schedule a free case assessment with a trade secret attorney to discuss the various legal tools available to safeguard your business’ crucial assets.
What Exactly Is A Trade Secret?
A trade secret is any practice or process that a company can profit from. As the name suggests, it is generally not known to people outside the company.
Trade secret law includes information that would not be eligible under existing patent, trademark, or copyright law. Some inventions simply aren’t innovative enough to warrant exclusive rights. Others, such as abstract ideas, fall into areas outside the scope of patents. In those cases, designation as a trade secret is your only legal option for keeping that information within the company.
Google’s search algorithm and Coca-Cola’s signature drink recipe are two famous trade secret examples. They are what each corporation is best known for. Thus, their disclosure could have a disastrous effect on the companies’ bottom line.
More easily overlooked examples of trade secrets can include customer lists, supply chain information, or even business development and financial plans. All of these can also be critical to the company’s success.
Here are some other examples Colorado courts have upheld as trade secrets:
- pricing models
- strategic plans
- marketing programs
- pricing models
- proprietary computer software programs
Trade Secrets vs. Patents
Where patents are exclusively governed by federal law, trade secret protections are left up to the states.
As of 2021, 47 states have adopted the Uniform Trade Secrets Act. Colorado has adopted a slightly modified version known as the Colorado Uniform Trade Secrets Act.
Here’s how it reads:
‘Trade secret’ means the whole or any portion or phase of any scientific or technical information, design, process, procedure, formula, improvement, confidential business or financial information, listing of names, addresses, or telephone numbers, or other information relating to any business or profession which is secret and of value. To be a “trade secret” the owner thereof must have taken measures to prevent the secret from becoming available to persons other than those selected by the owner to have access thereto for limited purposes.”
In other words, not everything a business does is automatically a trade secret. A company must take reasonable steps to keep trade secrets… well, secret.
By contrast, patents are public record and require disclosure of the invention itself in the patent application.
Additionally, the patent application process is long and complex, with strict criteria. Under U.S. patent law, an innovation is eligible only if it can be established as:
Designating a trade secret does not require proving any of the above elements.
Time and costs should also be considered.
The patent application process could take years and comes with hefty annuity fees if it is granted. Annuity fees, also known as renewal fees, must be paid at certain time points after a patent is issued to keep it going.
Trade secrets do not require an application process or legal fees. The information need only be designated as secret. Also, the designation is immediate.
More Trade Secret Advantages
Who doesn’t love a mystery? It may sound simplistic, but the secrecy itself can lend value to the information it is protecting. No one knows exactly which ingredients make up McDonald’s “special sauce” — that’s part of the mystique.
It’s also worth noting that most patents expire after 20 years. At that time, anyone can use or profit from the invention without permission from the patent owner.
Conversely, Colorado’s trade secret law has no set time limit. Therefore, that information could theoretically remain a secret forever.
Finally, unlike patents, trade secrets have no reporting requirements. As long as trade secrets do not become public knowledge, their holders will continue to benefit from them.
Trade secret law does not prevent a competitor from independently discovering the information. Nor does it bar other parties from using legitimate duplication processes, such as reverse engineering, to uncover the secret on their own.
Furthermore, a trade secret loses all legal protection if it is publicly disclosed by someone with access to it. For this reason, vigilance is of the utmost importance.
How a Trade Secret Attorney Can Help
A company’s secrets are only as strong as the safeguards surrounding them. If that confidentiality is destroyed, the company will struggle to remain economically afloat.
Therefore, hiring a highly skilled trade secret attorney is crucial in ensuring that your secrets stay safe. Trade secret attorneys can help write non-disclosure agreements and non-compete clauses for your company’s employment contracts. Call 303-688-0944 for a free case assessment today.