The common and legal definitions of a trade secret overlap, but the legal definition has a great many nuances. In common understanding, a trade secret is something a business or a company keeps secret. Famous examples include the secret formula for Coca-Cola and the recipe for Kentucky Fried Chicken. Note that the “trade” aspect of “trade secret” distinguishes these types of secrets from personal, family, or government secrets. The “secret” must have some relationship to a commercial enterprise, production, services, sales, marketing, or something similar. Commercial trade secrets are protected by a number of state and federal laws. Family and personal secrets might be protected by privacy laws, and government secrets are protected by criminal laws against espionage and the like.
Commercial trade secrets have several characteristics, which are:
- Information or device
- That is “secret” — that is, something that is not publicly known
- That is subject to the owner’s reasonable efforts to keep the information/device secret
- That has commercial value — that provides a competitive advantage vis a vis competitors — because the information/device is kept secret
In more detail, the information/device can be pretty much anything. It may be as simple as a customer/client list or a vendor list kept in hand-written form in a file or on a Rolodex. Knowing the names of customers and clients can provide a competitive advantage to a competitor. Likewise, with knowledge of the source of products, ingredients, and raw materials. As noted, almost anything can be a “secret” in this sense, including processes, instruments, designs, techniques, devices, machines, data, patterns, formulas and recipes, methods, plans, practices, etc.
Under the definition of a trade secret, a trade “secret” is only legally protected if the “secret” is actually secret. Thus, if the information/device is publicly known, then there is no “secret” to be protected. Likewise, if the owner releases the information/device to the public — intentionally or through mistake — the information/device loses its “secretness. As one example, as part of a marketing campaign, McDonald’s once produced and distributed a video showing how to make one of its secret sauces for one of its sandwiches. Obviously, the video removed the recipe from its status as a “trade secret.” As another example, a business held a series of investor “pitch meetings” via public access Zoom meetings. The company’s business plans and methods were fully discussed, and once made public, those business plans and methods were no longer deemed “secret.” The “secret” can also be “lost” if a competitor can reverse-engineer the information/device from public sources.
Under the definition of a trade secret, “reasonable” precautions to keep information/devices secret depend on the circumstances and the type of business. Keeping a Rolodex in a locked room or locked drawer might be sufficient for that type of information. Under other circumstances, more pronounced security measures may be needed up to keeping the information/data in a locked safe or under active security surveillance. Often, the requirement that “reasonable” measures be used to keep information/devices secret is satisfied if the owner requires employees and others given access to the secret to execute non-compete and non-disclosure agreements.
In terms of “commercial advantage,” that hurdle is very low. Courts have held that almost anything can provide a commercial advantage by not being publicly known.
Contact the Trade Secret Attorneys at Revision Legal
For more information, contact the experienced Trade Secret Lawyers at Revision Legal. You can contact us through the form on this page or call (855) 473-8474.
