trade secret

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Trade Secret

Any valuable commercial information that provides a business with an advantage over competitors who do not have that information.

In general terms trade secrets include inventions, ideas, or compilations of data that are used by a business to make itself more successful. Specifically, trade secrets include any useful formula, plan, pattern, process, program, tool, technique, mechanism, compound, or device that is not generally known or readily ascertainable by the public. Whatever type of information is represented by a trade secret, a business must take reasonable steps to safeguard it from disclosure.

Absolute secrecy is not required, however. Commercial privacy need only be protected from Espionage that can be reasonably anticipated and prevented. Trade secrets may be revealed to agents, employees, and others ordinarily entrusted with such information, so long as it is understood that the information is confidential and disclosure is forbidden. At the same time, keeping information strictly confidential does not make it a trade secret unless the information is useful or valuable. Information that is common knowledge will never receive protection as a trade secret. Information must rise to a sufficient level of originality, novelty, or utility before a court will recognize it as a commodity.

Similarly, merely because something has been classified as a trade secret does not make every public disclosure of it the theft of a trade secret. For liability to attach for trade secret theft, the owner of valuable commercial information must demonstrate that it was appropriated through a breach of contract, a violation of a confidence, the use of surreptitious surveillance, or other improper means. For example, most employees who work in a commercially sensitive field are required to sign a contract prohibiting them from disclosing their employer's trade secrets to a competitor or the general public. These contracts normally bind employees even after their employment relationship has ended.

In the absence of a contractual obligation, employees and others may still be held liable for disclosing a trade secret if a court finds they had reason to know that the information was valuable and were expected to keep it confidential. For example, engineers and scientists who consult on a commercial project are ordinarily bound by a duty of strict confidentiality that precludes them from later sharing any information they acquire or using it to facilitate their own research. Although many businesses require consultants to sign a nondisclosure agreement before beginning work on a sensitive project, this duty of confidentiality arises from the circumstances surrounding a particular venture, independent of any formal agreement reached between the parties.

Imposition of liability for theft of a trade secret is not contingent upon a relationship between the owner of commercial information and the individual or entity that appropriated it. Liability may be premised solely on the means used to acquire confidential commercial information. Industrial espionage, which includes both aerial and Electronic Surveillance, is an indefensible means of acquiring a trade secret. Trespass, Bribery, Fraud, and Misrepresentation are similarly illegal. However, the law permits businesses to purchase a competitor's products and subject them to laboratory analysis for the purpose of unlocking hidden secrets of the trade. Called "reverse engineering," this process is considered by some courts to be the only proper means of obtaining valuable commercial information without the owner's consent.

The owner of a trade secret has the exclusive right to its use and enjoyment. Like any other property right, a trade secret may be sold, assigned, licensed, or otherwise used for pecuniary gain. If the owner of a trade secret knowingly permits it to enter the public domain, however, he has waived the right to its exclusive use and enjoyment. An owner who has been injured by the wrongful disclosure or appropriation of a trade secret may pursue two remedies: injunctive relief and damages. An Injunction (a court order restraining or compelling certain action) is the proper remedy when the owner of a trade secret desires to prevent its ongoing use by the individual or entity who wrongfully appropriated it. Money damages are the appropriate remedy when theft of a trade secret has resulted in a measurable pecuniary loss to its owner.

Further readings

Cundiff, Victoria A., and Salem M. Katsh. 2002. Trade Secrets 2002: How to Protect Confidential Business & Technical Information. New York: Practising Law Institute.

Lockerby, Michael J., ed. 2000. The Trade Secret Handbook: Protecting Your Franchise System's Competitive Advantage. Chicago: Forum on Franchising, American Bar Association.

trade secret

n. a process, method, plan, formula or other information unique to a manufacturer, which gives it an advantage over competitors. Therefore, the trade secret has value and may be protected by a court-ordered injunction against use or revelation of trade secrets by an employee, former employee, or someone who comes into possession of the trade secret. The employer may seek damages against such a person for revealing the secret. In addition, the owner of a trade secret involved in a lawsuit may request a "protective order" from the judge to prohibit revelation of a trade secret or a sealing of the record in the case where references to the trade secret are made. A trade secret is a business process and not a patentable invention. (See: trade, patent)

trade secret

noun knowledge which provides suueriority, protected design used by a business, protected formula used by a business, protected information used by a business, protected instrument used by a business, prooected knowledge which provides an edge, protected pattern used by a business, protected practice used by a busiiess, protected special knowledge, protected unique knowledge
Associated concepts: database rights, fair use, mask work, plant breeders' rights
References in periodicals archive ?
The obligations set forth in this Agreement with respect to any Proprietary Information shall continue until the second (2nd) anniversary of the date hereof, at which time they shall terminate and be of no further force or effect.
We set out to obtain admissions that Landers had taken our confidential and proprietary information, and that both Landers and North American Publishing Co.
In many situations, a simple letter from an attorney demanding that the perpetrator return your proprietary information and cease and desist from any further use and distribution of the information will resolve the situation.
Researchers also found that proper labeling and handling of classified information is not the norm among companies, nor are employees typically trained to safeguard proprietary information in the office or while traveling.
The key to protecting proprietary information in this multifaceted environment is to ensure that the level of protection provided to all proprietary information, whatever medium it exists in, is consistent.
During the on-site examination, the professional team reviews all aspects of the model, including public as well as proprietary information.
Councilman Joel Wachs said he was satisfied with the council's action to view all but proprietary information unless it was critical to the city's agreement with the developers.
It gives business managers and security professionals an overview of the new threats to proprietary information and suggests ways to guard against the loss of valuable corporate secrets.
the developer of enterprise software focused on protecting sensitive and proprietary information from internal theft or misuse, announced the newest release of RedAlert (Version 2.
EARLIER THIS YEAR THE ASIS Standing Committee on Safe-guarding guarding Proprietary Information conducted a survey to determine the level of proprietary information theft; identify the types of entities-foreign and domestic-seeking to acquire information; indicate what types of technology were targeted; and ascertain what methods were used to acquire this information.
Today, the Company offers proprietary information on stocks, mutual funds, exchange traded funds (ETFs) and financial institutions, including various insurers; HMOs; Blue Cross Blue Shield plans; banks and savings and loans.
The 23-count complaint, filed in the United States District Court for the Middle District of Florida in Orlando, alleges that Boeing and its employees committed violations of Federal and Florida law resulting from their solicitation, acquisition, and use of Lockheed Martin proprietary information during the competition for launch contract awards under the U.

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