Intellectual Property Toolkit –
TRADE SECRETS
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IP Toolkit – Trade Secrets
A trade secret is economically valuable information that is not generally known, has value to those
who cannot legitimately obtain it, and has been subject to reasonable eorts to keep it secret.
–
Trademarks protect brand names,
slogans, and other source identifiers.
•
–
Patents protect new processes and
inventions.
•
–
Copyrights protect original creative
works, like books, songs, sculptures,
paintings, and photographs.
•
–
D SCS among us
Every day we interact with trade secrets, patents, copyrights, and trademarks.
Take a look around your environment to see the intellectual property (IP) in your world.
IP Toolkit – Trade Secrets
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• rade secres a a glance .............................
• Improper acquisiion o a rade secre .................
• Proper acquisiion o a rade secre .................... 4
• Proecing a rade secre ............................. 4
• as ha proide rade secre proecion .............. 6
• rade secres and paens ............................
IP Toolkit – Trade Secrets
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rade secres a a glance
rade secres pla an imporan role in deeloping commercial compeiieness, economic gain, and sraegic
posiioning. his ooli ill help ou ideni rade secres and undersand ho o proec hem properl.
rade secre is a pe o IP. Unlie ih oher orms o IP, rade secre proecion is no graned b he
Unied Saes Paen and rademar Oce USPO or an oher goernmen auhori, nor are rade
secres applied or or regisered.
rade secre is inormaion ha:
1. Has acual or poenial independen economic alue because i is generall unnon o ohers
. Is aluable o ohers ho can’ legiimael obain he inormaion, and
. Is mainained as secre hrough reasonable eors aen b he rade secre oner.
I, a an poin, one or more o he hree crieria aboe is no longer me, he inormaion is no longer a
rade secre. I his happens, a rade secre can’ be recoered.
broad range o inormaion proiding a compeiie adanage can be a rade secre, including
ormulas or recipes, produc designs, cusomer liss, pricing schedules, manuacuring echniques, and
mareing sraegies.
Some amous producs are or ere subjec o claims o rade secre proecion:
• Coca-Cola
• D-40
• enuc ried Chicen
• ena Blacburne
ubbing Mud
• inies
• Ne or imes
Besseller lis
Some o he claimed rade secres a he hears o hese producs hae been secre
or a long ime, demonsraing he long-erm benes rade secre proecion can
proide oners ho igilanl guard heir rade secres.
IP Toolkit – Trade Secrets
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Improper acquisiion
o a rade secre
rade secre eiss onl as long as i remains a secre. No
onl is i imporan o mainain secrec rom a pracical
sandpoin, bu he la requires ha, o mainain heir righs,
rade secre oners hae o ae cerain seps.
Misappropriaion occurs hen a person nos, or has reason
o no, a rade secre as acquired improperl and he
sill disclose, acquire, or use he rade secre. hile he la
doesn’ describe ha means are “improper,” cours hae
proided insigh hrough rade secre cases. heher a rade
secre as improperl acquired depends on each specic
case, bu as a general guideline, improper means “all belo
he generall acceped sandards o commercial morali
and reasonable conduc.”
1
ccording o his guideline, he,
misrepresenaion, breach o du, and espionage are all
improper means o acquiring a rade secre.
he
or eample, an emploee remoes les conaining rade secres rom
heir place o or ihou permission.
Misrepresenaion
or eample, a compan approaches a rade secre oner and claims i
ans o ener ino a join enure, bu he compan has no inenion o
honoring he deal. Once he compan has access o he rade secre, i
bacs ou.
Breach o du o mainain secrec
or eample, a person misappropriaes a rade secre hrough a
relaionship ih he rade secre oner in hich he oner could
reasonabl epec ha heir secres ould be mainained.
spionage
or eample, a person uses elecronic or phsical sureillance or digial
hacing o obain a rade secre.
1 . I. du Pont de Nemours v. Christopher, 41 .d 101 h Cir. 190 quoing esaemen o ors § , commen a 10 199.
IP Toolkit – Trade Secrets
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Proper acquisiion o a rade secre
I a rade secre is acquired hrough proper means, here
is no misappropriaion. hile here is no lis ideniing
all proper means o acquisiion, independen innoaion,
reerse engineering, and licensing are all eamples o
proper acquisiion.
Independen discoer
I is possible or o or more innoaors o deelop he
same rade secre independenl. In his case, he all
possess he rade secre legiimael.
eerse engineering
I is possible or someone o deermine a rade secre b
eamining a nished produc or sample and recreaing i b
oring bacards. s long as he produc or sample as
obained legall, he rade secre as no misappropriaed.
he par ha reerse engineered he rade secre ma
een hae a rade secre in he mehods i used.
icensing
rade secre oners ma license heir secres o
ohers ihou losing rade secre proecion. icensing
agreemens commonl conain proisions regarding he
licensee’s obligaions o proec he rade secre.
Proecing a rade secre
o be proeced under he la, rade secre oners mus mae reasonable
eors, or emplo reasonable means, o mainain secrec. “easonable”
eors or means mus be deermined on a case-b-case basis. acors o
consider in assessing reasonableness ma include he pe and alue o
he secre, he imporance o ha secre o he compan, he sie o he
compan, and he complei o he compan’s organiaion.
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Some eamples o reasonable eors ha rade secre oners can mae o proec heir
rade secres are:
• imiing access o rade secres o onl emploees ho require i o do heir jobs.
• equiring people ih access o rade secres o sign agreemens acnoledging heir obligaion o
mainain he secrec o he rade secres, ih regular reminders and agreemen reneals.
• raining emploees regularl on handling condenial inormaion, including rade secres.
• equiring ouside paries, including poenial cusomers, o sign condeniali agreemens i he ill
hae access o a rade secre or oherise condenial inormaion.
• Maring all maerials ha are rade secres or oherise condenial.
• Conrolling phsical access o rade secres loced room, sae, ec..
• Conrolling digial access o rade secres compuer logins ih dieren leels o permission, ec..
• nsuring ha deparing emploees reurn or desro rade secres in heir possession beore heir
deparure. Haing deparing emploees rearm heir ongoing obligaions o mainain rade secres
aer he depar.
• eieing emploee aciiies relaed o rade secre les, especiall i an emploee leaes on bad
erms or under circumsances ha sugges rade secres ma hae been aen.
hile proecie measures come in all shapes and sies, some companies
hae gone o eraordinar lenghs o proec heir rade secres.
Coca-Cola
The Coca-Cola formula was developed in 1886, but was not written down
until 1919, when it was placed in a vault at the Guaranty Bank in New York
City. In 1925, the formula was transferred to the Trust Company Bank in
Atlanta. The formula remained at the bank for 86 years, and was then
moved to a special vault at the World of Coca-Cola in Atlanta.
D-40
The company that makes WD-40 was founded in 1953 by three
technicians. The formula for WD-40 is so secret that only one person
knows every ingredient that goes into it. In 2018, the company decided to move its most critical
asset from its headquarters to a local bank vault. The formula was placed in a briefcase, which was
then handcued to the CEO. The CEO was escorted to the bank by two armed guards.
While most companies won’t need to resort to these measures, it is critical that trade secret owners protect
their trade secrets with reasonable means. In taking protective steps, they not only show they are attempting
to meet a legal standard, but they help ensure that the secret does, in fact, stay a secret.
IP Toolkit – Trade Secrets
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as ha proide
rade secre proecion
Boh ederal and sae las allo rade secre
oners o enorce heir righs i heir rade
secre is misappropriaed.
On a federal level, the Economic Espionage Act (EEA)
was passed by Congress and signed into law in 1996.
The EEA created two criminal oenses to protect trade
secrets.
3
In 2016, the EEA was amended by the Defend
Trade Secrets Act (DTSA). The DTSA added a civil
cause of action, expanding trade secret owners’ access
to federal courts in civil cases.
4
On a state level, in 1979, the National Conference
of Commissioners on Uniform State Laws issued
the Uniform Trade Secrets Act (UTSA). The UTSA
is a model law, that states use as the basis for their
individual state trade secret acts. The UTSA provisions
have been widely adopted throughout the states.
The EEA and state trade secret acts co-exist, so trade
secret owners can choose either federal or state law for
civil trade secret cases. Criminal cases under the EEA
are only prosecuted in federal courts.
What if you think your trade secret has been stolen?
• c as soon as he he is suspeced or discoered. Conac legal counsel immediael or adice in
deermining he bes course o acion or ou or our compan.
• Be read o gaher all eidence o he he, hich ill be easier and more eecie i ou hae ep a
good record o our compan’s rade secres, he means aen o proec hem, and he people ih
access.
he Deparmen o Jusice proides a helpul publicaion: eporing Inellecual Proper Crime: uide or
icims o Coprigh Inringemen, rademar Counereiing, and rade Secre he.
Oher las or legal heories can also be used in addressing rade secre misappropriaion, including bu no limied o unair compeiion, conracs, and
compuer raud and abuse. his discussion addresses onl saues specic o rade secres.
he o criminal oenses, prosecued b he U.S. Deparmen o Jusice, are: 1 economic espionage, and he o rade secres. conomic espionage
requires ha “he oense ill bene an oreign goernmen, oreign insrumenali, or oreign agen.” he is ound a 18 U.S.C. §§ 181-189.
4 18 U.S.C. § 186.
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rade secres and paens
Innovators looking to protect their information will commonly consider the
balance of trade secret protection and patent protection. A fundamental function of a patent is to disclose
information to the public, but depending on the innovation in question and the needs of the trade secret
owner, patent and trade secret protections can be complementary. Deciding on the right types of protections
may involve a complicated analysis and it may be helpful to obtain advice from an attorney who specializes
in intellectual property. Innovators should consider the following:
• uili paen ill disclose an inenion sucienl o allo ohers o mae and use i, bu he paen
gies he oner he righ o eclude ohers rom doing so or up o 0 ears. In conras, he duraion
o rade secre proecion can be unlimied, proided he secre is proeced according o legal require-
mens.
• o obain a paen, he inenor mus le an applicaion and be graned he paen b he USPO. In
conras, a rade secre is obained and mainained b he rade secre oner; here is no applicaion,
gran, or regisraion o rade secres.
• hile he la limis ha pes o inenions can be paened, rade secre eligibili is eremel broad
and includes inormaion ha is no paenable.
• lhough a paen mus sucienl disclose ho o mae and use an inenion, no all aspecs o an
innoaion mus be paened. Unpaened aspecs, such as propriear soare code, cerain daa and
improemens, ma be proeced as rade secres.
an o learn more?
Below are resources to information and tools to assist in managing your IP
• Trade secret policy and general information webpage
• USPTO free services webpage
• IP identifier tool
• USPTO events webpage
USPTO
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USPTO
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