A trade secret is a practice, process or formulation that is not known outside the company that gives the company an economic edge or competitive advantage. Trade secrets are often the result of internal research and development. In order to be considered a trade secret, a reasonable effort must be made to conceal the information from the public, the secret must have economic value, and contain information.

This is separate from a patent or copyright in that patents and copyrights are publicly known and available. Copyrighted works are intended for public consumption while patents are publicly available from the U.S. Patent and Trademark Office.

The U.S. Patent and Trademark Office recommends several steps to protect intellectual property including physical security, cyber security, identifying insider threats, and appointing a trade secret point of control.

There are two major remedies for trade secret misappropriations: injunction and damages. Trade secret injunctions use the power of the court to demand that the misappropriating party stop using the trade secrets in their practices and spreading the trade secrets to others. Additionally, a company can file for damages suffered as the result of sharing the secrets with others.

In general, there must be something that exists as a trade secret, meaning that the information is being kept from the public and other companies in the same industries. Second it must be demonstrated that the company has ownership of the trade secret information. Third, notice must be given that the information is restricted. Finally, access to the trade secret must be restricted and monitored.

Employment contracts can maintain the necessity of protecting trade secrets but trade secrets cannot be established through NDAs or contracts. The purpose of an NDA or employment clause is to serve as another layer of protection for a company’s trade secrets.