6 Ways Your Business Can Protect Its Trade Secrets
Want your business's information to be protected? Here are some ways you can protect your coveted trade secrets.
As a business, there are all sorts of innovations and unique qualities that you can bring to the table. It may be as simple as a secret recipe which would damage your business if competitors had access to it. However, there are many other trade secrets, such as system processes, competitive information, or special analytics.
Below are 6 ways you can protect your trade secrets.
1. Non-Disclosure Agreement (NDA)
An NDA is a highly effective method for protecting your confidential information. A business may not only need an NDA with its employees but also third parties like suppliers, distributors and contractors. The effectiveness of the NDA depends upon leaving no gaps in who is a party and what information you class as confidential. Therefore, the business should ensure that they can enforce their NDA.
2. Non-compete clause
Closely related to a NDA is a non compete clause in an employment contract. In contracts with employees, it can state explicitly that all trade secrets are the property of the business. This would mean for an employee to use trade secrets in the same industry as the business would count as competition. Therefore, a non compete clause aims to prevent an employee quitting and setting up a business in opposition to the original business while making use of the trade secrets they learned.
3. Access to trade secrets
The next step is to safeguard against any physical or digital access to the trade secret. The confidential information needs to be physically protected from someone without authority accessing it. Likewise, staff should regularly update and maintain IT infrastructure along with restricting access. This will help in the case that a breach occurs as the court will see that you had safety measures in place. Furthermore, obvious issues should not be overlooked such as failing to request a company laptop to be returned which has confidential information on it.
4. Trade Secrets manager
The only way to ensure that the information is physically safe is to have someone who has central authority and power over it. If there is no individual or team in control of the trade secrets then protection will be difficult to carry out. Therefore, the team can set up guidelines, penalties and consequences.
5. Employee Accounts
Just as access should have restrictions in place, the termination phase should as well. When an employee leaves they usually have access to email accounts, private networks, downloaded files etc. The person or team in charge of access to trade secrets should document this. Thus, when an employee leaves there is a standardised protocol in place to follow.
A patent is a legally recognisable way of protecting your trade secret. However, the patent applies only to devices, substances, methods and processes. The other issue is that a patent expires. Depending on which type of patent you apply for, it will generally be 8-20 years. Although, in order to a patent application to be successful, you generally can’t have told anyone or have shared it publicly. This may be more suitable for a new business which has an inventive or innovative idea.
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Justin is a legal intern at Lawpath as part of the content team. He is currently studying a Bachelor of Laws and a Bachelor of Economics at UTS.