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Businesses may protect trade secrets from employees

On Behalf of | Jul 6, 2022 | Business Law |

A business’s trade secrets could help keep its products and services competitive. Although trade secrets may not qualify for legal protection on their own, businesses may take steps to preserve them. As noted by the United States Patent and Trademark Office, unlike a patent, defending trade secrets has no expiration.

When undisclosed information generates revenue, owners may take steps to maintain its secrecy for as long as possible. Through a lawsuit alleging misappropriation, courts may protect intellectual properties such as trade secrets. Judges may order defendants to stop unlawful actions.

What may qualify for trade secret protection?

Federal courts may protect trade secrets when shown proof that they reflect three elements. As noted on the USPTO.gov website, a trade secret represents information that has actual or potential monetary value because it remains generally unknown. The second element reflects data or information that has value to parties who cannot obtain it without the owner’s permission.

Finally, owners must show they exercise “reasonable effort” to preserve their trade secrets. A food manufacturer’s “secret” ingredient, for example, provides an advantage over its competitors. Because the public cannot obtain information about an ingredient to reproduce the product, trade secrets offer the manufacturer economic benefits.

How may businesses share trade secrets with employees?

Employees may need to learn the hidden details about a company’s products or services. By sharing that information, however, businesses risk their exposure to theft. As described by Entrepreneur.com, employers could ask their employees to sign confidentiality agreements to protect their valuable trade secrets. Agreements with carefully crafted clauses could protect a business’s intellectual properties after employees depart. Former employees who breach their signed agreements may face legal actions.

Companies may prevent others from misappropriating their trade secrets through intellectual property protection plans. Under certain circumstances, a judge may award damages and order a defendant to pay a plaintiff’s legal expenses.