Santa Clarita Valley Business Journal

Six steps to keeping a trade secret

By Samuel R.W. Price, attorney with Poole & Shaffery LLC

We often receive calls from companies looking to pursue claims for misappropriation of trade secrets, usually against former employees or business partners.

Unfortunately, in many situations, the claims have already been undermined by the company’s own failures to take reasonable efforts to protect its trade secrets from disclosure.

Under California law, a trade secret can take the form of just about anything that confers a competitive advantage and is kept secret in order to maintain that advantage. This includes not only highly technical and complicated information such as chemical formulations, computer software, physical devices, and unpatented inventions, but also more mundane items such as vendor and customer lists, bidding processes, and financial information.

While business owners can typically identify the information they deem to be proprietary and that gives them a competitive advantage in the marketplace, simply calling it a “trade secret” does not offer protection. Critically, the trade-secret owner must take affirmative steps — “reasonable efforts” — to maintain the secrecy of the information or else trade secret protection is lost. It’s well-established that when an owner publicly discloses a trade secret or discloses it to someone who has no obligation to protect the trade secret’s confidentiality, the trade secret protections are lost.

Reasonable efforts required to protect your trade secret will depend on the nature of the information. Six key steps that all business owners should consider are:
1. Identify your trade secret information
2. Clearly label or identify confidential information
3. Control your confidential information
4. Implement a written trade secret protection policy
5. Require non-disclosure agreements
6. Perform periodic reviews

These are, of course, just some of the actions a company should consider taking to protect its trade secrets, and what is “reasonable” will invariably depend on your business and the nature of the information.

For more information about trade secrets from Poole & Shaffery, visit: pooleshaffery.com/articles/?Article=1588

Samuel Price is a partner with the law firm of Poole & Shaffery, LLP and practices in the areas civil litigation, representing both plaintiffs and defendants in complex business disputes and commercial litigation; intellectual property litigation; employment litigation; bankruptcy-related litigation; and construction, construction-defect, and construction defect-related product liability matters.

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