Editor’s note: The opinions expressed in this commentary — the third in a four-part series — are the author’s alone. Chris Brown is the founder of Venture Legal where he represents startups, freelancers, and small businesses. This column is intended to be general in detail and does not constitute legal advice.
With both federal and state trade secret laws on the books, as you can guess, there are different ways to define “trade secret.” Understanding those nuances is key to helping entrepreneurs safeguard their own intellectual property, as well as to avoid infringing the rights of others.
You generally can use trade secret laws to protect information that has some economic value because of its confidential nature — provided you take reasonable steps to maintain that confidentiality. That’s a broad definition and can apply to many different kinds of information including business plans, technical data, and more.
How do I get started?
You can stamp the information as “CONFIDENTIAL.” You can limit access to the information (either physically or digitally). And perhaps most importantly, you can use non-disclosure agreements (an NDA) anytime you disclose your trade secrets to third parties.
When you draft or sign an NDA, you should consider (1) whether the agreement restricts just one party or both parties; (2) what information is deemed “confidential”; (3) whether there should be any exceptions to what is deemed “confidential” (for example, information in the public domain); (4) what limitations to place on the parties (such as a duty to protect the confidentiality, and a duty not to disclose the confidential information); (5) whether there should be exceptions to those duties (for example, permitted disclosures required in litigation); and (6) how long the restrictions should last (for example, five years, ten years, or perhaps forever).
How long does trade secret protection last?
Trade secret protection will last for as long as you maintain the confidentiality of the information. As soon as your information becomes available to the general public, you can lose your rights in that information.
What constitutes misappropriation?
Unlike other areas of intellectual property (where third parties might be found to have “infringed” your rights), the breach of trade secret rights is known as misappropriation.
This means that you can prevent other people from doing three things with your trade secrets: (1) acquiring your trade secret without consent; (2) using your trade secret without permission; and (3) disclosing your trade secret without authorization.
If someone is misappropriating your trade secrets, it is often a good idea to seek an injunction in court to prevent them from continuing their harmful actions. You can also seek monetary damages if they have caused you financial harm.
Coming up: We’ve now covered copyrights, trademarks, and trade secrets, but there’s more to learn about patents.
Chris Brown is the founder of Venture Legal where he represents startups, freelancers, and small businesses. He also co-founded Contract Canvas, a digital contract platform for freelancers. www.venturelegalkc.com // @CSBCounsel