What are Trade Secrets and Why Do They Matter to My Business?

Trade secrets are a type of intellectual property that can have significant value for your company, including monetary value. However, they only hold value if they remain secret.

That’s why trade secret protection is so important in business. If you can’t protect your trade secrets, then you’ll lose many of your competitive advantages in the marketplace.

Trade Secret Examples

There are many types of trade secrets. Examples include your computer programs, customer lists, manufacturing processes, recipes, data models, vendor contracts, new product development communications, and research information. The list goes on and on and varies from one company to the next.

Think of it this way—Coca-Cola has been protecting the recipe for its flagship product for a very long time. It’s one of the best kept trade secrets in history. Imagine if that secret recipe was leaked. It wouldn’t take long for Coca-Cola to lose some of its competitive advantage.

The same could be said of Apple’s product development information or Google’s search algorithm. If those highly proprietary trade secrets got out to the public, both companies would suffer.

The Risks of Leaked Trade Secrets

When trade secrets are leaked, the negative effects to your business can be immediate and long-lasting. In fact, those negative effects could be disastrous. Not only could you lose sales, you could also lose consumer trust.

And if you haven’t gone to market yet, you might never get the chance if your secrets get out before your products or services do.

How to Protect Your Trade Secrets

Protecting your trade secrets starts by identifying them. You need to be able to describe your trade secrets and educate employees, vendors, and business partners about what information must be held in secret. You also need to put the right processes in place to ensure there is as little chance as possible for your trade secrets to get out.

This begins with implementing the right physical security measures such as systems security, file drawers that lock, limiting access to certain rooms or buildings through electronic access controls, marking all communications that contain sensitive information as proprietary, and ensuring all employees understand their roles in protecting trade secrets.

Employee training is critical because they could leak trade secrets on purpose and with malice, or they could accidentally leak trade secrets. Either way, your business will pay the price, but if you never trained your employees on how to protect sensitive information, the law won’t provide you much help after the fact.

Develop a pro-intellectual property (pro-IP) company culture where every employee, from the top down, understands what your company’s trade secrets are and why protecting those secrets is so important. Of course, only give employees specific details about individual trade secrets when the information is essential to their job functions. If you can’t hold information closely within your company’s four walls, there is little chance that you can keep that information secret beyond your four walls.

Many companies attain great success based primarily on the strength and value of their trade secrets. However, those trade secrets would be worthless if they weren’t protected vigilantly. If you want your trade secrets to grow in value and support your business growth, then you must identify them and develop the necessary procedures and policies to keep them secure. Put a comprehensive trade secret protection program in place as soon as possible so your business isn’t at risk!