The recipe for Coca-Cola is an example of a trade secret because it’s confidential information that gives the business a competitive edge. It would be illegal for someone to steal or reveal the recipe.
Type of litigation
Theft of trade secrets, referred to as business torts or economic torts, are wrongful acts that hurt a business. Information about this type of crime falls under intellectual property and unfair competition legislation.
Defining a trade secret
A court considers how easy it is to uncover the information that gives a business a competitive edge when it comes to determining whether a case counts as theft of a trade secret.
Other examples of trade secrets besides recipes include:
- Manufacturing processes
- Customer lists
- Advertising strategies
- Sales methods
A business needs to take adequate steps to protect its trade secrets. The court evaluates the protection methods used to determine if the business made an honest effort to keep its important information a secret.
Protecting against the theft of trade secrets
Methods of protecting against the theft of trade secrets include nondisclosure agreements (NDAs), noncompete agreements and regular audits. You could use software and other tools to detect potential theft of your trade secrets. Carefully choosing who you allow to access your trade secrets also helps prevent this problem from happening. You may want to limit how many people can access your trade secrets and have them sign nondisclosure agreements for additional legal protection.
Clearly communicating with employees the importance of protecting trade secrets is also helpful. If they know that it’s illegal to tell others, then they are more likely to avoid leaking sensitive information that can hurt your business.
When you’ve found a unique competitive edge that isn’t easy for another person to discover on their own, then you probably have a trade secret. You may want to take precautions to protect the information from hackers, employees and thieves.
