To protect your startup’s trade secrets, you first need to identify the types of confidential information that may qualify for protection. Valuable information may qualify when it gives your startup a competitive advantage because others do not generally know or cannot readily ascertain it through proper means. To protect that information, you must control how people access, use, store, and return it. With your attorney’s guidance, you can implement several strategies, like coordinated agreements, security measures, and workplace procedures, to reduce the risk of disclosure and help your information qualify for legal protection.
Jones IP Law helps startups identify and protect their trade secrets and other intellectual property (IP). Founder Michael Jones combines a background in mechanical engineering with more than a decade of intellectual property experience representing technologies ranging from mechanical devices and manufacturing systems to computer software, machine learning, cloud computing, and digital technologies. He can help you identify potentially protectable information, prepare appropriate confidentiality agreements, and develop safeguards suited to your operations.
What Are Trade Secrets in Business?
Trade secrets may include financial, business, scientific, technical, economic, or engineering information that derives value from remaining secret and that its owner takes reasonable measures to protect. The information must derive actual or potential economic value from remaining unknown to people who could benefit from using or disclosing it. Information may qualify for protection if competitors cannot readily ascertain it through proper means. Information may not qualify if competitors can readily discover it through lawful means, such as publicly available sources, independent development, or permissible reverse engineering.
Depending on your business, trade secrets may include, for example:
- Source code, algorithms, and software architecture;
- Formulas, manufacturing methods, and technical processes;
- Product designs, prototypes, and testing data;
- Pricing methods, customer information, and supplier terms; and
- Business strategies, product roadmaps, and market research.
Merely labeling information “confidential” is not enough. The business must use reasonable measures suited to the information, the people who access it, and the circumstances in which it is stored and shared.
Federal and state law authorize you to respond when someone misappropriates a trade secret. Someone may misappropriate a trade secret by:
- Acquiring it through theft, deception, or another improper means;
- Using or disclosing it without permission after acquiring it through improper means; or
- Using or disclosing it while knowing, or having reason to know, that it was obtained under circumstances requiring secrecy or restricted use.
Trade secret protection allows you to ask a court to stop the person from continuing to use or disclose the information and, in the right circumstances, recover financial compensation. It can last indefinitely as long as you continue to treat the information as secret and use it in your trade.
How to Protect Trade Secrets
control how people use the information, typically by classifying what is and is not secret, then implement safeguards that:
- Restrict access to information,
- Secure physical and digital materials,
- Use written agreements,
- Train recipients of the information, and
- Manage that information when relationships end.
Working with a trade secret protection attorney gives you the insights you need to understand how to protect trade secrets legally. Your attorney can help you classify information, determine who needs access, establish appropriate safeguards, respond to suspected misappropriation, and update those protections as your startup changes.
Identify and Classify Confidential Information
Begin by inventorying the technical and business information your startup creates, receives, and stores. For each type of information, identify:
- Where you store it,
- Who uses it,
- Whether competitors already know it, and
- How secrecy gives your business an advantage.
That review helps you distinguish potential trade secrets from ordinary internal information and determine which materials require heightened safeguards.
Restrict Access and Secure the Information
Next, determine who needs what information to perform their work. Limit access to employees, contractors, and other recipients who have a legitimate need for the information, and provide only the level of access required for their roles.
You typically use safeguards, tailored to the information, to enforce those limits. You may:
- Secure prototypes, paper records, laboratories, offices, and other physical locations where protected information is kept;
- Limit account permissions that control which users may open or change protected files;,
- Adopt a system that logs every time someone accesses sensitive systems;,
- Require multifactor authentication;,
- Encrypt information to make it unreadable without a key or authorization;, and
- Restrict access to information on personal devices or outside platforms.
Consistent controls help prevent disclosure and demonstrate that your startup treats the information as secret.
Use NDAs and Other Protective Agreements
Employees, contractors, vendors, investors, and prospective business partners may need access to confidential information for limited purposes. Work with your attorney to create a nondisclosure agreement (NDA) or a ppropriate confidentiality, invention-assignment, employment, contractor, or vendor provisions that identify the protected information and establish how the recipient may use, protect, and disclose it. The agreement can:
- Limit how the recipient may use the information,
- Restrict disclosure to others, and
- Require the recipient to protect it.
Agreements with employees, contractors, and consultants should also be reviewed for the notice concerning protected disclosures under the federal Defend Trade Secrets Act. Omitting the required notice may limit the remedies available to the company in a later federal trade secret action. Before giving someone access to the information, ensure they sign the agreement and understand its terms.
Train Everyone Who Receives Access
Agreements and security controls establish rules, but the people receiving access must understand how to follow them. Train everyone on which information your startup protects, how they may use it, where they may store it, and how they should report a suspected disclosure.
Update that training and review your safeguards with your attorney when you introduce new technology, change your procedures, or give someone access to different information.
Manage Departures and Review Your Safeguards
Access needs change when working relationships end. When an employee, contractor, or partner leaves:
- Disable access,
- Recover company devices and records, and
- Confirm the return or deletion of protected information.
Consider conducting an exit interview, reminding the departing person of continuing confidentiality obligations, documenting the return or deletion of information, and preserving relevant records when misuse is suspected. Access needs also change as your business grows. Review your safeguards with your attorney when you develop products, hire personnel, engage vendors, or adopt new storage systems.
Discuss Trade Secret Protection with Jones IP Law
Effective trade secret protection connects the information your company creates with how your business stores, uses, and shares it. Jones IP Law helps startups identify protectable information and coordinate decisions, agreements, security practices, and workplace procedures into a practical protection strategy. Contact us to discuss how you can protect the information behind your competitive advantage.
Frequently Asked Questions
What Qualifies As a Trade Secret?
Information may qualify as a trade secret if it has actual or potential economic value because it remains secret, competitors cannot readily discover it through lawful means, and its owner takes reasonable measures to protect it.
How Long Does Trade Secret Protection Last?
Trade secret protection can last indefinitely as long as the information retains value due to its secrecy and its owner takes reasonable measures to protect it.
What Is the Difference Between a Trade Secret and a Patent?
Patents can protect qualifying inventions in exchange for publicly disclosing how the invention works, and patent rights generally last for a limited statutory term. Trade secret protection does not require public disclosure, in fact, it requires the opposite. Trade secrets may continue indefinitely, but only while the information remains secret, retains value from that secrecy, and is protected through reasonable measures.
What Happens If a Trade Secret Is Stolen?
The owner may ask a court to stop the misappropriation and, depending on the circumstances, seek an injunction, damages, a reasonable royalty, exemplary damages, and attorney fees.
Do NDAs Protect Trade Secrets?
NDAs are part of the reasonable measures you may use to protect trade secrets. They work with access restrictions, security measures, training, and procedures for people who leave the company.
Legal References Used to Inform This Page
To ensure the accuracy and clarity of this page, we referenced official legal resources during the content development process:
- 18 U.S. Code § 1836.
- 18 U.S. Code § 1839
- 18 U.S. Code § 1833 .
