What Is A Trade Secret?

In the world of business, there are many situations where keeping certain information confidential is necessary. 

This may be for the purpose of maintaining a distinctive brand, or reducing competition. Either way, an idea that is protected or kept secret is known as a trade secret. 

Trade secrets are extremely valuable to a business, and ensuring that it isn’t shared or disclosed to other people is essential. However, it’s worth noting that a trade secret doesn’t necessarily offer the same protection as a trade mark or a patent. 

In this article, we’ll explain why and how trade secrets are a little different to other areas of Intellectual Property, and how trade secrets (if managed correctly) can serve to protect your business in the long run. 

How Do Intellectual Property Rights Work With Trade Secrets?

Like we mentioned above, trade secrets are business assets that are kept confidential. So, what rights are available when it comes to trade secrets, and are they the same as general intellectual property rights?

The answer isn’t so simple. 

Put simply, trade secrets are one way you can keep information private, but it isn’t legal protection in the same way as a trade mark or patent. 

If you want to legally protect your idea, you can register a trade mark or patent. These forms of legal protection are enforceable under legislation, so if someone uses your assets without your permission, you can take legal action against them. 

Trade secrets, on the other hand, do not require a registration process or a requirement to be listed on a publicly available register. Instead, the protection arises from the way the trade secret is managed or treated. 

How Do I Register A Trade Mark?

If you want to protect certain assets in your business, you can register them as trade marks with the Intellectual Property Office (IPO). This means you’ll be on the official list of registered trade marks. 

For example, if you register your logo with the IPO, this will ensure that other businesses cannot use the same or a similar one. 

However, it’s important that you follow the correct process for registering a trade mark in the UK. Our lawyers can walk you through the process – learn more about our Trade Mark Consultation package. 

Are Trade Secrets Intellectual Property?

Yes, trade secrets are intellectual property as they are intangible assets. This could be a recipe or a manufacturing process. 

Generally speaking, intellectual property is intangible knowledge, and is therefore seen as a ‘product of the mind’. 

There are many ways to go about protecting IP, but when it comes to trade secrets, it’s safe to have a Non-Disclosure Agreement in place. We’ll discuss this in more detail shortly. 

What Is Considered A Trade Secret?

A trade secret can be any piece of information that isn’t known (generally) and reasonable steps have been taken to keep it confidential. Let’s look at this definition in a little more detail. 

Under the Trade Secrets (Enforcement etc.) Regulations 2018, a trade secret means:

• The secret is generally unknown to other people
• Its secretive nature adds to its commercial value
• Reasonable steps have been taken to keep it a secret

For example, Coca Cola’s recipe is known to be one of the world’s biggest trade secrets. It’s a good example of how having good legal documents and processes in place can go a long way when protecting your intellectual property. 

The regulations go on to say that the use or disclosure of a trade secret will be considered unlawful where a breach of confidence has taken place. 

The laws around trade secrets mean we are also walking on confidential information territory – we’ve written more about how confidentiality works in the workplace. 

How Are Trade Secrets Protected?

Generally, trade secrets are protected by ensuring no one discloses that information to other people. This is where a Non-Disclosure Agreement (NDA) comes in. 

An NDA is a legally binding agreement between certain parties to ensure they do not disclose certain information to other parties. They are often inserted into Employment Contracts to ensure employees do not share this valuable or confidential information after they leave the business. 

In addition to these legal documents, you can also implement certain training programs or processes within your business to maintain confidentiality around your IP. For example, you can incorporate a training program into your onboarding process for new employees where they are told what they can and can’t share with other people, thereby protecting your trade secrets. 

While it’s important that your employees agree to these things in writing, it’s always safe to ensure they fully understand their legal obligations by incorporating it into your workplace policies and culture. 

It’s always handy to have these documents in a Staff Handbook so that it is easily accessible. 

How To Protect Trade Secrets From Departing Employees

When offboarding employees, one important thing to consider is how to protect your trade secrets from leaving the business with them. 

Your employees often have access to highly valuable and confidential information during the course of their employment with you, so when they leave, it’s your responsibility to ensure that your IP remains well-protected. 

At Sprintlaw, we always advise our clients to be proactive when dealing with any legal protections as you never really know what could happen. In this situation, it’s wise to have Confidentiality Clauses in your Employment Contracts from the beginning of your employment relationship, so any IP headaches that may arise when they leave the company are already covered in writing. 

You can also have Non-Compete Clauses in your Employment Contracts to ensure your employees do not work for your competitors, which could heighten the risk of your confidential information falling into the wrong hands. 

You also want to incorporate your IP protection into your general admin process, such as offboarding. For example, you may wish to ask employees to recover all copies of confidential information before they officially leave. It’s also always safe to remove all access they may have to your company’s systems and documents. 

Can A Trade Secret Be Patented?

Yes, you may choose to legally protect your trade secret by registering it as a patent with the IPO. 

However, once you register it, this means it will be shared with the public. This is important information because once a piece of information is known to the public, it no longer satisfies the requirements of a trade secret under the Trade Secrets Regulations. 

However, having your IP patented means it is afforded strong legal protections with the IPO. This means any attempt to use that IP (once patented) is legally enforceable. 

It’s also worth noting that patent protection is limited, and is only in effect for 20 years. Trade secrets, on the other hand, do not have time limits. 

If you need help or wish to learn more about patent protection for your business, reach out to our lawyers and they’d be happy to walk you through the process. 

Can You License A Trade Secret?

Yes, it is possible to license a trade secret to another party. However, this engagement can easily become very risky, so your safest bet is to get all the details in writing. 

Make sure all parties agree to the key terms before signing. Our expert lawyers can review your contracts to identify any key terms that may work against your business or put you at risk, and re-draft your agreement to ensure it aligns with your business’ interests and long-term goals. 

Learn more about our Contract Review packages and protect your business. 

Do Trade Secrets Have To Be Registered?

No, trade secrets do not have to be registered (like trade marks and patents). Instead, it’s important that you take steps to keep it a secret, such as having an NDA or a Confidentiality Agreement. 

Like we mentioned earlier, it’s the way you treat your trade secrets that attracts legal protection. 

Need Help With Your Trade Secrets?

Trade secrets are a great way of keeping important business information confidential and private. This could help your business maintain its competitive edge and achieve its long-term goals. 

However, a trade secret by itself may prove to be insufficient in some cases. To be safe, it’s best to get a Non-Disclosure Agreement or Confidentiality Agreement drafted by an expert lawyer. At Sprintlaw, our lawyers have a wealth of experience with these agreements, as well as relevant privacy obligations. 

Otherwise, you can also consult one of our lawyers for help with trade marks or patents. Either way, we’ve got you covered. 

If you would like a consultation on your options moving forward, you can reach us at 08081347754 or [email protected] for a free, no-obligations chat.

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