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Trade secrets.  The key to many large companies’ successes.  Companies like Coca-Cola don’t protect the formula for their internationally successful drink with a patent–that would reveal to the public how to make their drink, and the patent would expire in 20 years.  So they keep their formula safe in a vault, and only a handful of people in the world know the recipe.

What if these trade secrets fall into the wrong hands?  That does happen; sometimes by someone on the inside, and other times by spies, who look to capitalize by revealing trade secrets to competitors.  Corporate espionage is a problem faced by small and big businesses alike.  Under the Uniform Trade Secrets Act, companies that don’t take steps to protect themselves may even find that courts are reluctant to punish the spies.  Here are popular ways that businesses protect their trade secrets and preserve their rights in court:

1. Confidentiality Agreements.  All employees, contractors, and even business prospects often must agree to the terms of a confidentiality agreement.  Don’t take the contents of these agreements lightly.  A legal expert should draft a confidentiality agreement specific to the intellectual property that is to be protected.  The proprietary information should be specifically identified and described as confidential.  When the relationship with the trade secret owner terminates, procedures should be put in place as to how confidentiality is to be maintained.  Consequences of leaking trade secret information should be made clear.
2. Limited Access.  Allow only people who must absolutely be privy to the secret to be in on the secret.
3. Diligence.  Constantly monitor and evaluate the individuals privy to the information.  Scrutinize how they are using the trade secret.  Keep an ear to the ground for moles and information leaks.

Whether these big businesses took these steps, they were still victims of corporate espionage:

• Coca-cola’s trade secrets were allegedly stolen and leaked to Pepsi.  Pepsi refused the stolen information.
• Gillette’s new designs for razors were leaked by one of their engineers.
• Avery Dennison’s new formula for glue was stolen.

Filed under: Trade Secrets by Yau Jo-Anne Sunday, April 15th, 2012