Whether you are talking about Coca Cola’s secret formula, or McDonald’s secret sauce, or KFCs secret ingredients, or even Mrs. Fields secret chocolate chip cookie recipe, you are talking about “Trade Secrets.” These are special things each of these organizations has that are confidential and they can be legally protected. They are also, most likely, one of the things that gives them a competitive advantage in the market place.
Do YOU have some Trade Secrets of your own? Are they protected within the law? Do you even know? Hopefully I can help shed some light on this sometimes confusing topic for you.
A trade secret is a piece of information which is confidential, can be legally protected, and gives your company a competitive edge. You don’t need to be a food purveyor or a mega-corporation to have a unique approach that sets you apart from your competition…and if you can legally keep it a secret, you should.
Here are four steps you can take to keep trade secrets safe…
- Create a list of possibilities…The first step is to create a list of the pieces of information that are specific to, critical, and confidential to your business. To be able to protect them we have to know about them. Think about your business as broadly and deeply as you can and list down any possible type of information you possess that could be both confidential and critical to your success. Creating a list is the best way to think deeply about your business in a way that answers the question, “Is this a competitive advantage for us?” If so, it could possibly be a trade secret. Trade secrets can take the form of product designs, customer lists, marketing plans, sales forecasts, or processes. For software developers, proprietary code obviously needs protection and for restaurants and food stores, it’s the secret recipe. Another helpful exercise is to conduct a “trademark audit” to identify the information you have a legal right to keep private and wouldn’t want your competitors to find out.
- Time to “stake your claim” to what’s rightfully yours…Once you have identified what you believe your trade secrets to be, now’s the time to start claiming them and treating them like they really are secrets. One way to start doing this is to stamp or watermark “confidential” on sensitive documents. It is also important to start a process where you can get confidentiality and non-disclosure agreements in place with employees and vendors. This is a great way to let people know (internal and external) that these are YOUR secrets and they aren’t to be taken lightly. And if necessary, it will put the people who learn your secrets on notice not to usurp them. Finally, it will lay the proper groundwork for the basis of a legal claim should that be necessary.
- Secure them and lock them up…After you have identified your trade secrets and staked your claim, now you need to secure them. It is just as important to take the necessary steps to secure and lock up your trade secrets to avoid unwanted access. In decades past, this meant taking the pages these were developed and created from and putting them into a vault for safe keeping. Today, with many of our records being in digital format, they also need to be stored away in a vault of a different kind. They should be thoroughly encrypted and password protected as they are put into a secure structure. Physical files should always be kept locked into a secure safe or facility…but so can your digital assets. The cloud may be a great option but having a physical copy of them secured away is also a great plan. Finally, make sure you establish rules around who has access to these incredibly sensitive files. Using “access control” systems on your facilities and putting up the proper signage can go a long way to helping you control the access to this critically important information.
- Provide Training to your employees (and others)…It is always sad to see a breach of security when it comes to trade secrets. Often times it isn’t malicious, it is just a lack of understanding. It is very important to educate your employees, vendors, partners, and anyone else that might have access to this critically important information. Most of the disclosures of trade secrets are inadvertent by an employee who simply did not know better. While this is unintentional, it doesn’t lessen the impact it can potentially have on your business. You can prevent the majority of this from happening with solid, in-depth training and education for your employees (and others). Providing training on what your company considers confidential and what employees’ obligations are is the foundation to keeping your information secure. But it is also equally important to support your training with some clearly written and strong policies. And when an employee leaves (and some always will), have the proper procedures in place to shut down their access to your files and systems immediately. This is one of the best ways to ensure your secrets stay your secrets and don’t walk out the door with your employees. right away to ensure that your secrets don’t leave with them. If they understand the importance of this information from the beginning and the subsequent consequences they could face when they leave, you can eliminate the majority of any issues.
While there are more things you can do than just these 4 steps, these are a great starting point for any organization, regardless of size or industry, to take to get started down the path of safeguarding your competitive advantage. If you feel you need more in-depth assistance in this area, I would recommend retaining an attorney for a professional security audit. Business attorneys, like what we help business owners with every day, can be a great way to help you protect your trade secrets and your business. A great place to start is to simply Ask some Questions about where you are and what you are curious about. We can get you started and answer some of your burning questions. Because as we all know, when we have answers we have much greater peace of mind.