Trade secrets are Intellectual Property rights on confidential information. Trade secrets protect undisclosed know-how and valuable business information against their unlawful acquisition, use, and disclosure. The commercial and economic value of a trade secret results from its secrecy.

Trade secrets work best for know-how that cannot be reverse-engineered. In comparison to patents or utility certificates, trade secrets can have an unlimited lifetime and cover a much broader range of business information suitable for protection. Such a protection can include aspects like formulas, practices, processes, software in general, business methods, customer information and the like.

One of the most famous trade secrets is the Coca Cola formula, being kept as such for more than 100 years, while patents have a maximum life of 20 years and protect mainly technical ideas and inventions.

In most jurisdictions globally, the following main criteria apply:

• Information/idea must be company and business-related. .

• Information/idea must be non-obvious.

• Information/idea must remain secret according to the will of the owner.

• You have a legitimate interest in keeping the information/idea confidential.

In general, information classifies as a trade secret if it:

• Has a commercial value.

• Is only known to a limited number of people.

• Is protected by reasonable measures to ensure its secrecy.

That said, establishing an enforceable trade secret requires certain specific measures.

Trade secrets are not established by simply not talking about them in public. Sound measures are required to make a trade secret valid and enforceable in agreements or legal proceedings. The most relevant measures include:

Documentation:

1. Labelling trade secrets as restricted information, with indication on documents or other kind of information.

2. The liberty to grant a license to others for the agreed-upon manufacturing of your invention, mitigating the risk of theft.

Employee-related aspects:

1. Contractual obligation for the non-disclosure of restricted information.

2. Information about the use of restricted information after leaving the company.

3. Indication of potential sanctions in case of confidentiality breach.

Sharing of information:

1. Access to restricted information based on a need-to-know principle only.

2. Guideline for sharing restricted information outside the company and with other employees.

Additional measures:

1. Technical safeguards to restrict the access to protected information.

2. Quite often, a whistle blower policy as well.

3. Clear allocation of trade secret responsibilities within the company.

If trade secrets are well established, they can provide strong additional safeguards to protect specifically business information which cannot be protected by other means of IP rights, or which would lose its value after publication through a patent, such as the Coca Cola formula. Trade secrets can be sold or licensed too. For an enforcement of trade secret rights, good evidence for a sound, reliable, and well communicated trade secret policy, guidelines, and practice is required.

Successful business is all about creating and sustaining competitive advantages. Some of these advantages lose all their power once they become known to the public or competitors, and therefore, should be classified and treated as trade secrets.

However, secrecy and confidentiality are also a critical factor prior to obtaining a patent. As discussed before, one criterion for patentability is novelty. Most IP offices and lawmakers are very strict on this aspect. The owner is not even allowed to communicate or present an invention idea publicly if patent protection is sought for it. This means that any kind of publication of an invention idea before its patent filing destroys its novelty, even if it was only a presentation to a limited audience - for example on a fair or at an event.

So, to be on the safe side and safeguard your innovations: before any presentation or communication of a new product or idea to an external audience, be it at an event or to a business partner, such as customers or suppliers, be sure you know whether your idea is sensitive and needs to be kept secret.