What is a Trade Secret?
A trade secret is a secret technique, device or piece of information used by a company.The technique, device or information must be protected by the company as a secret. Companies cannot claim a public thing is a confidential – because it is not secret. It is possible to protect trade secrets but you need to be pro-active and take action immediately if you discover someone has taken your material.
What defines a trade secret?
A trade secrete is any piece of confidential information which a company uses in trade to gain an advantage. However, when it comes to protecting information the Court will analyse multiple things to determine if the information is truly secret. This includes the types of information included, the value of the information to the business, what harm would the company suffer if it was made public or went to a competitor, how common the information in the marketplace and also how the company protects the information and the steps taken to keep it a secret. These are very similar to the tests which apply to determine if the information is confidential.
What is an example of a trade secret?
Company secrets come in many different forms and can include information such as R&D information, Source Code, Inventions or patents which are not yet published, recipes or formulas, or cooking techniques.
One of the most famous trade secrets in the world is the Google Search Algorithm. Other examples are the Coca-Cola formula, and KFC’s secret herbs and spices. The ability to discover KFC’s secret herbs and spices is also an example of why keeping some information secret will eventually fail. They will be discovered or released to the public as technology evolves and allows discovery of the secret. It may be possible to keep some secrets initially but eventually, they may be discovered.
Some other examples include costing or pricing information, marketing plans, source code and customer lists. Some information that is not considered a secret includes know-how, general skill and knowledge, prices paid for services that were rendered many years ago (because the information is now outdated).
How do you protect trade secrets?
To protect confidential information, you must engage a combination of staff education and electronic and physical barriers to protect the material. You should have a confidentiality policy which is practical, notified to all staff members and enforced.
Once you discover information is released or taken, you must take action immediately. Any delay in applying for an injunction in a Court may be seen by the Court as an indication that you do not wish to protect the material.
You should also have crisis management plans that are written before your information is stolen and you practice that plan regularly. One of the best methods to protect your confidential information is to create and maintain a culture of secrecy in your company. Only let those staff members have the information if they need the information to do their job. Also only allow staff members to have access to the information for the period they need the information.
Always block access to the information by leaving employees when they leave, not the Monday after. Always hold leaving interviews so the person is aware of their responsibilities including a responsibility to return information that they may discover they have inadvertently kept. You should also conduct privacy impact assessments (PIAs) when dealing with new entities to ensure that they will protect your information and that of your customers effectively.
You should also mark your material as being confidential to indicate to a person who innocently receives the information that it is confidential. You should also use copyright markings on the material (but only the material you own the copyright in) to indicate that it should not be copied and it will be protected.
What is the relationship between Trade Secrets and Patents
As part of the patenting process it is necessary to disclose the Patent and make it open to public inspection (OPI). Thus once a patent is made OPI it cannot be protected as confidential information. For this reason, a lot of companies may wish to protect their secrets by keeping them confidential rather than by obtaining patent protection over confidential information. This technique is not suitable if your secret will become public once the product is released. The other concern with trying to keep a secret is that we now live in an era where it is somewhat easy to steal confidential information. There are constant data breaches in the media and thus, companies may be unable to stop employees taking secrets and selling them to the highest bidder. For more information on patents, please read this page: Patent Definition.
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What is trade secret law?
There is no one law in Australia that protects confidential information. However, they are protected by a bundle of laws including common law and other statutes. An example of the laws that protect company secrets are misuse of confidential information, vicarious liability, copyright infringement, breach of employment contracts, breach of the Corporations Act and breach of fiduciary duty.
What can you do if your Trade Secret has been taken?
You must act quickly to protect your company’s secrets if they have been taken. There is a risk that the person who took the material could release it to the public or could use it for their advantage or use it to seek a competitive advantage. You should immediately seek legal advice on your prospects of success in a claim against the person who took the material. You should seek to obtain an injunction, Anton Piller orders if necessary and start a claim against the person who took the information and possibly their employer if you have a claim for vicarious liability. The relief a Court will order if you establish the Respondent took your confidential information includes an injunction, delivery up of any of the information, destruction orders to destroy material that cannot be returned, orders that the persons are not to use the information and monetary damages. Depending on the claim you run you may also be able to obtain additional damages for the Copyright infringement.
As expert confidential information lawyers in Brisbane, EAGLEGATE understands the litigation process, case law and defences. We will guide you through the process of litigation, enforcing your rights or defending a claim and hold your hand, every step of the way.
TRADE SECRET LAWYERS
EAGLEGATE’s founding Partner, Nicole Murdoch, is an Engineer, a registered Trade Marks Attorney and has over 10 years of industry experience in the IT industry. She trained as a Trade Marks Attorney with Cullens Patent and Trade Mark Attorneys. She has practised Intellectual Property law for over 10 years and aims to settle cases on commercially sensible and economic terms without having to proceed to court.
Stuart Efstathis’ background is in Applied Science, majoring in Biotechnology. Stuart can assist in matters regarding trademark law and enforcement of trademark rights.
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