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Overview of Trade Secrets

Intellectual property is a hot topic in business today because it’s difficult to define and protect ownership of such a valuable but intangible commodity. Intellectual property comes in four forms, the least regulated of which is trade secrets. Trade secrets are not protected by any federal law, although the Uniform Trade Secrets Act has been adopted by most states.

A trade secret can be any kind of information important to a business’s operations that gives a competitive advantage, and that reasonable effort is being exerted to protect. The point of a trade secret is that it is supposed to be secret. Therefore, if a company has not placed enough measures to guard the trade secret, then it loses the protection of the UTSA as soon as the secret becomes known by any third party, or the general public.

In order to warrant prosecution upon the loss of a trade secret, there must be reasonable proof that it was shared or used illegitimately.

Keeping information as a trade secret is the opposite alternative to patent protection. In order to qualify for a patent, an idea must be thoroughly explained to the point where an independent researcher could follow the explanation and recreate the system or technology. However, the amount of protection and royalties given in a patent is meant to compensate for the lack of secrecy. Patents also have limited life spans, after which the material becomes public domain. It’s up to the owner of intellectual property to decide which form of protection to pursue.