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    Tuesday, April 29, 2008


    Trade secrets can be a valuable asset in the entrepreneur's IP portfolio. Unlike copyrights, trademarks, and patents, trade secrets are not registered nor are they applied for, granted, or issued. In a short definition, trade secrets are information that is maintained confidential and which gives the entrepreneur competitive advantage and/or derives independent value from being kept confidential.

    Virtually every state protects trade secrets using some form of the Uniform Trade Secrets Act. Common law also gives some protection to trade secrets. Theft, or misappropriation, of trade secrets can also implicate the Federal Economic Espionage Act.

    But trade secrets are only protectable if they are maintained as secret, and that includes the requirement that (a) the information is not easily available to competitors, and (b) reasonable precautions are used to maintain secrecy.

    Customer lists are frequently claimed to be trade secret, but in many cases the customer and contact list is as easy to discern as looking in a known industry directory, or typing a well phrased Google(R) search. On the other hand, some customer lists are not accessible that easily and can only be created over time using sources not readily available. In such a case, the list may well qualify as trade secret...but only so long as reasonable precautions are used to maintain it. Is the information let out to people who are not under a written obligation of confidentiality? Is the information laying on a desk that members of the public or frequent vendors walk past? Do employees have a written obligation of confidentiality? Is the information on a computer connected to the Internet that has only the most rudimentary of security protections? Do the customers know each other and do that they know that they are all customers of the entrepreneur? These things factor, sometimes dispositively into the question of whether reasonable precautions are being used.

    One easy self assessment is to ask the following questions. For (a), is the nature and reason for the trade secret status easy to state. For (b), are the precautions taken to preserve secrecy well documented and do they include documentation on the items just listed. If either of the answers are "no", then trade secret protection is not being well established and/or maintained. But don't tell anybody that, it'll be our secret.

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