Myth of Trade Secrets

Every business likes to claim that it has some sort of proprietary information that qualifies as trade secret and warrants special protection. Employees in sales and technical positions are more likely to be prevented from misappropriating information involving customers or highly specialized business knowledge.

All proprietary information is not trade secrets. A trade secret could be in different forms. It may be a formula, device, business process, software, or information that gives the employer competitive advantage and is being used in the continuous operation of the business. A trade secret does not need to be a registered patent.

Simply sticking a label on whatever an employer claims to be trade secret will not cut it. There are steps an employer shall take to increase the likelihood that the information is to be defined as trade secret. Mass courts consider several factors: the value of such information to the employer, measures taken by employer to guard the secrecy, amount of capital and effort expended by employer to develop that information, degree of difficulty the information could be duplicated by others.

In terms of reasonable measures to protect the secrecy, an employer shall at minimum restrict outside visitors from the business areas where the trade secret is used, limit access to the secret to those with business needs, maintain the secret in a secure location; and communicate to those who have access to the secret that it is confidential.

Unauthorized access or misappropriating trade secret is not only a tort based on the theory that an employee breaches her or his duty to safeguard this information, but also a civil and criminal liability.