MasiboLaw

Would Coca-Cola still be Coca-Cola if Pepsi knew about all its secret ingredients? Would KFC still be KFC if every fast food restaurant could cook chicken like they do? Whatever your answers to these questions are, you will agree that one of the main reasons for the success of these businesses is their secret ingredients and recipes. But how do they stay secret? It is because they are protected as trade secrets.

What is a Trade Secret?

A trade secret is any practice or process of a company that is generally not known outside of the company. It is usually a very valuable form of intellectual property that can be sold or licensed and that, unlike patents, copyrights or trademarks, depends solely on confidentiality as opposed to uniqueness.

Some examples of trade secrets include formulas, programs, methods, techniques, processes, distribution strategies, customers, and marketing plans which provide the business with a competitive advantage. These can then be classified as either technical or commercial information/secrets within the company. If such secrets are acquired and used without the legitimate business owners’ knowledge, the infringing party is liable to pay damages to the legitimate owners.

How can a business protect its trade secrets?

1. To keep confidential corporate information private, employees and business partners should sign a Non-Disclosure Agreement, which is a legally binding agreement that creates a confidential relationship between 2 or more parties. The parties agree that any information obtained will only be shared where there is consent.
2. Establish a culture of employee training programs within the company so that staff members may learn more about confidentiality, what it means, and why the company must maintain it. Additionally, the staff members might receive training on confidentiality best practices.
3. Create an accountability system check that will allow the tracking of documents each time they move from one employee to another within the organization; the type of document and its file number and the employees who handled the document. As a business, it would be wise to also limit the number of people who have access to such confidential information contained in the documents within the enterprise to reduce the risk of such information getting out to persons or other entities outside the business.
4. Ensure every business device be it computers or mobile phones is well secured using strong passwords that would make it difficult for anyone to gain access. Data contained can also be encrypted. Encryption guards against unauthorized parties intercepting trade secrets that are transferred over networks. It guarantees that the information is kept private while being transmitted from one point to the next, even through email. Where possible limit the number of devices that carry such confidential information to reduce the risk of dissemination to outside parties.
5. Employers and their employees can also get into a non-compete agreement. Employees who leave the business with knowledge of trade secrets may exploit such knowledge by establishing a rival business or by working at a rival business that would exploit the secret for their gain. A non-compete agreement is a formal contract provision or legal agreement that states an employee is not permitted to compete with their employer after the conclusion of their employment. Additionally, throughout employment and beyond, these agreements forbid the employee from disclosing confidential or proprietary information to any third parties. Such information includes trade secrets.

Trade secrets are one of the key reasons behind business success. Businesses can protect their trade secrets through non-disclosure agreements, and non-compete agreements as well as conducting proper employee training and ensuring they practice cyber hygiene.

The writer is a lawyer and licensed patent agent who specializes in offering legal services to technology companies and people in technology, you can contact him through info@masibolaw.co.ke