According to the National Center for Science and Engineering (NCSES), millions of American companies introduce new, innovative ideas each year. The Harvard Business School (HBR) and many other sources maintain that innovation is key to the success of the nation. The entire US economy depends on continuous innovation for growth, and much of this innovation stems from “trade secrets.” Companies must strive to protect this type of intellectual property (IP) in order to benefit from it. Trade secrets and intellectual property of all kinds can turn small startups into major enterprises very quickly, but some entrepreneurs might not fully understand how this IP works in a legal context. Intellectual property lawyers in Chicago may be able to shed further light on trade secrets and intellectual property – and they may also help with IP protection. To learn more, entrepreneurs might want to reach out to Sullivan & Carter, LLP at (929) 724-7529.
A trade secret is a type of intellectual property. Other examples of intellectual property include patents and copyrights. According to the United States Patent and Trademark Office (USPTO), trade secrets have three defining features. First, the secrecy of this information gives the IP “actual or potential” economic value. Second, the value of a trade secret makes it profitable for others (usually competitors) to try and obtain it. Third, the value of a trade secret depends on whether the IP owner can maintain its secrecy. Along with the USPTO, state and federal law enforcement helps protect trade secrets.
Some trade secrets are scientific or technical in nature, while others are more abstract. A more technical example of a trade secret is a formula or recipe. However, the value of a recipe does not necessarily need to involve complex chemical formulas or methods – and this may be as simple as a secret recipe handed down through the generations. Other trade secrets involve highly specific manufacturing techniques, perhaps involving the creation of new fibers or metallic compounds. According to the USPTO, a straightforward list of existing clients and their phone numbers may also qualify as a trade secret.
More abstract examples of trade secrets involve ideas and methods. The USPTO may see a specific marketing strategy or sales technique as a trade secret. A trade secret does not necessarily need to take a physical form in order to gain IP protection.
One of the most well-known trade secrets is the recipe for Coca-Cola. Although each bottle of Coca-Cola has a list of its ingredients, certain additions remain secret to this day. The term “natural flavors” is an intentionally vague addition to the ingredient list, and very few people know what these natural flavors actually are. Some believe that these ingredients may include vanilla, cinnamon, essential oils, and nutmeg.
A more abstract example of a trade secret is the New York Times Best Seller List. Although one might assume that this list is based on sales numbers alone, the actual methodology is a closely guarded trade secret. Some say that the list is based on distribution numbers and not sales numbers. The New York Times has a specific data analysis method that has never been revealed to the public.
Along with trade secrets, copyrights and trademarks are common types of intellectual property. Although all offer legal protection to entrepreneurs and companies, there are notable differences to consider. While trade secrets involve formulas and methods, copyrights involve works of authorship like books or movies. Patents, on the other hand, are associated with inventions. Trade secrets must have three defining characteristics (value due to secrecy, value because others want to discover the secret, and value that depends on maintaining secrecy). In contrast, patents require the underlying invention to be new, useful, and “nonobvious.” Copyrights require original, creative, and tangible works.
A copyright gives the author IP protection for the rest of their life, plus 70 years. A patent only provides IP protection for 20 years. In contrast, a trade secret continues to provide IP protection indefinitely – as long as the company manages to maintain the secret. The type of IP protection also varies. A copyright prevents anyone from distributing or reproducing the work. A patent also prevents reproduction, but it also prevents people from importing or even using the invention. A valid trade secret prevents people from not only using the secret, but also disclosing its details. Revealing a trade secret to the world is prohibited even if the person who stole the secret does not profit from the disclosure. The Economic Espionage Act ensures severe penalties for those who steal trade secrets, and the Illinois Trade Secrets Act offers additional protection.
Entrepreneurs may be reluctant to work with state and federal authorities to protect their trade secrets for obvious reasons. The secrecy of this information may make it difficult to discuss details with the USPTO, public courts, law enforcement, and so on. While patents, copyrights, and trademarks are subject to strict application and registration processes, no such process exists for trade secrets. The government recognizes that these applications could jeopardize the confidentiality of the trade secret.
Instead, entrepreneurs and companies become solely responsible for the protection of their trade secrets. Those who wish to protect their trade secrets must make “reasonable efforts” to maintain confidentiality. For example, a trade secret might be protected by a cybersecurity solution – or stored in paper form behind the wall of a safe. Companies may also tell employees about the trade secret on a strict “need-to-know” basis. These reasonable efforts are crucial, as their absence may make it difficult to pursue remedies through the Economic Espionage Act or the Illinois Trade Secrets Act. Entrepreneurs who believe their trade secrets have been misappropriated may wish to speak with Sullivan & Carter, LLP to learn more about potential remedies.
One of the most interesting things about trade secrets and intellectual property is their varied nature. Trade secrets are inherently innovative, and these new ideas are challenging from an IP perspective because they push businesses into uncharted territory. New, innovative business ideas may require new, innovative legal protections. These legal protections could be useful for entrepreneurs with purely conceptual trade secrets that have not yet been tested in the market. They may also be useful for established, growing businesses with existing trade secrets. Whatever the situation may be, guidance provided by online research may be less targeted than guidance from experienced intellectual property lawyers in Chicago. To continue this discussion, consider contacting Sullivan & Carter, LLP at (929) 724-7529.
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