Protecting trade secrets requires proactive measures before theft occurs. Unlike patents or copyrights, trade secret protection depends on maintaining secrecy—once information becomes public, protection is lost forever. Companies that implement strong protection programs position themselves to enforce rights when theft occurs.
Identifying Your Trade Secrets
The first step is identifying what information qualifies as a trade secret. Trade secrets include any information that derives economic value from not being known and is subject to reasonable secrecy efforts. This can include formulas, processes, customer lists, pricing information, business strategies, software code, and manufacturing techniques.
Create a trade secret inventory documenting what confidential information your company possesses, where it's stored, who has access, and why it's valuable. This inventory helps focus protection efforts and supports enforcement if theft occurs.
Physical Security Measures
Restrict physical access to areas where trade secrets are used or stored. Use locked areas, badge access systems, and visitor logs for sensitive locations. Manufacturing processes might require separate secured areas with limited personnel access.
Secure documents in locked cabinets when not in use. Mark confidential documents with clear "Confidential" or "Trade Secret" labels. Physical labeling demonstrates you treat information as secret and puts recipients on notice.
Digital Security Measures
Electronic trade secrets require robust cybersecurity. Implement access controls limiting who can view sensitive files. Use password protection, encryption, and multi-factor authentication. Maintain access logs showing who viewed or downloaded confidential files.
Restrict the ability to copy, print, or email sensitive files. Use data loss prevention (DLP) tools to detect unauthorized transfers. Monitor for unusual access patterns that might indicate data theft—employees accessing files outside their job responsibilities or downloading large amounts of data before departure.
Employee Agreements
Confidentiality agreements or non-disclosure agreements (NDAs) are essential. Have all employees sign agreements acknowledging their obligation to protect confidential information, both during and after employment. These agreements establish clear legal duties and support enforcement actions.
NDAs should define what information is confidential, prohibit disclosure and use outside job duties, require return of materials upon termination, and survive employment termination. Agreements signed before receiving confidential information are most enforceable.
Training and Awareness
Employees can't protect what they don't understand. Train employees on what constitutes confidential information and their obligations regarding it. Explain security procedures and the consequences of violations.
Regular reminders reinforce the importance of confidentiality. Include trade secret obligations in onboarding and annual compliance training. Document training to demonstrate your secrecy efforts.
Need-to-Know Access
Limit access to trade secrets to those who genuinely need them for their jobs. Compartmentalize information so no single person has complete knowledge. This limits exposure from any individual departure and makes theft more difficult.
Review access periodically and remove permissions when job responsibilities change. Departing employees should have access terminated before their last day.
Vendor and Partner Protections
When sharing trade secrets with vendors, contractors, or business partners, use robust NDAs. Limit disclosures to what's necessary and require similar protections from the recipient.
Mark all shared materials as confidential. Track what information was shared with whom. Include audit rights in agreements to verify compliance.
Exit Procedures
Employee departures are high-risk moments for trade secret theft. Conduct exit interviews reminding departing employees of their confidentiality obligations. Collect all company devices, access credentials, and confidential materials.
Revoke electronic access before the employee's last day. Review the employee's recent electronic activity for signs of data exfiltration. Document the return of confidential materials for potential future use.
Documentation for Enforcement
If theft occurs, you'll need to prove you took reasonable secrecy measures. Maintain records of security policies, access controls, confidentiality agreements, training records, and security measures. This documentation is essential for trade secret litigation.
Getting Legal Help
An intellectual property attorney can help design protection programs tailored to your business. They can draft appropriate agreements, advise on security measures, and prepare you to enforce your rights if theft occurs.