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1) derives independent economic value, actual or potential, from not being generally known to and not being readily ascertainable by proper means by, other persons who can obtain economic value from its disclosure or use, and

2) is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.

What The Act Protects

The information that can be protected under the Act is extremely broad and includes almost any information that gives a business entity a competitive edge by virtue of its not being known to competition. Information held to be protectable includes: manufacturing processes; the formula for manufacturing a product; software; customer lists and information; general corporate strategy; business plans; and marketing techniques.

The information must be secret and must be "the subject of efforts that are reasonable under the circumstances to maintain its secrecy." As long as the company makes "reasonable efforts," but the secret is somehow exposed, protection is generally available under the Act.

Although the Act explicitly indicates that not every employee and every person must receive express notice of the trade secret status of every piece of information - an impossible standard - this is the goal to which you should strive. The standard of "reasonable efforts" to maintain secrecy is far more easily stated than implemented, as illustrated by the many cases where trade secrets have been lost by failure to meet this test.

The 17 Steps

1. Specifically identify each piece of information you wish to protect as a trade secret. Establish an ongoing system to identify new trade secrets.
2. Do not be overly inclusive or overly broad in choosing which information to protect, as this will trivialize and undermine protection of your true trade secrets.
3. Label all documents which contain or reflect trade secret information as CONFIDENTIAL and treat them as such. Limit copies and, where appropriate, register document numbers and require the return of such information either when the task is completed or on demand.
4. Limit access to the information to only those employees with a need to know.
5. Instruct all employees who work with company information as to which information is considered trade secret and how they should treat it confidentially.
6. Have all employees who will be exposed to, or use, the information sign confidentiality agreements and, if appropriate, covenants not to compete. Make sure those agreements are: (a) backed up by adequate consideration; (b) are reasonable in scope and nature; and (c) require the departed employee to advise his/her new company of these restrictions.
7. Implement security measures such as secure zones, badges, security guards, passwords, and locked cabinets. Limit access to your company's facilities through tours or other public disclosures. Make visitors sign in and out, wear badges, and, if appropriate, sign confidentiality agreements (e.g., any consultant, prospective purchaser and joint venturer). Prohibit cameras, tape recorders, and similar items. Monitor computer notebooks.
8. Be very careful about information on computer disks or hard drives. Make sure the information is only available through use of a password that is given only to appropriate personnel and is changed frequently. Create "fire walls" and access blocks to computer espionage and theft. Remember, electronic mail may last forever and be redistributed, and there is NO security on the Internet.
9. Include a confidentiality provision in all contracts with outside entities, including temporary workers, distributors, joint venture partners, licenses, vendors, customers, etc.
10. Be very careful that information you are trying to protect is not unwittingly disclosed in advertising or marketing information. Be careful about training materials, professional publications, and presentations at trade shows or conferences.
11. Conduct periodic trade secret audits to check for leaks.
12. If you outsource part, or all, of your product/technology assembly, then require strict vendor confidentiality agreements, use different vendors for different components, and do not disclose either how the parts relate or any final product information.
13. Be aware that outside the U.S., trade secret protection varies widely from some to none. In some countries, espionage to customarily used, totally legal, and culturally accepted.
14. Establish and update written policies and manuals for protecting your intellectual property, including trade secrets. Require your employers to read, understand, and comply with these policies.
15. Hold periodic training sessions for your employees to remind them of these rules and to publicly note and correct sloppy practice.
16. Correct, censure, reprimand and/or discipline employees violating these policies.
17. Hold exit audits with departing employees in which you obtain the return of all secret information and an acknowledgment from the employee of compliance with non-compete, non-disclosure, or other obligations. Note: Certain severance payments or benefits may be conditioned on such continued compliance.

If you discuss these 17 steps with your company's employees and ensure that most or all of them are implemented, your trade secrets be less likely to be stolen. And in the event they are stolen, the court will more than likely to award your company injunctive and monetary relief.

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