Following Tuesday’s post, “Should you keep your inventions as trade secrets or patent them?”, we provide below some general best practices for protecting your trade secrets.
Trade secrets are an important component of any innovative company’s IP strategy and, in some cases, can be absolutely critical for maintaining competitive advantage. But it’s not enough to simply say “we have trade secrets” – there are diligent steps that must be taken to prevent your trade secrets from being stolen or leaked. Once the genie is out of the bottle, it cannot be put back inside and its value is lost forever.
We provide below some general best practices for protecting and maintaining your trade secrets.
Best practices from a legal standpoint:
- Identify your trade secrets: Determine what information and processes are unique and essential to your business and qualify as a trade secret. Trade secrets can include things like formulas, software code, customer lists, business plans, and other proprietary information.
- Catalogue your trade secrets: Establish a system to keep track of what information is confidential, who has access to it, and how it is being protected. Assign a unique identifier, such as a code or number, to each trade secret to help keep track of them.
- Use non-disclosure agreements (NDA): Create an NDA that all employees, contractors, and partners must sign before gaining access to your company’s confidential information.
- Avoid public disclosure: Do not disclose your trade secrets in public or to anyone inside or outside of your company who is not bound to confidentiality.
- Monitor for leaks: Stay vigilant and monitor for any signs of unauthorized acquisition, use or disclosure of your confidential information. If you discover or suspect a violation, take action immediately with the help of legal experts.
From a practical standpoint:
- Limit access: Restrict access to trade secrets to employees who need the information to perform their jobs. Track who has access to the information.
- Secure physical and virtual access points: Secure access points to your company’s physical location and virtual information storage. Password protect and/or encrypt all files containing trade secrets and limit access to a need-to-know basis.
- Educate and train employees: Educate your employees on the importance of trade secrets, what it means to keep them confidential, and the consequences of violating an NDA or sharing them. Train them on best practices for security and confidentiality, such as encrypting files, using secure communication channels, and following company password protocols.
- Create a culture of confidentiality: Encourage a culture of confidentiality and emphasize the importance of trade secrets in your business operations. Establish an IP and Confidential Information policy for your company and have employees sign it.
- Monitor employee behaviour: Monitor electronic communications and other actions to identify breaches or risks of a breach.
Following these general best practices will go a long way to securing your company’s competitive advantage through trade secrets. Keep in mind that trade secret practices can vary widely between industries and jurisdictions. The general best practices outlined above are not intended to replace the sound advice of a professional who understands your particular business.
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