Trade Secret Protection – Key Points for Entrepreneurs to Know

Stephen LaCount Intellectual Property Talk Trade Secrets CSUF Startup Incubator IrvineDuring Stephen LaCount’s talk titled Intellectual Property and the Entrepreneur at the CSUF Irvine campus Stephen went over a lot of interesting topics; topics that are immediately valuable to the entrepreneurs that were there. One of the parts of his talk that I liked in particular was his information on trade secret protection.

Here are some key takeaways that I had:

  • If you do it right, a trade secret can last forever (i.e. Coca Cola)
  • “Trade Secret” means information, including a formula, pattern, compilation, program, device, method, technique, or process that: 1. Derives independent economic value… from not being generally known to, and not being readily ascertainable by proper means by other persons… and 2. Is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.
    • This is from the Model Trade Secrets Act
  • One example that Stephen gave was how Texas Instruments successfully sued someone who flew a plane over a factory that they were building so that he could get pictures of how they were doing things, which violated their trade secrets
    • (I tried finding this story but, alas, couldn’t find it)
  • If the company or person with a trade secret doesn’t properly maintain it’s trade secrets then they will go to the public domain
    • That is, obviously, not good, so you have to work to protect your trade secrets
  • How to protect your Trade Secrets:
    • Restrict visitors to your work site – control or deny access to sensitive areas
    • Limit disclosure – implement strict “need to know” standard
    • Internal procedures and safeguards – you will need to create these, train your people on how to properly follow them, and have a system that ensures employee fidelity to your procedures and safeguards
    • Explicit written agreements: what is being disclosed and for what purpose?
      • Any relationship of importance should have a non-disclosure agreement (NDA) attached to it
    • Stamp and legend documents: such as “Confidential and Proprietary”; “Do Not Duplicate or Distribute”
  • Even though there is a lot that goes into protecting a trade secret there is no paperwork that you have to file with the government and a trade secret theoretically will never expire
  • What about past employees? Do they have to protect trade secrets from their former employer?
    • The answer is, of course, yes. Past employees do have a duty to protect the trade secrets of their former employees

The part about trade secrets was only a small fraction of Stephen’s overall talk and we will be working on putting together video segments of this talk for our Knowledge @ CSUF Entrepreneurship video series and Stephen’s segments will be published over the next couple of months.

So make sure to check back in frequently so you won’t miss any of the videos or, better yet, become a CSUF Entrepreneurship Insider. Insiders get a weekly update featuring the ideas, news, events, and success stories that are coming out of the CSUF Entrepreneurship community.


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