Trade secret protection is an important asset for small businesses, but it is also an aspect of intellectual property law of which most startup founders may not be familiar.
Generally speaking, any information that is not widely known, derives some economic value from not being widely known and is subject to reasonable efforts to remain not widely known can be considered a trade secret. For example, the formula for Coca-Cola is considered the world's most famous trade secret.
For startup entrepreneurs, lots of information could be considered a trade secret. For instance:
- Business practices
- Customer lists and profiles
- Growth strategies
- Distribution methods
- Advertising and marketing plans
- Vendors and suppliers
Securing information as a trade secret is important because it gives you legal options in the event your information is obtained and used by a competitor. If you have taken the proper steps to secure trade property protection, you may be able to prevent a competitor's use of this information, or obtain damages (i.e., money awarded as the outcome of a lawsuit) in the event that it does get used.
Trade secret protection differs from patent and copyright protection in that it can continue indefinitely, whereas patent and trademark protection expires after a period of time (albeit a lengthy one, in the right circumstances). Obtaining trade secret protection also does not required the potentially length and expensive process of registration, like a patent does.
To learn more about trade secrets and the other three types of intellectual property law, check out our video on Understanding the 4 Types of Intellectual Property.