What is a Trade Secret?

Individuals and businesses have a variety of legal rights in the intangible things that create, invent, design or write. These are generally known as Intellectual Property and most people are familiar with the big three: copyright, trademark and patent. Lesser known, trade secrets can also offer substantial protection and represent a valuable asset that must be cared for.

Trade Secrets: The Summary
Trade secret law protects commercially valuable information that is (1) not generally known by others and (2) which the owner considers and treats as a secret. Imagine the harm to a business from an improper act like theft of goods or cash receipts. Now imagine that instead of stealing the goods or cash, someone stole the ideas that produce those goods and generate that cash. Trade secrets protect your valuable ideas so you can turn them into goods and cash. In short, there is no protection if there is no wrongful act, but by treating certain ideas and knowledge as secret and using reasonable measures to preserve secrecy in the event of a wrongful act, the owner is protected.

Oregon and Washington Trade Secret Laws
In Oregon and Washington, trade secrets law is statutory, based on the Uniform Trade Secret Act (ORS 646.461 et seq. and RCW 19.108.010 et seq.), which defines a trade secret as information “including a formula, pattern, compilation, program, device, method, technique, or process” that is economically valuable because it (1) is not generally known and (2) is maintained generally as a secret.

Clearly not everything valuable and secret can be a trade secret, including those products that can be reverse engineered. But where a trade secret is appropriate it offers protection for unlimited duration—examples of long-lasting trade secrets include a well-known fried chicken recipe and cola recipe. For such recipes or formulas, trade secrets offer the best possible protection since patent protection may either not be available or expired.

What are the steps to establishing a valuable trade secret right?

1. Identify the property to be protected (remembering that it must be valuable because it is secret);
2. Treat it as a secret, sharing only with those who need to know;
3. Have an employment agreement for employees who need to know the secret;
4. Have a non-disclosure agreement for non-employees who need to know the secret; and
5. Be diligent in halting any use upon discovering it is an unauthorized.