Each and every participant in the commercial enterprise of products or services should be alive to the law of trade secrets.

The very viability of their business might depend on it.

The legal concept of a trade secret is both underdeveloped and mysterious. It is a device of intellectual property law which can, in limited circumstances, protect or compensate the owner from the disclosure or use of their intellectual property by unauthorized others.

As a creature of intellectual property, the trade secret is overshadowed by larger-than-life siblings-in-law: copyright, patents and trademarks and industrial design. But that's a bum rap: trade secrets and the protection the law affords the owners of trade secrets, can be extremely powerful legal concepts which in some cases, can protect the very core of a commercial enterprise.

trade secretJust as the Coca-Cola Company or Kentucky Fried Chicken, these companies have protected their core product recipes by asserting trade secret rights. And who can forget the trade secret "how do we get the caramel inside the Caramilk bar?" ad campaign?

Client-lists and client lists can be other, very valuable commercial trade secrets.

The Silk Road

The most important and significant trade secret in the history of man is the invention of a process to create silk by the Chinese in 2,500 B.C., a trade secret which opened up trade routes until gradually, between 500 and 1300 A.D., Chinese immigrants arrived in Europe and shared their nation's greatest trade secret.

In the mid-1600s, a London, England doctor invented forceps to assist in childbirth and went to great length to keep it secret so as to attract al business. A 2006 article in the New Yorker Magazine not only tells the story but highlights the public interest in government control of  intellectual property generally and trade secrets specifically. Who will ever know how many women suffered needlessly because of this jealously-held trade secret:

"The story of the forceps is both extraordinary and disturbing, because it is the story of a life-saving idea that was kept secret for more than a century. The instrument was developed in the seventeenth century by Peter Chamberlen (1560-1631), the first of a long line of French Huguenots who delivered babies in London. It looked like a pair of big metal salad tongs, with two blades shaped to fit snugly around a baby’s head and handles that locked together with a single screw in the middle. It let doctors more or less yank stuck babies out and, carefully applied, was the first technique that could save both the baby and the mother.

forceps"The Chamberlens knew that they were onto something, and they resolved to keep the device a family secret. Whenever they were called in to help a mother in obstructed labor, they ushered everyone else out of the room and covered the mother’s lower half with a sheet or a blanket so that even she couldn’t see what was going on. They kept the secret of the forceps for three generations. In 1670, Hugh Chamberlen, in the third generation, tried and failed to sell it to the French government. Late in his life, he divulged it to an Amsterdam-based surgeon, Roger van Roonhuysen, who kept the technique within his own family for sixty more years. The secret did not get out until the mid-eighteenth century. Once it did, it gained wide acceptance."

In legal history, businessmen were left to their own and the concept of judicial interference and even an allegation of unfair competition, was foreign to the common law. Trade secrets are a relative newcomer to the law.

Just what is a trade secret?

A trade secret is unique and discreet commercial information, exhaustively defined at Legal Definition of a Trade Secret.

The statute of one jurisdiction proposes this:

"Trade secret means information, including a formula, pattern, compilation, program, device, product, method, technique or process that is used or may be used, in business or for any commercial advantage, that derives independent economic value, actual or potential, from not being generally known to the public or to other persons who can obtain economic value from its disclosure or use, that is the subject of reasonable efforts to prevent it from becoming generally known, and the disclosure of which would result in harm or improper benefit."1

In the United States of America, a uniform trade secrets act was proposed by the National Conference of Commissioners on Uniform State Laws (aka Uniform Law Commission)  in 1985, and since enacted by almost all states. The statute includes this definition:

"Trade secret means information, including a formula, pattern, compilation, program device, method, technique, or process, that: (i) derives independent economic value, actual or potential, from no 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 (ii) is the subject of efforts that are reasonable under the circumstances to maintain its secrecy."

In the French language, a trade secret is translated as secret industriel: an industrial secret.

The breadth of trade secret coverage can be extensive:

"Trade secret law encompasses far broader subject matter than patent law. While patents cover inventions that are useful, novel, and nonobvious in light of the existing knowledge, virtually any useful information can qualify as a trade secret. The information need not be novel or nonobvious. Even very slight improvements to known processes or discoveries of what does not work may qualify. The information need not have actual economic value; potential economic value is sufficient. The information need not be technological in nature, as the law covers business information like customer lists, financial projections, and marketing plans. And unlike patent law, neither the identification of individual trade secret creators nor a formal application process is required for trade secret protection.

"Another important difference from patent and copyright law is that trade secret protection is not limited to a specific term of years...."2

Cloaks and Daggers

ROLODEX TRADE SECRETTrade secrets come with advantages and disadvantages both marvelously described by Vancouver intellectual property lawyer Christopher Wilson in his January, 2012 article as follows:

"Trade secret protection is the first line of defense against the loss of intellectual property assets, and so long as the idea is secret, it is often available when other forms of protection are not.

"Trade secret protection can last forever if you can protect the secret by contractual, procedural and/or technological means....

"Unfortunately, trade secrets are also generally the weakest form of intellectual property protection. They typically exist only until the secret is disclosed (unless you act very quickly) and they cannot assist if the same information is discovered independently.

"Reverse engineering of a product by a competitor is a common way of losing trade secret protection. Ex-employees (and suppliers) are another common way of losing trade secrets."

The very essence of trade secret protection is secrecy. Not all intellectual property is amenable to trade secret protection since many products and services, methods or techniques are overt and readily discoverable from observation or a rudimentary analysis of the product or service. In court cases involving trade secrets - almost all claiming injunctive relief against the alleged thief - the pleadings will include numerous and desperate applications for secrecy so that the evidence provided to prove the trade secret does not enter the public domain because of the court case.

To protect a trade secret, the owner has to take vigorous and seal-proof security measures especially limiting access to the trade secret information itself. Once public, information is no longer a trade secret.

Legal Opinion

It is beyond the scope of this legal information primer on trade secret law to fully cover the in's and out's of this essential branch of intellectual property, especially as they may relate to a unique set of facts.

And yet, the law of trade secrets always lurks underground as participants in a global economy strive to be the best at what they do. Often, that very standing depends upon their knowledge of the law behind their trade secrets.

If your business relies on a trade secret as many of them do, you may be well advised to seek and obtain the advice of a lawyer knowledgeable in this area as there are techniques to protect your trade secrets, especially contractual techniques such as nondisclosure agreements.

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