The difference between trade secrets and trademarks
Some people get confused between trade secrets and trademarks. A trademark is something that is publicly recognized and known to be officially associated with a particular company. In contrast, a trade secret can be a much broader definition and by its very name is not made public.
Under the laws of most states, any device, pattern, formula, idea, or collection of information that gives the owner an advantage in the marketplace and is protected by the owner in a manner that shows it can reasonably be expected to keeping your competitors or the public from finding out without stealing it is considered a trade secret.
There are many examples I can give of trade secrets. In a real product, a trade secret could be the way certain ingredients are combined in the formulation of a nutritional supplement. Recipes, particularly those used in commercial restaurants, are considered trade secrets.
One very famous one that immediately comes to mind is Colonel Sander’s recipe for his Kentucky Fried Chicken. An idea for an invention that one has that has not yet applied for a patent would also be considered a trade secret, as would the complex algorithms that search engines like Google use to provide us with search results online.
Trade secrets are the opposite of other types of intellectual property protection, such as trademarks and patents. The idea of a trade secret is to keep it out of the public eye and it is basically something that a person or company does for itself. Your trade secret will be protected by law until you make the information public.
Companies and individuals protect information that they cannot protect with other legal means, such as patents and trademarks. There are numerous things that can be considered trade secrets. An idea that will give you a huge leap over your competition in a particular market or even an idea for a piece of software or a website would also be a trade secret. Business information that you keep secret and only allow access to employees, such as marketing plans, costs and prices, would be protected by law.
Under the law, the owner of a trade secret can legally prevent employees from using or disclosing trade secret information by binding them to confidentiality or non-disclosure agreements. They also have legal protection against people who obtain the information by stealing it or through industrial espionage, as well as against people who obtain the information knowing that it is a protected trade secret.
The best way for a company to legally protect itself is to have employees sign a confidentiality agreement, also known as an NDA. You should also have them signed by anyone you do business with, such as lenders and investors. An intellectual property attorney can help you draft this important document.