Trade Secrets

Trade secrets include formulae, practices, processes, designs, instruments, patterns, commercial methods, or compilation of information, such as customer or client lists, which are not generally known or reasonably ascertainable by others, and which give a business an economic advantage over competitors or customers. Trade secrets are sometimes considered to be "confidential information”, but the term is broader than that.  In order for something to be considered a trade secret, the business must take reasonable steps to safeguard the secrets.  What steps are required will depend upon many factors, such as the nature and size of the business, the information to be deemed a secret, knowledge in the industry and the like.  Trade secrets should be contrasted with patents, as patents require the disclosure of information and trade secrets require that information be kept confidential or secret.

What may be considered a trade secret and the steps required to protect it are subject to state law.  Most states have a law defining trade secrets and the remedies available in the event of their theft.  Most states have also adopted the Uniform Trade Secrets Act.  The Maryland Trade Secrets Act is contained in the Maryland Code, Title 11- Trade Regulation, Subtitle 12- Maryland Uniform Trade Secrets Act. 

Although not every company has patentable inventions, every company has trade secrets and they should be protected against disclosure or unauthorized use by others. Customer lists, equipment specifications, formulas, even lists of clients' birthdays can be very valuable. The point is to recognize the value of trade secrets to  your business and treat them accordingly.

Trade secret documents should be kept in a locked and secure place. Where appropriate, they should be stamped "Proprietary Confidential Information". Access to areas where confidential information is kept or used should be limited. Most importantly, employees should be made aware of their responsibilities insofar as your trade secrets are concerned both during and after their employment with your company. Written agreements with employees should specify that confidential information cannot be disclosed or used for any purpose other than the performance of their job duties.

Trade secret law protects your confidential business information from misappropriation. Although trade secret litigation may be costly and protracted, the steps necessary to attempt to protect your trade secrets from unauthorized use or disclosure are neither expensive nor complex. Taking these steps may even prevent misappropriation. But if they do not, and misappropriation does occur, your company will be in a better position to enforce its rights in litigation should you choose to do so.