Every company has a few secrets. Sometimes, that is a recipe, but other times, it’s a client list, a pricing strategy, a custom process, or a formula that makes your business run more profitably than others.
That is known as a trade secret. It is the quiet powerhouse behind a business’s success. But trade secrets are only valuable as long as they stay secret. Once they leak out, you could lose your advantage in the industry.
However, with the right systems, contracts, and company culture, you can reduce the risk of losing what makes your business special. Here is what you need to know about protecting trade secrets with a look at the best practices for businesses.
Know What You’re Protecting
What gives your business an edge? This might include:
- Client or supplier lists
- Manufacturing processes
- Marketing strategies
- Product designs
- Software code or algorithms
If it is something your competitors would love to know but is not publicly known, it probably qualifies as a trade secret.
Under the Defend Trade Secrets Act (DTSA) and most state laws, the requirement is that you have made reasonable efforts to keep the information confidential. You cannot claim a secret if you have left it in a public Google Drive folder or allowed employees to discuss it freely outside of work.
Limit Access
Once you’ve identified your confidential information, you should carefully consider who needs access. The fewer people who know, the safer that information remains.
You might want to use role-based permissions for files and software. Also, restrict access to sensitive folders and make sure only authorized employees can view high-value data.
For physical documents, lock them up. If you have digital ones, use secure servers, encryption, and multi-factor authentication.
Put It in Writing
You will need written agreements to protect these secrets. Every employee, contractor, and vendor who has access to sensitive information should sign a non-disclosure agreement (NDA).
A good NDA will specify what is confidential, how it can be used, and what happens if someone violates it. For employees with access to major trade secrets, you may also want to include confidentiality or non-solicitation clauses in their employment contracts.
Build a Culture of Confidentiality
Even the strongest contracts will not save you if your team does not understand why confidentiality matters. Most trade secret leaks are not the result of malicious spying; they are often the result of honest mistakes.
For example, someone forwards an internal spreadsheet to the wrong person or uploads files to an unsecured folder. Those are mistakes that shouldn’t happen. For that reason, you want to focus on training. This can help your employees understand:
- What counts as confidential
- How to handle sensitive data properly
- What they should and should not share externally
You want to make confidentiality part of your onboarding and revisit it regularly.
Keep an Eye on Things
Trade secret protection is not a “set it and forget it” project. Technology changes, employees come and go, and risks evolve. You will want to schedule regular audits to make sure your policies still make sense and your systems are secure. Plus, it is a good idea to review who has access to sensitive information and whether that still makes sense.
Monitoring access logs, file downloads, and external sharing can help you identify suspicious activity before it escalates into something bigger.
Handle Departures Carefully
When employees leave, emotions can run high. Additionally, there is a risk of data walking out the door. Before anyone exits, make sure they:
- Return all company devices and files
- Delete any business data from personal accounts or drives
- Review their confidentiality obligations one last time
You might want to restrict access immediately after departure and document everything. If something seems off, like a sudden download of client data the week before an employee resigns, address it right away.
Have a Plan
Even with the best precautions, leaks can still happen. You will need a clear response plan that outlines who to contact, how to investigate, and the steps to take to contain the damage.
If you suspect a breach, act fast. To collect evidence, contact your IP attorney, and secure your systems. The faster you respond, the better your chances of protecting your rights and limiting fallout.
Get the Protection You Need for Trade Secrets
Protecting trade secrets is about preparation. And when you can mitigate the risks, you can keep those trade secrets protected from accidental leaks.
Even the best plans can go wrong. If you want to know how to protect your business assets, such as trade secrets, or need to take legal action after a leak, Iconic Inc. can assist you. Schedule a consultation today to find out how we can help.