What is a trade secret?
Under Texas law, a trade secret may consist of any formula, pattern, device, or compilation of information which is used in one’s business, and which gives one an opportunity to obtain an advantage over competitors who do not know or use it. To determine whether a trade secret exists, Texas courts typically apply a six-factor test: • the extent to which the information is known outside of the business; • the extent to which it is known by employees and others involved in the business; • the extent of the measures taken by the person or company to guard the secrecy of the information; • the value of the information to the business and to its competitors; • the amount of effort or money expended by the person or company in developing the information; and, • the ease or difficulty with which the information could be properly acquired or duplicated by others. However, a trade secret need not necessarily satisfy all six factors, because trade secrets do not fit neatly into each factor every
In most states, a trade secret may consist of any formula, pattern, physical device, idea, process or compilation of information that both: provides the owner of the information with a competitive advantage in the marketplace, and is treated in a way that can reasonably be expected to prevent the public or competitors from learning about it, absent improper acquisition or theft. Some examples of potential trade secrets are a formula for a sports drink, survey methods used by professional pollsters, recipes, a new invention for which a patent application has not yet been filed, marketing strategies, manufacturing techniques and computer algorithms. Unlike other forms of intellectual property such as patents, copyrights and trademarks, trade secrecy is basically a do-it-yourself form of protection. You don’t register with the government to secure your trade secret; you simply keep the information confidential. Trade secret protection lasts for as long as the secret is kept confidential.
A trade secret is classified as one of the various types of intellectual property. It provides protection over information that is not publicly known, has commercial value and is subject to reasonable efforts to preserve confidentiality. The scope and duration of trade secret varies country- by-country but in general it last as long is it keep secret and includes any know-how with commercial value (proprietary knowledge and information) like formulas, patterns, compilations, devices, methods, techniques, or processes. Some academics argue that trade secrets are not a form of intellectual property as is not, strictly speaking, a right that grants exclusivity of use, and does not stop anyone else from independently obtaining the information or knowledge and exploiting it commercially. However, there are legal mechanisms (like confidentiality agreements and non-disclosure agreement) used to stop people from revealing the secret or proprietary knowledge and information.
The Uniform Trade Secrets Act (UTSA) defines “trade secret” as: information, including a formula, pattern, compilation, program device, method, technique, or process, that: (i) derives independent economic value, actual or potential, from not 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. Uniform Trade Secrets Act (UTSA), subsection 1.4. Source: http://www.nsi.org/Library/Espionage/usta.
