Are You Paying Attention to Your Trade Secrets?

It is the first, and often, most important thing

Patents can be very important - and writing and prosecuting them is my livelihood.

But one of the most important things you need to understand as a small businessman (or woman) is that in a typical business most of the intellectual property is going to protected in other ways than by patents.

And I am not talking about copyrights and trademarks.

Trade secrets and how to protect them are one of the things you need to really understand as a small business person.

What Are Trade Secrets?

Such things as:

    > your marketing and business plans

> your customer lists

> negative learnings - all of the things you tried that do not work - you don't want a competitor to know these.

> what products you have under development.

You can probably add to that list easily.

In addition there are instances in which you can use this form of intellectual property to protect major products or processes in a company. You have probably heard how Coca-Cola has protected the Coca-Cola formula for years - much longer than any patent could protect it. I personally know of a major chemical process that was so complex and required so many steps that the company decided to protect it in this manner and has been doing it successfully for years.

I should say right here that while I believe you should understand this practice well and use it well I also believe you need to understand the downside of using trade secret for an important product. There is one big problem with trade secrets - they must be kept secret.

If someone independently develops your product and begins to sell it you can do nothing about it. This is especially an issue if your product would be easy to "reverse engineer". There is no law against reverse engineering an un-patented product.

Since most of my clients are small businesses they often may have one (or a few) important products that are the lifeblood of the company. If that is your situation you need to think seriously about patent protection where you really need it.

O.K. - enough warning about that - and back to the point of this article. There are still any number of things in your business that you may need to protect as a secret. And even significant products may need to be protected early in development before you get patent protection. 

So How Do You Do This?

First understand that simply identifying any important information as a trade secret does not make it so. You have to behave in a way that proves you are making diligent efforts to protect it. This behavior is not a major problem though - and you don't have to put a moat around the business. Below I have provided a sensible list of precautions you need to build into your business practice.

Good Practices

    >Educate your employees that you are seriously intending to protect your secrets and that they have a key role to play in not allowing any company information out to the public.

> Mark documents that are secrets as "Confidential"

> Allow access to extremely sensitive information to people with a reasonable need to know only.

> Lock secret materials away after business hours.

> And most importantly - make the use of non-disclosure agreements (NDA's) with all outside communicants a rigorous business practice.

Finally - document all of the above practices (and any others that you do) in a formal document that you keep on file and review with all of your employees.

Maintaining good trade secret practices is not an onerous task. Think of it as one of your standard business practices and monitor it regularly to be sure it is working.


In future newsletters we will delve into many other aspects of patents and patent law that might be useful for you to know. Patent law is not rocket science - but it is not always intuitive either.

Ever heard of the Archimedes screw pump? Long before patents there were great inventors. One of my favorites was Archimedes - who recorded most of his inventions in his notebooks in which he recorded everything in mirror writing. You had to hold a mirror up to it to read it!

Here is a quick description of two of his inventions.



Mike Ervin