After years of woodworking as a hobby, Ron opened his own store selling items he had built. His products had a unique look. That’s because Ron had developed a new way of applying varnish that led to a much deeper shine. His formula for varnish also was an important part of his process. Many people wanted to know Ron’s trade secrets. Ron felt his formula and methods made his business unique. He just was not sure how to protect this information from being used by competitors.
Defining Trade Secrets
‘Intellectual property’ generally means “creations of the mind.” We recognize four general types of intellectual property:
- Patents,
- Trademarks,
- Copyrights, and
- Trade secrets.
The company that owns the trade secrets generally has an economic advantage of companies that do not have access to it. Such information is:
- Valuable because it is not generally known
- Valuable to people who want it but cannot legally do so
- The subject of efforts to keep it secret.
Ron’s woodworking secrets meet the above definition. Since trade secrets are important, he needs to protect them to maintain his competitive advantage.
Further Definition, Forms, and Examples
Trade secrets can take many forms, including:
- Formulas and recipes
- Product designs
- Manufacturing methods and techniques
- Programs
- Devices
You probably see the results of trade secrets every day. For example, the following trade secrets are well-known and carefully guarded:
- Coca-Cola’s secret formula
- Google’s search algorithm
- KFC’s secret blend of herbs and spices
- McDonald’s Big Mac Sauce
While the companies mentioned above are large corporations, confidential information is important to small businesses also.
Some forms of intellectual property have an expiration date. However, trade secret protections remain in place unless the secret is discovered or lost.
When Trade Secrets Are No Longer Secret
Having a competitive advantage can significantly enhance your business. Losing that competitive advantage may negatively affect your ability to dominate the market for your products or services. In addition, profits may suffer as competitors begin mimicking your formulas and methods.
Someone might gain access to your secrets even if you took reasonable efforts to protect them. If so, you may be able to take legal action against anyone who uses your intellectual property without permission.
In the case of Ron and his woodworking shop, failure to protect his trade secrets may become an issue. Ron kept his notes and plans in an unlocked file cabinet. He also divulged his secrets to friends, families, and employees without warning them of their confidential nature. When a competitor begins to use his varnish and woodworking methods, Ron’s legal options may be limited. The fact that Ron willingly shared the information might lead a court to find that his ideas no longer warrant trade secret protections.
Protecting Trade Secrets Should Be a Priority
Attorney Richard Sierra at the Florida Small Business Center assists clients like you with business and litigation matters. As always, Our Goal Is to Help You Succeed™. For an appointment, you may call us at 1-866-842-5202 or use the contact form on our website. We represent clients throughout the State of Florida, including Coral Springs, Coconut Creek, Boca Raton, Delray Beach, Pompano Beach, Sunrise, Fort Lauderdale, Miami, West Palm Beach, Jupiter, Deerfield Beach, Stuart, Port St. Lucie, Orlando, Naples, Fort Myers, Sarasota, Tampa, and surrounding communities.