Often, a company’s most valuable assets can be its “trade secrets.” The formula for Coke holds an immense value for Coke. What makes a trade secret so valuable is the fact that the secret is truly secret.
What is a trade secret?
Congress has defined a trade secret in a broad sense as all forms and types of financial, business, scientific, technical, economic, or engineering information, including patterns plans, compilations, program devices, formulas, designs, prototypes, methods, techniques, processes, procedures, programs, or codes that the owner has taken reasonable steps to keep secret, and the information itself derives independent economic value from not being generally known.
In Florida, a trade secret is defined as information, including a formula, pattern, compilation, program, device, method, technique, or process that derives economic value from not being generally known or ascertainable, and is the subject of reasonable efforts to maintain its secrecy.
Notably, in order for information to be treated as a “trade secret” it requires the owners to keep the information secret. For example, if Coca-Cola was to publish the formula for Coke on its website or an advertisement in USA Today, the formula for Coke would likely lose its status as a trade secret.
Stealing or “misappropriation” of a trade secret is a crime under both Federal and Florida law.
What should companies do to maintain the secrecy of “trade secrets”?
The law requires that companies take reasonable steps to maintain the secrecy of trade secrets. More often than not, companies require employees to sign confidentiality agreements, and very often, highly proprietary and confidential pieces of information are only accessible to certain employees. Below are some useful tips to ensure trade secrets truly remain secret:
1. Enact Policies and Procedures
Companies should have written employment policies that establish the company’s expectations on how to treat confidential, proprietary, and trade secret information. These policies should also be incorporated as part of any policies governing the use of the company’s computers. Employees need to be notified what is confidential and what is not, and what their obligations are as far as secrecy.
2. Confidentiality/Non-Disclosure Agreements
Companies should require employees to sign confidentiality/non-disclosure agreements as a term of their respective employment.
3. Create Barriers to Access
Companies need to prevent access to confidential information from any employees who do not have a legitimate reason for the information. Computer networks should require login credentials and passwords, and electronic files should be encrypted. The more companies can invest on the technological front, the safer the information will be.
4. Perform Routine Computer Checks
Companies should routinely audit the computer systems to ensure that confidential information is being protected and that there has been no improper access by unauthorized persons.
What can a company do if trade secrets have been stolen?
In Florida, companies have the right to sue for misappropriation of a trade secret. The law allows companies to obtain injunctions, economic damages, and in some instances, exemplary damages (damages multiplied by 2). It is important that once a company is aware that there has been misappropriation, that they contact an attorney to ensure that prompt action is taken. Additionally, it is critical that a company undertake significant efforts to mitigate the damage of the misappropriation, which could include, disciplining the employee, termination of the employee, reporting to law enforcement, and, to the extent possible, undertaking efforts to secure the return of the secret and proprietary information.
Bruce Loren and Frank Sardinha, III of the Loren & Kean Law Firm are based in Palm Beach Gardens and Fort Lauderdale. The Firm represents and advises companies in all aspects of employment issues. Mr. Loren and Mr. Sardinha can be reached at firstname.lastname@example.org or email@example.com or 561-615-5701