In a highly competitive and ever-evolving business landscape, entrepreneurs must be diligent in safeguarding their ideas and business plans from potential competitors. One of the most effective ways for a business to protect their competitive edge is to keep certain elements of their business plans a trade secret.
In a legal context, a “trade secret” is information that provides a business with a competitive advantage due to the fact that it is not generally known to the public. This could include anything from recipes, inventions, processes, designs, or formula. A trade secret is similar to a patent, however, a patent protects an inventor’s right to exclude others from making, using or selling a particular invention, while a trade secret protects a company’s rights to keep the information of their invention undisclosed, and away from the public.
Identifying and Classifying Trade Secrets
When establishing your business plan, it’s important to first identify what components of the plan could be considered trade secrets and then to classify them accordingly. When determining that a particular piece of information has been declared a trade secret the business owner or legal team should often take extra precautions to further protect the information from being shared or accidentally disclosed. This can be done by either limiting the number of people with access to the information or by implementing strict compliance protocols, such as the signing of non-disclosure agreements.
However, for the information to legally qualify as a trade secret, businesses must demonstrate that they have taken steps to keep this information a secret. Merely giving something a label like ‘confidential’ or ‘top secret’ is not enough and to demonstrate that they have taken sufficient steps, businesses should document the steps they have taken, such as employee training or security protocol around the storage of the information.
Examples of Trade Secrets
Notable examples of trade secrets include the ingredients that go into the recipe of Coca Cola, the design of the formula for the Google algorithm, the processes that go into making Nike shoes, or the production secrets behind the Wii gaming console. Even a simple recipe for a sandwich or salad can count as a trade secret as Subway and Panera have both demonstrated.
By properly classifying and protecting the trade secrets that make up the blueprints of your business, entrepreneurs can ensure that their competitive edge is kept intact. When competing for new customers, protecting your business plans as trade secrets can help to guarantee your success.