What are trade secrets?

First off, you might want to take a look at a questionnaire I posted earlier here. It is a quick and simple checklist that might tell you whether you have a trade secret to protect. Today, I want to get a bit more detailed.

Indiana’s version of the Uniform Trade Secrets Act defines trade secrets as:

...[I]nformation, including a formula, pattern, compilation, program, device, method, technique, or process, that: (1) 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 (2) is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.

In short, a business possesses valuable information that their competitors do not have and which the business secreted from the world outside of the business.

What does this mean in the real world? The business needs to inventory its formulas, patterns, compilations, programs, devices, methods, techniques, or processes that have independent economic value because the business' competitors do not know about them. Information claimed as a trade secret cannot (generally) be gleaned from reviewing want ads, Chamber of Commerce lists, making cold calls, the business' own website or direct contact, or by other legitimate means.

However, what the business designates as a trade secret might not stand in court. Trial courts decide whether a particular "formula, pattern, compilation, program, device, method, technique, or process" is a trade secret. What is reasonable under the facts of one case may be considered inadequate under the facts of another. A business designating its information as a trade secret only has begun to the process of invoking the trade secrets statute. For success in the real world, the business needs its attorney involved in the process of designating trade secrets.

Even if the business designates information as a trade secret, the business may still not have the protection of the trade secrets statute. The business must enforce the security of its secrets as well as designate that information as a trade secret. Protecting trade secrets will be the subject of another post.