How "Secret" Does a Trade Secret Have To Be?

It goes without saying that a trade secret must be secret.  But how secret?  That question is key to every trade secret case.  The answer can mean the difference between trade secret misappropriation – giving rise to civil or criminal liability – and innocent conduct.

A trade secret must be secret enough that it is not generally known in the industry.  But absolute secrecy is not required.  Instead, it must be sufficiently secret that (1) the trade secret owner can economically benefit from the relative secrecy, and (2) it would be too difficult or costly for others to legitimately discover the secret.

Courts consider a variety of factors to decide whether information is secret.  For example, they consider whether the information is known inside and outside of owner’s business, the measures taken to guard secrecy, the value of the information, the amount of effort and money expended to develop the information, and the ease with which the information could be acquired by outsiders.

Businesses need not build a fortress to house every trade secret.  Instead, they must take reasonable efforts to protect secrecy.  Some general rules of thumb are useful.

1. The more valuable the trade secret, the greater efforts a business should take to protect it.
2. Trade secrets should be shared – internally and externally – only as widely as to allow the owner to benefit economically from the trade secret.
3. Businesses should have clear internal confidentiality policies, especially for departing employees, and should require outside contractors who may access the trade secret to enter confidentiality agreements.
4. Businesses should invest in both physical and IT security to protect trade secrets.

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