MT2-large.gif (2252 bytes)
The Online Guide to Marketing in the Information Age

Marketing to Engineers
Marketing communications guru Robert W. Bly provides insight on reaching the technical mind.

Internet Marketing
IM Basics
Anyone who markets on the Internet needs to know the basics.

Effectively Promoting Your Web Site
Think That Simply Building a Great Site Will Make it a Successful Site? Think Again. Successful Sites Need to Be Promoted.

Building Your Own Web Site
Help for the DIY'er

Collateral Materials
How To Write a Good Advertisement
Author of the best selling Copywriter's Handbook provides tips on writing ads that get results.

Robert W. Bly's Business-to-Business Copy Clinic:
7 Ways to Create Business Publication Advertising That Gets Results
If you are in business to business marketing, you should  be

More Tips On Using Testimonials
Testimonials make for powerful advertising campaigns - tips on how to make sure your doing it right.

Stalking The Perfect High-Tech Brochure
High-tech collateral pieces deserve to be treated specially. 

Direct Response/
Direct Mail
The 12 Most Common DM Mistakes
Must reading before sending out your next mailing.

In Search of Ink - Getting Your Company's Message Into Print

Marketing and the Law
Copyright Basics
Every marketer should read and know these or be ready for an onslaught of legal problems.

What Web Site Builders Need to Know About Trademark Law
"Copyright-free" clip art web sites, a web site domain that is not protected by a national trademark, did your web designer use a competitor's name in the meta tags when building your site? A simple trademark oversight that cost computer giant Compaq to pay three million dollars to the registrant of to purchase their $35 a year rights. 

If these issues don't yell "danger," you should read this article to find out why they should.

Trade Secret Law
In the information age, information is the central nervous system of your business. Treat and guard it accordingly.

Trade Secret Law: Overview
by Attorney Stepher Elias
Copyright Nolo Press 1998

The most important point to understand about trade secrets is that there is no crisp, clear definition of what they are. Rather, the context in which a dispute over ownership of information arises will determine whether a court will treat the information as a trade secret. As a general rule, information that has commercial value and that has been scrupulously kept confidential will be considered a trade secret; the owner of the information will be entitled to court relief against those who have stolen or divulged it in violation of a duty of trust or a written nondisclosure agreement.

  1. What kind of information qualifies as a trade secret?
  2. What makes something a trade secret?
  3. How are trade secrets lost or stolen?
  4. May trade secrets be sold?
  5. How is trade secret protection enforced?
  6. Trade Secret Resources

1. What kind of information qualifies as a trade secret?

In most states, a trade secret may consist of any formula, pattern, physical device, idea, process, compilation of information or other information that both:

  • provides the owner of the information with a competitive advantage in the marketplace, and
  • is treated in a way that can reasonably be expected to prevent the public or competitors from learning about it, absent improper acquisition or theft.

Trade secrets often comprise customer lists and other sensitive marketing information. Other specific items that may be trade secrets include:

  • biological inventions (unpatented)
  • chemical inventions (unpatented)
  • computer hardware
  • computer software
  • cosmetics
  • electrical inventions (unpatented)
  • electronic inventions (unpatented)
  • fabric
  • food inventions
  • formulas--chemical
  • formulas--cosmetic
  • formulas--food
  • machines
  • machines--internal parts
  • magic tricks or techniques
  • manufacturing processes
  • mechanical inventions
  • medical devices--mechanical
  • movie plots (not written)
  • movies--script
  • movies--treatment
  • musical composition
  • odors/processes
  • photographic processes, and
  • project designs.

The one element that these items of information have in common is that they have the potential to make money for their owners if they are kept secret from would-be competitors and are used to make money in the marketplace.

Related terms: business information as trade secret; customer lists; databases as trade secrets; formulas as trade secrets; GATT (General Agreement on Tariffs and Trade); ideas as trade secrets; industrial know-how as trade secrets; industrial secret; methods and techniques as trade secrets; patterns and designs as trade secrets; processes as trade secrets; software and trade secrets.

2. What makes something a trade secret?

As mentioned, a trade secret is any information that both benefits a business commercially and is kept a secret. More specifically, when deciding whether something qualifies as a trade secret, courts will typically consider the following factors:

  • the extent to which the information is known outside of the particular business entity
  • the extent to which the information is known by employees and others involved in the business
  • the extent to which measures have been taken to guard the secrecy of the information
  • the value of the information to the business, and
  • the difficulty with which the information could be properly acquired or independently duplicated by others.

Related terms: competitive advantage; compilation of information as a trade secret; copyright and trade secret law compatibility; head start rule; in-house trade secrets; notice to employees of trade secret; novelty and trade secrets; parallel research; patent application, effect on trade secrets; physical devices, ability to maintain as trade secrets; read-only memories (ROMs) and trade secrets; reasonably precautionary measures to protect trade secrets; source code as trade secret; trade secret, defined; trade secret owner; Uniform Trade Secret Protection Act.

3. How are trade secrets lost or stolen?

Information that qualifies as a trade secret is subject to legal protection (against theft and misappropriation) as a form of valuable property--but only if the owner has taken the necessary steps to preserve its secrecy. If the owner has not diligently tried to keep the information secret, courts will usually refuse to extend any help to the trade secret owner if others learn of the information.

Some activities that the courts will commonly treat as trade secret theft--which means the owner will be afforded some judicial relief, such as damages or an order preventing use of the stolen information--are:

  • disclosures by key employees (current and former managers, scientists and others occupying positions of trust) in violation of their duty of trust toward their employer
  • disclosures by employees (current and former) in violation of a confidentiality agreement entered into with their employer
  • disclosures by suppliers, consultants, financial advisors or others who signed nondisclosure agreements with the trade secret owner, promising not to disclose the information
  • industrial espionage, and
  • disclosures by any person owing an implied duty to the employer not to make such disclosure, such as directors, corporate offices and other high-level salaried employees.

When a disclosure is considered wrongful, the courts may also consider use of the information wrongful and issue an order (injunction) preventing its use for a particular period of time.

Related terms: accidental disclosure of trade secrets; antitrust law and trade secrets; beta testing and trade secrets; confidential employment relationship; confidentiality agreements; covenant not to compete by employee; disclosure of confidential information; duty of trust; exit interview; Freedom of Information Act, exemption of trade secrets; illegal restraint of trade; improper acquisition of trade secrets; improper disclosure of trade secrets; industrial espionage; infringement of trade secret; loss of trade secrets; maintained as a trade secret; nondisclosure agreement; notice to former employee's new employer; piracy; public domain and trade secrets; public records and trade secrets; reverse engineering and trade secrets; theft of trade secrets; unsolicited idea disclosure.

4. May trade secrets be sold?

As with other types of property--such as goods, accounts receivable, patents and trademarks--trade secrets may be sold by one business to another. Most trade secret sales occur as part of the sale of the business owning the trade secret, but that is not mandatory.

Related terms: covenant not to compete by owners of a sold business; licensing of trade secrets; specific performance of covenant not to compete.

5. How is trade secret protection enforced?

If the court finds that trade secret theft has occurred, it may issue an order (injunction) requiring all those wrongfully in possession of the information to refrain from using it or disclosing it to others. The court may also award the trade secret owner money damages to compensate for any monetary loss suffered as a result of the theft. In cases involving willful or deliberate theft, the court may also award punitive damages to punish the wrongdoer. Finally, in extreme cases, criminal antitheft laws may be invoked and the trade secret thief subjected to criminal prosecution.

Related terms: damages in trade secret infringement actions; independent conception, defense to trade secret claim; injunctions in trade secret cases; predetermination of rights in technical data; temporary restraining order; territorial restriction agreements--trade secrets; trade secret infringement action; tying arrangements; unjust enrichment and trade secrets; World Intellectual Property Organization (WIPO).

6. Trade Secret Resources

If you're interested in preparing your own trade secret protection contracts for software, you may want to consult this Nolo Press resource:

  • Software Development: A Legal Guide, by Stephen Fishman.
    A detailed description is provided in the Introduction, Section C. (Order information is at the back of this book.)
  • If you have access to the Internet's World Wide Web you can find valuable information about trade secrets by using the Trade Secret Home Page This site provides discussions of recent developments and general background information on trade secrets. Also visit Findlaw, a general purpose legal search engine. Click on intellectual property in the topics section of the homepage and then click on the trade secret subcategory when the intellectual property page appears. From there you can find appropriate statutes and discussions of trade secret principals.

PLEASE NOTE The information presented at MarketingToday is not legal advice, MarketingToday is not in the business of legal information, we are not lawyers, just publishesr. We provide this information to help you understand the issues that we believe marketers should be aware of. We recommend that you consult a qualified attorney who specializes in trademarks, copyrights, advertising, intellectual property and the Internet for your questions or problems, we do.

PDLBanner2.jpg (18555 bytes)

MT2-large.gif (2252 bytes)

PositionAgent - Monitor Website Search Engine Rankings - PositionAgent monitors where your website is ranked on top search engines for selected keywords and reports all listings and positions to help you get more hits.