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What Is a Trade Secret? Trade Secret Legal Definition of Trade Secret.

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Trade Secret

Trade secrets are a type of Intellectual Property that consists of information and can include a formula, pattern, compilation, program, device, method, technique, or process. To meet the most common definition of a trade secret, it must be used in business, and allow obtaining an economic advantage over competitors who do not know or use it.

The definition of a trade secret that has been defined in an unambiguous language varies by jurisdiction, as do the particular types of information that are subject to trade secret protection. Three factors are common to all such definitions:

A trade secret is an information that

  • Is not generally known to the public;
  • Confers an economic benefit on its holder because the information is not publicly known; and
  • Where the holder makes efforts to maintain its secrecy.

Trade secrets are an invisible yet salient component of a company?s intellectual property (IP). They can be significant benefactors to a company's value, measured as its market capitalization.[4] Being invisible, that contribution is hard to measure.[5] Patents are a visible contribution but delayed, and unsuitable for internal innovations.

Registration of Trade Secrets-

Registering confidential information through notarial deeds, deposits at the Intellectual Property Registry, and time-stamping services to establish ownership, contents, scope, and date of creation.

Protection Of Trade secrets-

Courts can protect trade secrets by prohibiting misappropriation, ordering parties that have misappropriated a trade secret to take steps to maintain its secrecy, as well as ordering payment of a royalty to the owner. Courts can also award damages, court costs, and reasonable attorneys' fees. This protection is minimal because a trade secret holder is only protected from unauthorized disclosure and use, which is referred to as misappropriation. If a trade secret holder is unsuccessful in maintaining secrecy or if the information is independently discovered, becomes released or otherwise becomes generally known, protection as a trade secret is lost. Trade secrets protection continues until discovery or loss since they do not lapse.

Example: An MES develops a process for the manufacturing of its products that allows it to produce its goods more cost-effectively. Such a method provides the enterprise with a competitive edge over its competitors. The enterprise in question may hence value its know-how as a trade secret and would be unwilling for the competitors to learn about it. It makes sure that only a limited number of people know the secret, and those who know it are made well aware of its confidentiality. When dealing with third parties or licensing its know-how, the enterprise signs confidentiality agreements to ensure that all parties know that the information is a secret.


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