What Form of Protection Does Confidential Information/Trade Secret Protection Provide?
Confidential information/trade secret protection can allow you to prevent someone from using or disclosing your secret information or copying your product as long as they cannot easily discover the information embedded in your product.
However, legal protection over confidential information/trade secrets does not give any absolute right to exclude competitors. So, for example, if the secret information is embedded in your product, competitors can reverse-engineer the product, discover the secret and use it for their own purposes. Also, the fact that something is confidential does not automatically allow you to exclude someone from making commercial use of it if they independently developed it.
HOW DO YOU GET LEGAL PROTECTION OVER YOUR COMMERCIAL SECRETS?
In order to be able to claim confidential information/trade secret protection, you need to make sure that you take reasonable protective steps to maintain secrecy over the information.
Generally speaking, to determine if the information has been properly maintained as a secret, the following factors may be considered:
- the extent to which the information is known outside the business,
- the extent to which the information is known by individuals involved in the business (including employees),
- what steps have been taken to protect the secrecy of the information,
- how valuable the information is to its owner and how valuable it would be to the owner’s competitors,
- the effort (including any expenses incurred) to preserve the secrecy of the information,
- how easily the information can be copied or properly acquired by others, and
- whether the information is treated as a secret by its owner and by the competitor who has appropriated it.
Upfront costs for protecting your confidential information/trade secrets are typically nominal but can accrue over time in the form of administrative time and legal fees.
In the United States, as in Canada, confidential information/trade secrets are not regulated at the federal level. Instead, each province in Canada and each state in the United States have their own rules, even though they share many similarities. In the United States in particular, because of the differences in the way in which each state deals with the practical aspects of the law, the state in which you choose to sue someone can be an important strategic consideration. General issues surrounding litigation strategies in different jurisdictions will be discussed in a subsequent module.