The Uniform Trade Secret Act: What is a Trade Secret?

The Uniform Trade Secret Act, which has been adopted by 46 states is designed to protect the owners of valuable business information. The definition of trade secret is so broad it might almost be limited only by human ingenuity and creativity. Among the many types of items which can be defined as trade secrets are the following:

Manufacturing processes
Formulas
Programs
Devices
Techniques
Information

In order for something to be considered a trade secret it must have independent economic value (either actual or potential) and that value is contingent on it not being readily known by others. The trade secret must be also subject to reasonable efforts by the holder of that information to protect its secrecy from others.

In addition to the above technical types of trade secrets are any non-technical data that may also provide the holder with an economic advantage. Sales data, marketing reports and studies, cost reports, bid information and internal pricing data have also been held to be considered trade secrets.

Also, certain compilations of data, which might exist separately in the public domain such as customer lists can be deemed to be trade secret protected providing that certain criteria are met. Where a simple list of a company’s clients may not pass muster as a protectable trade secret, one which contains detailed contact information, sales histories and pricing information may meet this standard.

Negative information may also be deemed a trade secret if it provides economic benefit to the holder. If a manufacturing company possesses data that a particular process or material will either fail or be cost prohibitive, withholding that data from competitors will certainly benefit the holder even if it is to the detriment of the competitor.

No process, formula, program or other similar item can be considered a trade secret if it exists in the public domain or can be ascertained with very little effort or expense. So before you post that new idea or device on the internet or in a journal, understand that trade secret status is lost the moment this occurs.