Trade Secrets. What Are They?

Generally, trade secrets are any information, process, formula, or technique owned by a business that is secret, is subject to reasonable efforts to keep it secret, and derives its actual or potential economic value from remaining secret. The big difference between a trade secret and a patent, for example, is that patents are publicly registered.  An engineering drawing, a soft drink formula or particular software code may become subject to a patent and the legal protections afforded to patents against infringement. However, until or unless these become patented, their owner will keep them secret or confidential, known only to select employees or customers, to protect their commercial value and guard them against being copied or stolen by persons who can make use of them.  Typically, but by no means exhaustively, trade secret information may also include pricing, employee salaries, valuable vendor relationships, customer contacts, financial information of the company, marketing plans and strategies, customer purchase orders and various internal documents.

Different legal rules apply to trade secrets than to patents or copyrights.  In California, Uniform Trade Secret Act (Cal. Civ. Code §§3426 through 3426.11) provides protection to valuable confidential commercial information.

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