Can You Keep a Secret?

Can You Keep a Secret?

“Transparency” is a term that gets used on television a lot as something desirable, particularly in government terms to require that that our elected officials are being open and honest.. What transparency means is that there is nothing hidden and the people “employing” the elected official have complete knowledge of what is going on at all times.

Sometimes we think that even in the world of business, “transparency” would be a good policy as well. Very often the consumer world gets suspicious that businesses are not doing business in an honest and forthright fashion. But it is not uncommon for a business to have a need to sustain a certain level of secrecy about their products, their marketing and their business plans. This is not always because the business is crooked. It is just a fact of life in the business world and one that has given us a legal framework for trade secrets and confidentiality agreements of various sorts.

What would be the circumstances that you would want to take advantage of the legal status of trade secrets to keep the internal operations of your business a secret? Well, the most common rational for utilizing legal trade secret protection is to retain the marketing advantage that you might have to stay one step ahead of your competition. The world of business can be a cut throat environment to be sure. If one competitor learns of the secrets of how the competition makes a better product, utilizes a superior distribution or marketing plan or has a organizational philosophy that gives them the edge, the competition is more than happy to exploit that knowledge to capture business away. So it’s in the best interest of any business to protect their advantages from becoming well known to make sure they can capitalize on their hard earned edge in a competitive market as they deserve to do.

Trade secrets generally fall into either the “technical” or “business” related categories. Technical trade secrets, as the name implies, are discoveries or new ways of doing things to create something new. This would include the technical plans or specifications for a protected product or new design, the methods you have designed for manufacturing a breakthrough technology, notes and insider design documentation on failures in testing that would tip off competition on how you innovated this new product.

Business trade secrets are just as valuable because they include exclusive management and organizational methods that make you more profitable, marketing plans that would give your competition a heads up on “where you are going to hit them”, information about your customers and details about your employees and specialized talent that you retain to make your business run better than the competition.

There is a lot of “corporate espionage” between companies to crack the secrecy of another company to gain a competitive advantage. But as a new business just putting together plans for security, there are a few things you can do to legally protect yourself. A common practice for businesses in need of trade secret protection is to have their business partners all sign what is called a “Nondisclosure Agreement” which basically requires that anything your partners learn about your business will remain a trade secret even if the partner relationship does not continue. This is a legally binding document you can use if that partner uses or leaks your trade secrets and you lose business or market advantage from it.

Many companies require similar kinds of documents from employees and even add a “Non-compete” agreement to make sure an employee or partner doesn’t use trade secret information to compete for business from them. Your lawyer can help you decide what is the best way to protect your business and how to use these documents wisely.