Trade Secret Audit

Trade secrets should be at the forefront of every business's intellectual property portfolio. Trade secrets provide a low-cost way to legally protect both technical and non-technical proprietary business information. With the constant threat of theft from both internal and external sources, businesses must legally protect their proprietary information or risk losing these valuable assets without the possibility of legal redress.

While extremely important, many businesses and professionals are uncertain how to create and maintain legally protectable trade secrets. Our trade secret auditing services can help.

What can be a trade secret?

Trade Secret: A secret used in trade. A trade secret may be any information that can be used in the operation of a business or other enterprise and is sufficiently valuable and secret to afford an actual or potential economic advantage over others. A few examples of trade secrets include inventions (if publicly available, only those not easily reverse engineered), customer lists, recipes, marketing plans, financial projections and processes of manufacture. Famous examples of trade secrets include the formula for Coca-Cola, Google's Search Engine Algorithm and the procedure the New York Times uses for determining its Best Sellers List.

How do you create a trade secret?

To create a trade secret, the information must be secret, it must derive economic value because it is secret, and it must be the subject of efforts that are reasonable under the circumstances to maintain its secrecy.

Why do you need to make sure you are properly protecting your trade secrets?

Let's look at an example. What would you do if an employee took a company car when they went to work for a new employer? You would want to get the car back. Why should their new employer get the benefit of using the car you paid for? What would you need to do? You would need to show the court the title that states you are the owner of the car. Then, the judge would make the employee either give you the car back or, if they damaged the car, pay you money to compensate you for that loss.

Now, what if this employee didn't steal just a car, but your company's customer list, manufacturing process, or pricing structure and disclosed it to their new employer? What would you do? As with the car, you can seek relief from the courts if you have the right documentation. You need to show the court you have "title" to this information. How can you get title to this information? By creating a trade secret. If you can prove to the judge this stolen information was your company's trade secret, the judge will make the employee either give you back this information or, if the employee has already disclosed the information, pay you money to compensate you for that loss.

Why do you need to do a trade secret audit?

A trade secret audit assists you in creating the proper "title" for your proprietary information. But, more importantly, it also prevents theft of your proprietary information from ever occurring. Conducting a trade secret audit signals to your employees and competitors the seriousness with which you take your intellectual property rights and the lengths you will go to protect them. This may dissuade someone from stealing your proprietary information. Additionally, a trade secret audit includes information for employees on preventing accidental loss of trade secrets.

What is a trade secret audit?

In a trade secret audit, we look over your business's assets, practices and procedures, and we identify what areas of your business may be eligible for trade secret protection. Then, we identify the current strength of your trade secrets and provide both general and targeted feedback on what you can do to either strengthen the protection of your current trade secrets or protect currently non-protected information as trade secrets in the future. To assist the implementation of our recommendations, we provide you with an action plan with step-by-step instructions for turning your proprietary information into legally protectable trade secrets.

What should I expect from a Trade Secret Audit?

  • Initial Consultation
  • Detailed Meeting or Field Visit
  • Analysis and Report
  • Strategy Meeting
  • Follow-up