In the world of business, not every valuable asset is visible on a balance sheet. Some of the most important tools companies rely on are hidden in plain sight: trade secrets. Whether it’s a secret recipe, a manufacturing process, or a client list, trade secrets can be the lifeblood of a business. But many companies don’t fully understand what trade secrets are, or how to protect them until it’s too late.
So, what exactly is a trade secret? In simple terms, it’s any confidential information that gives a business a competitive edge. Think of the Coca-Cola formula, Google’s search algorithm, or KFC’s blend of 11 herbs and spices. These are all classic examples of trade secrets. What makes them legally protectable is that they are not publicly known, they provide economic value, and the company takes reasonable steps to keep them secret.
Protecting trade secrets isn’t just about locking up the recipe in a vault. It requires active steps, like using non-disclosure agreements (NDAs), limiting internal access, and training employees on confidentiality policies. If you don’t treat the information like a secret, the law may not either. For example, if you casually share your proprietary process with vendors without an NDA, it might lose its legal protection.
But what happens if someone steals your secret sauce? U.S. law, including the Defend Trade Secrets Act (DTSA), provides legal remedies. If a trade secret is misappropriated—meaning stolen, leaked, or used without permission—you can sue for damages and, in some cases, even ask the court to stop the person from using it. A famous case? When Uber was accused of acquiring trade secrets from Google’s self-driving car division (Waymo), it led to a high-profile lawsuit that ended in a settlement worth hundreds of millions.
The bottom line: If your business relies on confidential information to stay competitive, you need a plan to protect it. Identify what counts as a trade secret, put systems in place to guard it, and make sure your employees understand the importance of keeping it confidential. In today’s digital and fast-paced world, trade secrets can be stolen with a click—so don’t wait until they’re gone to realize their value.