What is a Trade Secret

A trade secret is defined as “Information, including a formula, pattern, compilation, program, device, method, technique or process that:

(a) derives independent economic value, actual or potential, from being generally known to the public or to other persons who can obtain economic value from its disclosure or use; and

(b) is the subject of efforts that are reasonable under the circumstances to maintain its secrecy. Cal. Civ. Code section 3426.1(d).”

The most widely used example of a trade secret is the formula for Coca-Cola’s (R) famed soft drink Coca-Cola (R). They never filed a patent on the formula and have managed to protect the secret for more than 100 years (I believe since 1886). However, if the secret ever got out, they would not be able to stop other persons or entities from using the formula for their own benefit. Today, if you use an invention before the public (put the product on the market) then after one (1) year you forfeit all of your patent rights in that invention. Trade secrets are used by those who wish to keep a monopoly over an invention or idea which is not going to be directly out in the public eye secret for more than the 20 years provided by the patent system.

The idea behind trade secrets is to create contracts which will prevent those who need to work with the secret from revealing the secret and to make those persons pay for the long term damage if they do happen to reveal the secret.

If done correctly a trade secret may last forever.

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