Typical trade secret incidents

The life cycle of a business, much like that of a human being, goes through many stages. Businesses are continuously changing and evolving. With the passage of time, a company will go through the various stages of the business life cycle.  Business experts disagree on the number of distinct stages in a business life cycle, although a number specify these stages as follows …

  • Development
  • Start-up
  • Growth
  • Expansion
  • Maturity


At each stage, a business will face various challenges. Running a successful sustainable business is like juggling, the manipulation of multiple objects, keeping multiple balls in the air simultaneously – product or services leadership; operational excellence; delighting the customer; proper financials, etc.

One ball which certainly needs to be kept in the air represents intangible assets and intellectual property, and specifically the trade secrets of the company, given that trade secrets oftentimes are the most valuable assets the company possesses. Broadly speaking, any confidential business information which provides an enterprise a competitive edge may be considered a trade secret.

Trade secrets

A trade secret is defined as any information that is:

  • Not generally known to the relevant business circles or to the public. The information should also not be readily accessible.
  • Confers some sort of economic benefit on its owner. This benefit must derive specifically from the fact that it is not generally known, and not just from the value of the information itself. It must have commercial value because it is a secret. Commercial value encompasses potential as well as actual value.
  • It must have been subject to reasonable steps by the rightful holder of the information to keep it secret. What is reasonable can vary depending on the specific circumstances.

A trade secret continues for as long as the information is maintained as a trade secret. However, information may no longer be considered to be a trade secret once it becomes easily accessible, is no longer properly protected or has no commercial value.

Typical incidents

Many organizations are failing to properly protect these valuable assets, and this failure is not unique to any one specific stage in the business life cycle.

This list below captures some of the typical trade secret incidents we see befall businesses …

  • A founding member leaves the company and takes some trade secrets with him and then establishes another competing start-up.
  • The company fails to understand that certain things should be kept secret and shares too much information with an external party.
  • A potential investor walks away after asking the company about their trade secret policy, processes and systems to properly protect such valuable assets.
  • A dis-grunted employee leaves the company and takes some trade secrets with him, put onto a memory stick on his last day of employment.
  • A supplier entrusted with one of the trade secrets of the company shares it with a competitor.
  • Cyber criminals hack the network of the company and steal some trade secrets. Cyber criminals are after the trade secrets of the company, the confidential business information which provides an enterprise with a competitive edge.
  • The company divests one part of the business but mistakenly gives away some trade secrets as well.
  • A collaboration partners accuses the company of stealing one its trade secrets, breaking the terms and conditions of the collaboration agreement.

Avoiding these type incidents:

I suggest that a business should strive to avoid or at the very least minimize these typically incidents from happening.

Firstly, the business needs to display management and leadership with respect to the trade secrets of the organization.

Secondly, the organization should embrace trade secret metadata.

“You can have data without information, but you cannot have information without data.”

– Daniel Keys Moran

Thirdly, it is important to note that trade secrets are fragile and require some TLC, using a combination of cultural, legal, technical and administrative means.

Trade secrets and know-how can be some of the most important assets in the intellectual property portfolio of an organization. They are at least on a par with other forms of intellectual property such as patents and trademarks. Some would argue that trade secrets and know-how are the crown jewels of any intellectual property portfolio.

Trade secret asset management:

Trade secret asset management is about the policies and procedure, processes and systems, education and governance defined and taken into use to help manage such assets.

Simply deciding to keep something secret is not sufficient !

I suggest that trade secret asset management consist of a diverse range of elements, such as:

  • Having a trade secret policy in place
  • Designing, developing and deploying a trade secret process within the organization
  • Taking a robust fit for purpose trade secret asset management system into use to underpin that process
  • Including a section on trade secrets to the basic IP training for all employees
  • Identifying trade secrets across the entire organization
  • Identifying any trade secrets shared with 3rd parties
  • Identifying any trade secrets belonging to 3rd parties and entrusted to the company
  • Putting the appropriate administrative, legal and technical protection mechanisms in place
  • Gathering metadata about the trade secrets for management purposes
  • Installing a culture of confidentiality within the company as far as trade secrets are concerned
  • Putting a governance structure in place

 Donal O’Connell, IPEG consultant & Managing Director, Chawton Innovation Services Limited

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