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How to Keep Your Trade Secrets Secret

Author: S. Hayes Edwards Jr. Date: 05/08/2015

Categories: Business Startups, Corporate and Business Law, Employment Law & Litigation, Intellectual Property, Legal Issues For Restaurant Owners

Does your business rely on information that you wouldn’t show to your competitors? If you don’t have a secure grasp on such trade secrets, you are at risk of losing these valuable assets with no way to recover them. The good news? You can easily protect a trade secret under Maryland and/or D.C. law, if you take the right steps.

First, be sure you are clear on what qualifies as a trade secret. The Maryland Uniform Trade Secrets Act (MUTSA) and the District of Columbia Uniform Trade Secrets Act (DUTSA) defines a “trade secret” as confidential information that is valuable because it cannot be easily obtained by others through lawful means. Examples are marketing strategies, sales plans, client lists, and other types of knowledge that your business may accumulate. Under MUTSA and DUTSA, a party who “misappropriates” or steals a trade secret can be liable for civil damages or can be ordered not to use the information by a court.

In order to benefit from that definition and protect your secrets, you must actually take steps to keep them secret. For example, you may well need to disclose your trade secrets to your employees in order to conduct business. In that case, the person receiving the information must be bound to keep it secret, preferably in writing. Non-disclosure agreements with employees are a perfect example of how businesses maintain the secrecy of their trade secrets. Other methods of maintaining confidentiality are labeling documents or communications as confidential, policies that explain which information is confidential, physical barriers, or “clickwraps” such as those that are often used in connection with software licenses.

Implicit, or unspoken, confidentiality measures might be enough to maintain trade secret status, but they are not advisable. A policy that no one knows about can still be very costly if you have to file a lawsuit or issue a cease and desist letter each time the information is used. A clearly written confidentiality policy can deter intentional or accidental disclosure of a trade secret, and deterrence is always less expensive than a lawsuit. By making clear exactly what constitutes your trade secret, the agreement will not only be more enforceable, but it will be easier to understand and comply with. Then, if your deterrent system fails, your clear and careful efforts to protect your trade secrets will work to your advantage if you bring a lawsuit under MUTSA and DUTSA.

Think about what trade secrets you might have before they fall into the wrong hands. If you think you might be developing trade secrets or if you already rely on them, contact me at hedwards@mcmillanmetro.com or 301-251-1180, ext. 329 so we can discuss your options and procedures. My colleagues and I will be glad to assist you in analyzing your trade secrets and how best to protect them.