Trade secret

Trade Secret

A Trade Secret (pronunciation: /treɪd ˈsiːkrɪt/) is a confidential piece of information which provides a company with a competitive edge. The term originates from the English words "trade" (meaning commerce or business) and "secret" (meaning something that is kept hidden or undisclosed).

Trade secrets encompass manufacturing or industrial secrets and commercial secrets. The unauthorized use of such information by persons other than the holder is regarded as an unfair practice and a violation of the trade secret. Depending on the legal system, the protection of trade secrets forms part of the general concept of protection against Unfair competition or is based on specific provisions or case law on the protection of confidential information.

Definition

The precise language by which a trade secret is defined varies by jurisdiction, as do the particular types of information that are subject to trade secret protection. Three factors are common to all definitions of a trade secret, as follows:

The information is not generally known to the relevant business circles or to the public. The information should also not be readily accessible.
The information confers some sort of economic benefit on its owner. This benefit must derive specifically from the fact that it is not generally known, not just from the value of the information itself.
The owner must make reasonable efforts to maintain the secrecy of the information. These efforts will be taken into account when determining whether information qualifies as a trade secret.

Related Terms

Confidentiality Agreement: A legal contract between at least two parties that outlines confidential material, knowledge, or information that the parties wish to share with one another for certain purposes, but wish to restrict access to.
Non-disclosure Agreement: A legal contract between at least two parties that outlines confidential material, knowledge, or information that the parties wish to share with one another for certain purposes, but wish to restrict access to or by third parties.
Intellectual Property: Refers to creations of the mind, such as inventions; literary and artistic works; designs; and symbols, names and images used in commerce.
Patent: A form of intellectual property that gives its owner the legal right to exclude others from making, using, or selling an invention for a limited period of years.
Copyright: A legal term used to describe the rights that creators have over their literary and artistic works.