Every business has it trade secrets, and they can take many forms. Your trade secret might be your customer list. It may be your business plan. It might be a process of how your product is made. Regardless of the forms your trade secrets take, they are assets of your company that must be protected.

Kauffman Founders School’s expert Peter D. McDermott, an attorney and intellectual property guru, discusses how new start ups can protect what is essentially the lifeblood of their business.

Patents can certainly help protect trade secrets, but if you’re not quite ready to patent your product or ideas, then a plan is crucial.  Peter advises that the courts will not be sympathetic to you if you accuse someone of stealing your trade secrets but did little or nothing to protect them.  When it comes to understanding the process of protecting your trade secrets, unfortunately there is no document that you complete that registers them with the government or any other entity for that matter.  As Peter points out, “you simply know them, and you hope that other people don’t.”

So how do you best protect your trade secrets?  Some actions that you can take include:

• Establishing written employee policies regarding the handling of your trade secrets
• Locking office doors
• Having robust IT protections in place
• Keeping papers off desks when visitors are in the building

Should an employee leave your company and begin sharing your trade secrets with a new employer, you’ll need to pursue legal action and have records that indicate you had that concept in place or in mind, and that you took steps (like those listed above) to protect it.

Establishing solid written company policies around the handling of trade secrets that employees learned while working for others is also critical. Ensuring your employees are aware that they are not to share or use trade secrets that they learned from a previous employer is a good first step.  Should you or your business be accused of stealing another company’s trade secrets, you’ll need to take the allegation seriously and take action immediately.  Do your homework by conducting a thorough investigation.  If the accusations are justified, you’ll need to take what’s called “remedial action” by removing the trade secrets from your product.  It’s also possible that the owner of the trade secrets may be willing to have you pay a licensing fee to use them in your business. 

As an entrepreneur, you know you must tackle an enormous task as you start a new business.  Protecting your trade secrets is an important part of your intellectual property’s strategy and is crucial to your future success.