Trade Secrets: Why They Matter to Your Business


In the world of electronic sharing and emails providing data at lightning speed, the issue of trade secrets has become an increasing concern for all businesses. Minnesota recognized this and adopted the Uniform Trade Secrets Act in 1980.

A trade secret is information, including a formula, pattern, compilation, program, device, method, technique, or process that derives independent economic value, actual or potential, from not being generally known to or readily ascertainable through appropriate means by other persons who might obtain economic value from its disclosure or use; and is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.

There is not set definition of what is considered “reasonable effort” under the statute. Courts have interpreted it to mean a “continuing course of conduct by the employer, a course of conduct which creates a confidential relationship.” As always, it depends on the business, the trade secret itself, and the circumstances behind its alleged dissemination on whether something is considered a trade secret. This does not leave a lot of guidance for businesses; however, there are ways to prevent a trade secret from being confronted. Some tips for businesses:

  • Identify all information that is confidential and clearly label the file with “confidential and propriety” on it.
  • Provide all employees with a policy handbook that outlines all confidential protocols and require employees to sign a confidentiality agreement.
  • If a confidential file is stored electronically make sure it is password protected.
  • If an employee has a company laptop as part of his or her employment with confidential information on it, make sure to retrieve that laptop with the hard drive back if that employee leaves.
  • Distribute confidentiality guidelines to all employees.
  • Require vendors, suppliers and customers to sign non-disclosure agreements regarding any confidential materials.
  • Limit access to confidential materials to employees that “need-to-know.”
  • If applicable, post “Authorized Personnel Only” signage at access points containing confidential information.
  • Establish procedures to shred confidential material.
  • Maintain rules and procedures for handling, distributing, and collecting confidential materials.
  • Consistently remind employees what is regarded as confidential business information.
  • If confidentiality is breached, take action to punish the violator and prevent further loss.

This is by no means an exhaustive list of all precautions a business can take to protect their confidential information. It is recommended to take all necessary steps to protect trade secrets and no business can be too careful in doing so.