What is Trade Secret?
Trade Secret is a important aspect to run the commerical goods businesses. They tend to give a tough competitve edge to other companies by secruing the Business proreitory informtaion for longer period of time. Trade Secret are part part of Intellectual Property Laws. The protected information is way more precious to enhance secercy through perpetual essence.
A Trade Secret can be any confidential information of business such as formulas, processes, design, recipes, methods or data. The protected Trade Secret information should derive some economic value as of no other person knew it through public disclosure. Specilality of trade secret it is protected for eternal period, untill the information got leaked, or disclosed through uncontingent event of fraud.
Best example of trade secret is Coca-Cola, the recipe of making Coca-Cola is kept under highest security and equivalent measures adhered not to disclose to people. The Coca-Cola Comapny has preserved the business infromation and it helped maintaning unique position in market till now even though the recipe was discovered before 150-200 years.
Importance of Trade Secret
Keeping the business information as trade secret can revolutionalise the business in large scale. It acts like you own the market demands, seize the opportunity in your hands. Primarliy, not all informtaion can be declared as Trade Secret. To qualify as a Trade Secret it must pass certain charactistics:
a) Secrecy: The information must not be available to public or readily available to anyone, has to be preserved with highest security.
b) Long term: The protected a business information has no time limit to keep information confidential. The trade secret can be protected forever till their secrecy is preserved.
c) Economic value: The trade secret must offer a unique competitive edge or other economic benefits to the business. The preserved information must be able to provide value through the uniqueness of the product, service, process, recipe, methods or designs.
d) Efforts to protect information: The owner of trade secret is liable to make reasonable and appropriate efforts to keep the information forever secret this can be initiated through NDA agreement, encryption, internal protocols, and strict privacy of employees, vendors or associated third party.
e) Difference Market: The protected trade secret needs to stand out in market, holds a unique position and offers variety of benefits in businesses for long terms goals.
f) Confidential protocols: The owner has to laid the set rules, protocols, encryption and password, to avoid the unnecessary leakage of information through any means. Give access to fewer individuals or less individuals for information.
Types of Trade Secrets
To give competitive edge in the industry the trade secrets can be of different information, it not only have to be inphysical form, though it can be some formula, process, choice, or strategies used by the businesses to attract customer. Following are the different types of trade secrets.
a) Prototypes: The design of a new product or refined ideas that are not yet released in public into the market. Prototype helps company to secure the design from copying others and help businesses to work on the further development for product or process.
b) Marketing strategist: For better understanding- the type of advertisement a businessman use its tactics to attract customer or 3D advertisement, promotion, pricing or product launching. The implementation of these strategies remain secret to prevent competitors from copying and ensure companies that embed ideas into successful motions and using for themselves.
c) Customer Data: It is the highy detailed database of customers, clients, preferences of customer choice, purchasing history, personal data of customer, likes and dislikes of customers. This information is highly valuable for the companies to understand the customer needs and hit the specific targeted audiences. They create Fomo among customers and anticipating customer through understanding customer preference, taste buds, needs. The customer data helps in personalizing the market and offers programs like coupons, royalties. This sort of information is highly valuable for food and consumption industry. Example - The type of advertisement performed by cadbury company to attract customers.
d) Formulas: the formula is a proprietary information , recipe, chemical composition of a particular products. Because most companies do not want a competition so, they keep it formula as the trade secret. Example The secret formula of making Coca-Cola which has remained as trade secret till this date.
e) Processes: These are the methods and techniques applied in manufacturing, software products or other business operation that give a company a different competitive edge. The company may have a special method of producing, goods and materials that perform more efficiently than competitors.
How trade secret are protected?
The owners of great secrets has to apply reasonable steps and ensure that the information remains confidential forever. Common practices done by companies to keep trade secret for a longer period
1. Non disclosure agreement: this binding contract restricts employees and companies not to disclose the confidential information through any means
2. Restricted access: Fewer individuals or limiting the access of information within the company
3. Physical security: Keeping the trade secrets in locks, safes, and storage of sensitive documentated information. Reduce unauthorised access to every individual.
4. Digital security: Protecting the trade secret information by creating encrypting files using a secure and stable networks
5. Training the employees: Boost employees and give them education and training to maintain the sensitive information a complete secret.
Difference between trade secret and patent
Patent: Patent is a type of intellectual property granted for the invention of any new product, process or novelty in new technologies. The patents is granted for a limited period of time that is usually 20 years from the date of application is filed. Once the period is complete the information completely goes for the public domain. Eventually, patent holder application has to fulfill full disclosure of invention before the official authorities. A patent has many benefits like seeking remedies in courts of law in case of infringement, royalty fees and enjoying exclusive rights over the products.
Trade secret: Trade secrets are remain secret till the indefinitive period of time. It is remain undisclosed only owner and concerned personal a given access s to the secret. There is no time period to protect the secret you can protect the trade secret as long as it remain undisclosed. All the efforts encourage by businessman to maintain its highest security and prevent leakage of information to others. In trade secret you do not have to file for application for the protection of trade secret before official authorities. Compared to patent, trade secret has a wide area of protecting business information such as customer data, formulas, process, business information, strategies and advertisement.
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