Trade Secrets

Trade secrets are assets that often underpin a business yet create hidden vulnerabilities. There is often no protection against leaking trade secrets unless ownership of the asset has been protected.  Often not a big job but always an important job.

Solicitors to protect your trade secrets

Information and know how is increasingly valuable in today’s world. Hence, the need to protect the asset in your trade secrets is a commercial necessity. Our experience and services include :-

• Trade Secret Protection Strategies – We advise on securing confidential information through contracts, policies, and internal controls.
• Drafting & Enforcing NDAs – Ensure employees, contractors, and partners are legally bound to protect sensitive data.
• Litigation & Injunctions – Fast action to stop misuse or theft of trade secrets, including emergency injunctions.
• Employee Exit Risk Management – Safeguard trade secrets when staff move to competitors or set up competing businesses.
• Confidentiality in Commercial Deals – Protection of trade secrets during M&A, joint ventures, and licensing agreements.

Intellectual Property and Technology trade secrets

Intellectual property assets can include software or database rights, algorithms, formulas, designs and ideas – these all make up your trade secrets. When dealing with intellectual property it is often necessary to deal with assignment of rights to the owner as well as the obligations of confidentiality.

The wide use of consultants increases the risk as consultants do not owe the employer the limited common law duties of confidentiality that employees owe.  Consultants do not have the fiduciary duties owed by directors.  These problems can only be overcome by express contractual agreement – this is something our lawyers can deal with for you.

Trade Secrets implications for commercial agreements

The opportunity to misuse confidential information, hence the need to address what is confidential to that business, arises frequently. Difficulties often arise when the commercial agreement is terminated when the party who has lost out realises the agreement either did not exist or was inadequate.

Based on our experience, the most problematic commercial agreements include (but by no means is limited to):

• Agents or distributors 
• Franchise agreements 
• Joint venture agreements .
• Agreements involving technology 
• Framework agreements 

Making trade secret agreements work in practice

There are many considerations which apply to agreements involving trade secrets and other confidentiality information – a template usually will not cover these points.

It is not unusual to negotiate the terms of a trade secret agreement.  As a disclosing party you may want to push hard for personal commitments rather than just corporate.  As the receiving party you might refuse to give a full indemnity or want to limit liability in some form.

Starting point for any trade secret agreement

Setting out the scope of the agreement and knowing exactly what is to be covered and how the release will be policed is complex and needs to be tailored to the type of negotiations to which you entering. The trade secret agreement needs to cover the obligations expected upon release.

Trade secrets and other confidential information can easily cease to be confidential information because the trade secret agreement did not cover the particular means by which it was made public. If there is no such obligation in the agreement then the other party has not breached it.

Reducing trade secrets risks

We find that there are two main ways to do this, being :-

• Staged disclosure – you may be considering an important and potentially lucrative transaction in which it is imperative, to start the process and create trust and credibility in your product or service, to disclose some information. However, you may not need to disclose all the information. The less you disclose the better, and you may only need to disclose more information when the other party has given clear signs of commitment. You may be better off disclosing bit by bit at various stages which are linked to the other party moving to the next stage and showing commitment to you.
• Insist that people as well as organisations sign up to your confidentiality or non-disclosure agreement – often, the best way of ensuring the other party doesn’t breach an important contract is to ensure that he/she/they are personally liable on breach. Having a commitment from a corporate entity is possibly not nearly as effective as a deterrent.

Trade secret misuse or breach

It may be that the breach is such that the information has been dissipated and damage done to the extent that your only remedy is in damages. However, it may equally be a case that a breach has occurred where the damage can be limited by swift and decisive action – this would be in the form of an injunction.

Any application for an injunction, you need to move fast, have strong evidence and convince the court of the real threat to your business interests for which damages are not an adequate remedy. Injunctions are very expensive so it’s preferable to try and avoid this by having the right confidentiality agreement in the first place which has been carefully thought through.

If there is no trade secret or confidentiality agreement in place covering the alleged breaches it is in practice very hard to obtain an injunction.  Hence, the threat used as a deterrent is unlikely to have teeth.

Breach by employees and directors

With employees and directors the breaches often come to light when the employee or director is already planning the next role.  One deterrent which can work is to write to the new employer putting them on notice of the trade secret restrictions. The rationale is a future employer may not want to run the risk of inducing a breach of an agreement.  We issue and prepare a great many of those letters.