Small Companies Have Big Secrets

"Small companies may have a very large number of trade secrets. These trade secrets are not so well bounded and defined as patents, copyrights and trademarks, and so they tend to blend into each other, forming an interlocking mesh of information that does not easily divide into separate, countable and distinct trade secrets. Finally, trade secrets are created and destroyed rapidly in an information economy, making the management of trade secrets a dynamic process."

This article from the Trade Secret Office, Inc. provides a good overview of trade secrets concepts, a methodology for valuing them, a discussion of litigation issues and helpful recommendations for protecting trade secrets including the following:

"* An inventory of the potential trade secret assets should be conducted immediately. In practical terms, this will involve the preparation of a list of trade secrets with documentation of the dates of creation, places of storage, places of use and other key information necessary for the maintenance of these assets on an on-going basis.

* Employee, contractor, and visitor agreements should be implemented. Careful attention should be paid to both confidentiality and ownership issues, with contractual assignment clauses being implemented where necessary.

* With respect to paper documents and tangible items, procedures for locked file cabinets or other security measures should be implemented.

* Electronic security procedures should be implemented, including, at a minimum, the implementation of login protections on personal computers.

* Access to information should be on a need-to-know basis. Sign out/sign in procedures should be used. Confidential documents should be marked “confidential.” Super-confidential documents should be marked “super-confidential,” and access should be severely restricted.

* Locked bins should be used to discard confidential documents, and these bins maintained by an outside company performing onsite document destruction.

* Accounting procedures should be implemented to track the time, effort and money expended on the creation and development of trade secret assets.

* All persons should wear prominently displayed badges while on the premises. A visitor sign in/sign out badge system should be implemented.

* Manufacturing processes should be restricted from public view.

* The company handbook should devote an entire section to trade secrets. There should be ongoing employee education on the importance of identifying and documenting the existence of trade secret assets, with employee economic incentives for complying with this policy.

* The company should implement a strict procedure for trade secret exit interviews."