One of the biggest, and often most overlooked, assets your business owns are its trade secrets. A lot of time and energy go into talking about the big boys of intellectual property, like patents, trademarks, and copyrights—so much so that you’re probably wondering what a trade secret is. These are essentially the secrets a company keeps about things like inventions, secret formulas, customer lists, supplier contacts, and generally those bits of information that keep the company special, unique, and give it that edge against the competition. Famous examples include the formula for Coca-Cola and the KFC secret recipe.
But what are you supposed to do about these trade secrets? Firstly, you need to keep them secret. They’re only protected by law if nobody knows about them. Secondly, you need to know what they are, how they’re used, and how their protected—and you find all of that out through a trade secret audit. A trade secret audit is good to perform at any time, even when your business is in its prime, if you just want to know which trade secrets are the most important and how to best ensure they’re not going to get out into the wild. After all, because these secrets are so valuable to your business, you do not want them to be discovered by the prying eyes of your competition or released to the public by a disgruntled former employee.
So how does a trade secret audit work? It starts out with your business attorney putting together the party, an Avengers-like team, who will work on the audit. This team will be given access to the company’s trade secrets to determine what are the company’s secrets and how best to secure them. Once the team is assembled, they will be tasked with auditing the secrets. The first step to the actual audit, then, is to identify what assets/resources are trade secrets and what are not. This requires a comprehensive review based on the rules regarding trade secrets, and ultimately the team should determine exactly what constitutes a trade secret in the context of your unique business structure.
Once the trade secrets have been identified, the team is tasked with determining how well protected those secrets are and how many people know about them. Are they stored out in the open for everyone (including customers) to see? Are they sheltered away in a vault somewhere offsite? Are they stored on computers? In the cloud? Who has access to them? Are those employees with access to them governed by non-disclosure agreements? These are just a few of the questions the audit team should be asking. And once they have answered all of these main questions, the team should move on to figuring out where problem areas are, how to solve them, and how to use technological innovations to even further secure your company’s secrets.
As Benjamin Franklin once famously wrote, three can keep a secret if two of them are dead. (I’m not advocating killing people you tell secrets to, but just be aware of who you share your trade secrets with.) Trade secrets are incredibly important to your business, whether you know it or not, and you must do everything you can to keep them secret.
Photo courtesy: kennymatic
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