Editing Trade secret (section)

== Protection ==

Unlike other forms of [[intellectual property]], trade secrets do not require formal registration and can be protected indefinitely, as long as they remain secret.<ref name=":0" /> Maintaining secrecy is both a practical necessity and a legal obligation, as trade secret owners must take "reasonable" measures to protect the confidentiality of their trade secrets to qualify for legal protection.<ref name=":8">{{cite web |title=Intellectual Property Toolkit - Trade Secrets |url=https://www.uspto.gov/sites/default/files/documents/tradesecretsiptoolkit.pdf |url-status=live |archive-url=https://web.archive.org/web/20241122084210/https://www.uspto.gov/sites/default/files/documents/tradesecretsiptoolkit.pdf |archive-date=2024-11-22 |access-date=24 November 2024 |publisher=United States Patent and Trademark Office (USPTO)}}</ref>{{rp|pages=|style=AMA|page=4}} "Reasonable" efforts are decided case by case, considering factors like the type and value of the secret, its importance to the business, the company’s size, and its organizational complexity.<ref name=":8" />{{rp|pages=|style=AMA|page=4}}

The most common reason for trade secret disputes to arise is when former employees of trade secret-bearing companies leave to work for a competitor and are suspected of taking or using valuable confidential information belonging to their former employer.<ref name="auto">{{Cite book |last=Bagley & Dauchy |title=The Entrepreneur's Guide to Law and Strategy |publisher=Cengage Learning |year=2018 |isbn=978-1-285-42849-9 |location=Boston, MA |pages=501–502}}</ref> Legal protections include [[non-disclosure agreement]]s (NDAs), and [[work-for-hire]] and [[non-compete clause]]s. In other words, in exchange for an opportunity to be employed by the holder of secrets, an employee may agree to not reveal their prospective employer's proprietary information, to surrender or assign to their employer ownership rights to intellectual work and work-products produced during the course (or as a condition) of employment, and to not work for a competitor for a given period of time (sometimes within a given geographic region). 

Violating the agreement generally carries the possibility of heavy financial penalties, thus disincentivizing the revealing of trade secrets. Trade secret information can be protected through legal action including an injunction preventing [[Breach of confidence|breaches of confidentiality]], monetary damages, and, in some instances, punitive damages and attorneys’ fees too. In extraordinary circumstances, an ''ex parte seizure'' under the [[Defend Trade Secrets Act]] (DTSA) also allows for the court to seize property to prevent the propagation or dissemination of the trade secret.<ref name="auto" /> 

However, proving a breach of an NDA by a former stakeholder who is legally working for a competitor or prevailing in a lawsuit for breaching a non-compete clause can be very difficult.<ref>{{cite web |title=Customer Lists as Trade Secrets |url=http://www.natlawreview.com/article/customer-lists-trade-secrets|publisher=[[Dykema Gossett]] PLLC|work=The National Law Review|date=2009-12-30|access-date=2012-04-19}}</ref> A holder of a trade secret may also require similar agreements from other parties, such as vendors, licensees, and board members.

As a company can protect its confidential information through NDA, work-for-hire, and non-compete contracts with its stakeholders (within the constraints of employment law, including only restraint that is reasonable in geographic- and time-scope), these protective contractual measures effectively create a monopoly on secret information that does not expire as would a [[patent]] or [[copyright]]. The lack of formal protection associated with registered intellectual property rights, however, means that a third party not bound by a signed agreement is not prevented from independently duplicating and using the secret information once it is discovered, such as through [[reverse engineering]].
[[File:Chartreuse-bottle.jpg|180px|thumb|Green [[Chartreuse liqueur]] protected by confidential information of the ingredients]]
Therefore, trade secrets such as secret formulae are often protected by restricting the key information to a few trusted individuals. Famous examples of products protected by trade secrets are [[Chartreuse liqueur]] and [[Coca-Cola]].<ref>{{Cite news |last=Stafford |first=Leon |title=Coke hides its secret formula in plain sight in World of Coca-Cola move |language=English |work=The Atlanta Journal-Constitution |url=https://www.ajc.com/business/coke-hides-its-secret-formula-plain-sight-world-coca-cola-move/VUWZPlcf2Ne4Yp2p9FO2eK/ |access-date=2023-11-11 |issn=1539-7459}}</ref>

Because protection of trade secrets can, in principle, extend indefinitely, it may provide an advantage over patent protection and other registered intellectual property rights, which last for a limited duration. For example, the Coca-Cola company has no patent for the [[Coca-Cola formula|formula of Coca-Cola]] and has been effective in protecting it for many more years than the 20 years of protection that a patent would have provided. In fact, Coca-Cola refused to reveal its trade secret under at least two judges' orders.<ref>''For God, Country & Coca-Cola'', by [[Mark Pendergrast]], 2nd Ed., Basic Books 2000, p. 456</ref>

Trade secret legal protection can reduce the knowledge spillover, which enhances the knowledge spread and technology improvement.<ref>{{Cite journal |last=Wang |first=Yanzhi |date=2023 |title=Trade Secrets Laws and Technology Spillovers |url=https://homepage.ntu.edu.tw/~yzwang/research/Wang_2023_RP.pdf |journal=Research Policy |volume= 52|issue=7 |page=104794 |doi=10.1016/j.respol.2023.104794}}</ref> Therefore, while trade secret laws strengthen R&D exclusivity and encourage firms to engage in innovative activities, broadly reducing [[Knowledge spillover|knowledge spillovers]] can harm economic growth.