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What You Need To Know About Trade Secret Law To Protect Your Business

Trade secret law protects your business from internal threats. It prevents people who have access to your valuable information from using it against you or competing with you in the future. It allows you to share confidential data with some people in a certain way but ensures that they can’t share it with others or the public.

Trade secret law plays a crucial role when it comes to protecting your confidential information. But you might be wondering what trade secret law is, how it works, and why it is important for your business.

Trade secret law is the area of law that protects your confidential commercial information. It’s an area of International Property that focuses on intangible assets. Unlike copyright and trademark, there are issues of state and federal law that come into play.

What exactly is a trade secret? It’s information that isn’t generally known because it’s confidential. For example, the recipes for Coca-Cola or Kentucky Fried Chicken are trade secrets that have been protected for a long time.  

You might be thinking, “That’s interesting, but what does this have to do with my online business?”

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Trade Secret Law And Online Business

Great question. Are there areas of your business that have confidential information or something that’s not generally known but has great value? Those are your trade secrets. A few examples are your leads list, customer list, and CRM database.

Let’s say you’re offering a platform where buyers can find sellers. You have a database for your buyers and a different one for sellers. You need to protect both of these databases because they contain valuable information.

Trade secret law protects you from internal threats. It prevents people who have access to your valuable information from using it against you or competing with you in the future. It allows you to share confidential data with some people in a certain way but ensures that they can’t share it with others or the public.

How Do You Protect Your Trade Secret?

There’s a good chance that you have trade secrets in your business. This means you need to make reasonable efforts to make sure that your information is kept confidential. Here are four key steps:

  1. Limit Access to People Who Need to Know

This might seem obvious, but you should only give access to valuable information to individuals who actually need to know it. People in certain roles will need access to particular information, but if it’s not part of their role, you don’t have to share it with them.

  1. Set Physical Security

Keep all physical copies of your confidential information secure. Lock it up in a safe or a secure filing cabinet if you’re not using it. You don’t want anyone coming into your office or home office and seeing your confidential information lying around.

  1. Set Electronic Security

Electronic security is also crucial. Limit access to confidential digital files. Don’t let anyone have access to all your folders. Set silos in place so you have control over who has access to your data. Don’t forget to password-protect not only your digital folders but also your phone, computer, and apps that contain confidential information.

  1. Sign Confidentiality Agreement

Make sure that anyone who has access to your confidential proprietary information signs a confidentiality agreement.

A confidentiality agreement defines all your confidential information. Anyone who signs is under a contractual obligation to use your confidential information for your business purposes or your joint business purposes only. 

That means they can’t use your confidential information for anything other than your business interests. You need to ask every individual you work with to sign a confidentiality agreement.

Why A Confidentiality Agreement Is Important  

A confidentiality agreement is similar to a non-compete agreement. In a non-compete agreement, you’re telling someone that you just hired that they can’t compete with you in your line of business. However, this only applies to certain states.

In California, for example, the courts will not enforce such an agreement because they believe people should be able to do whatever they can to apply their trade.

So instead of telling them that they can’t compete with you, you can say that they can’t use your confidential information to compete with you while they’re working for you or with you. Your confidentiality agreements will limit people from using your information to compete with you.

  1. Employees and Independent Contractors

Basically, you need to have a confidentiality agreement or a confidentiality clause in a different, much broader agreement with every employee, independent contractor, or individual who works for your business.

  1. Joint Venture Partners

Under this category, you’re working with another entrepreneur or contractor to meet a joint goal. The other party isn’t working for you. Perhaps you have an affiliate relationship with the other individual or maybe you’re making a joint course.

Since you have to share information under these circumstances, you need to have a confidentiality agreement in place. It helps make sure that neither of you use the information you shared together once the joint venture is over.

However, you need to have this agreement before you close a deal. You don’t want to end up sharing all your information with the other party and they will simply tell you that they’re backing out of your deal. When that happens and you didn’t sign any confidentiality agreement, they can use your valuable data to create a competitive service.

  1. Course Participants and Clients

When you’re offering online courses or online programs to a group or an individual, you need to have a confidentiality agreement that will prevent them from using the confidential information they learn from your course or program for any other purpose than what you’ve specified.

Protect Your Confidential Information

To sum it up, trade secret law focuses on protecting your confidential information. It prevents people who have access to it from using it to compete with your business, hurt you, or do anything that’s not in the best interest of your company. It limits what they can do with your information, and they’re obliged to get rid of it once they’re no longer doing business with you.

Don’t forget to join BADA$$ Online Marketing University (BOMU) to get access to my FREE Legal Foundations course where you can learn about the legal aspects of running a business.