Does Your Business Have Important Confidential Information It Wants to Protect From Others?

If so, you may have a Trade Secret.

California Civil Code Section 3426.1 defines a trade secret as:
"information, including a formula, pattern, compilation, program, device, method,
technique, or process, that:
(1) Derives independent economic value, actual or potential, from not being generally
known to the public or to other persons who can obtain economic value from its disclosure
or use; and
(2) Is the subject of efforts that are reasonable under the circumstances to maintain its
secrecy."

As you can tell, the definition is very broad. A trade secret can comprise many things from the tangible or intangible like a software program/source code, recipe, or a compilation of even publicly client or customer list. A customer list is a simple example of what any business might have that could constitute its trade secret. Some of the characteristics/information that establish that a customer list might be a trade secret include:
• Customer information that is not “readily ascertainable” to competitors;
• Customers’ particular requirements/preferences;
• Customers particular habits; and
• Key contacts of the client (if an entity).

Many businesses or persons might have a trade secret without even knowing it. However, merely something calling a trade secret is not sufficient, though it is a starting point. Businesses must identify its potential trade secrets and then examine what if anything it has done, does or should do to make sure it remains a secret. A business should also examine how it has treated and potentially distributed the trade secret material in the past. Frequently, a business will disclose its trade secret as a necessary part of providing its services, or as a marketing tool. That type of disclosure could destroy its status of a trade secret if done improperly.

Businesses should therefore take care in how they treat their confidential materials. Some points to consider include the following.
• Identify important materials that you believe to be your trade secret.
• Analyze the value of the material and whether it is valuable because it is secret.
• Have you disclosed the material that is potentially a trade secret to others who are not
under an obligation to keep its secrecy? For example, have you disclosed to employees
without a effective employee agreement; clients without a client agreement; on the web or in
marketing materials, etc.? If so, it might not qualify as a trade secret.
• Potential trade secrets that have been disclosed in a piecemeal fashion may not qualify as a
trade secret.
• What have you done to try to keep the information secret?
- Implement and enforce confidentiality agreements with clients, employees, etc.
- Keep the material under physical lock and key.
- Limit access to the material to just those who need to know it.
- Inform employees what materials are trade secret so that everyone in your business
knows to help protect the materials’ secrecy.


Businesses should work to protect its valuable information. It is advisable to consult with an attorney to help determine whether you have a trade secret, whether the business has taken adequate steps to protect its secret information, and whether its confidential secret information has been stolen. If you have a trade secret, call Darwin Bustarde to speak with an attorney extremely knowledgeable in trade secret/misappropriation law to help you protect your trade secrets or to help prosecute your rights if someone has stolen or is threatening to improperly use your trade secret, i.e. a former employee at his or her new employer/competitor.