Trade secrets are becoming more important in the knowledge economy, which we are heading for. Whether it be recipes for foods, commercial information about cooperation partners or negative knowhow gained during development processes, all industries require trade secrets in some situations to gain or keep their competitive edge. And with more cooperation between companies, big and small, as well as shorter times of employees staying at the same company, trade secret management is becoming more relevant, but also tends to become more complex. Therefore, many companies are well aware of the topic, nevertheless are also feeling overwhelmed with the task. The question is: How to overcome this challenge?

What are benefits of trade secrets

Trade secrets are offering businesses many opportunities to create competitive advantages in their industry and have features which may make them more useful than other types of IP in certain situations. For example trade secrets do not have a maximum life time, such as patents have. Additionally, they can be easier modified, when new developments are made or other products should be sold, which require a modification of the IP protection. Finally, they also can be applied to technological or other developments, which may not be eligible for patent protection. That makes them a valuable cornerstone of a well-rounded IP portfolio.

Another advantage, which is especially important for startups or other companies with a strained budget, is the low cost to acquire trade secrets and also the relatively low cost to maintain and enforce them. Nevertheless, they still incur some costs and work, which needs to be done, and companies may be reluctant to invest the necessary efforts to use trade secrets effectively and efficiently.

Which industries are profiting from trade secrets

Trade secrets can be important in virtually all industries. One example are recipes for dishes and processed foods and formulas used in a broad range of cosmetical, pharmaceutical and chemical applications. In manufacturing industries they can cover methods and processes during the production of new components. But also less technical industries can profit from the protection of customer, market and pricing data. This makes trade secrets a very valuable type of IP for many companies, if well managed.

What is needed for trade secret protection

While many companies are knowing about the abstract benefits of trade secret protection, not all are using it to the full extent. Utilizing trade secrets to the fullest include components such as the systematic identification and documentation of trade secrets and also a prioritization of the key trade secrets, which have the most economic value for the company. Additionally, the limitation of access to the trade secrets and the definition of employee roles regarding access helps to keep them secret. Finally, constant training of employees regarding trade secrets and a well designed onboarding and offboarding process that includes trade secrets is important.

Why are companies still struggling with trade secret protection

When considering that many companies are well aware of trade secret protection, understand their low costs and multiple benefits, the question arises, why still many companies are struggling or are hesitant with introducing a consequent trade secret management program. The main point, which is holding them back is the misunderstanding, that to start they need to reinvent all processes in their company. This makes them believe a trade secret management program will bind to many resources and is not worth the effort. Contrary to this believe trade secret management may be introduced to a company also in smaller more workable portions, e.g. on a project level, which is better than further ignoring the topic. For example, when beginning a collaboration project with another company, a typically trade secret and IP sensitive endeavour, this can be a good starting point to apply trade secret management on a small scale and immediately profit from it.