Practical Ecommerce

Managing Your Company’s Trade Secrets

Trade secrets are valuable assets that can be owned. Ecommerce businesses can create many types of trade secrets, including marketing techniques, supplier lists, business practices, and unique software processes. What may constitute a trade secret extends beyond what may be patentable, and includes anything that is used in a business and that gives the business an opportunity to obtain an advantage over competitors who do not know it or use it. If the owner of a trade secret attempts to keep confidential valuable and secret business information, the owner will have legal rights against others who use improper methods to obtain that information.

3 Steps for Managing Trade Secrets

Once you have identified your company’s trade secrets, the following three steps will help you manage them.

  1. Non-Disclosure and Assignments. Use non-disclosure and assignment agreements when help is sought for major processes of the business, such as development of new technologies or processes, implementing software, marketing plans, and financial analysis of your company. The proper use of non-disclosure agreements requires the person or company to hold all of your information in confidence, which helps create and secure your company’s information as a trade secret. In addition, any rights in a work product that is created by an outside company or an employee should be assigned to the company so that all such rights to information and creative endeavors are owned by the company.

  2. Manage Employee Access. A company may have many people doing very specific tasks in the operation of the ecommerce company. The software developer will be working on the specific functions of the website or inventory management system. Others may work on packaging orders or other functional duties in the business. The office staff may be working on filing requirements, paying bills, and other office duties. The point is that not everyone needs to have access or should have access to trade secrets. It is much easier to manage and control your trade secrets if there are a limited number of people who have access to such information. Use passwords on computers and other procedures to limit access. Your payroll person probably does not need to know what code the software developer used to make the website function in a particular way or be able to access it whenever they like. General knowledge of such things is fine, but the details should be limited to those who really need to know them. With the ease of transfer of information over the Internet, it is very important to limit access.

  3. Policies and Procedures. Written policies and procedures for handling your trade secrets — and following those policies and procedures — will help you enforce your rights if you have to go to court to protect them. Your company should include such policies and procedures in your employee handbook and talk about how to handle sensitive information. Examples should be used in the handbook to help employees understand what needs to be protected and how to protect such information. Assign one individual to be in charge of enforcing policies regarding trade secrets. If responsibilities are divided, it may become no one’s responsibility.

Summary

Trade secrets can last forever if you manage them correctly. However, they are vulnerable to a misstep in management, which could result in the loss of a valuable asset. Any public disclosure that is not limited effectively releases your trade secret to the world and you lose all rights to protect such information. It may seem difficult to manage your information with the access of many people within the company. But following a solid system for protecting your information will help protect your rights and simplify management of your trade secrets.

Jeff Jacobson, Jd, Llm
Jeff Jacobson, Jd, Llm
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