According to the Canadian Intellectual Property Office (CIOP), a trade secret “includes any business information that has commercial value derived from its secrecy.” A trade secret is confidential information which is often technical in nature, including formulas and techniques for making products, company research, customer data, inventions, product designs, and recipes.Common types of trade secrets are product formulas, such as the recipe for Coca-Cola, secret manufacturing techniques and customer lists. It is usually information that is used in a business and gives the business an advantage over competitors that do not have the information.

Components of a trade secret

To protect business information as a trade secret, a business must be able to prove the following:

• “Commercial Value”
  • The trade secret provides an advantage/economic benefit to the business while it is kept secret.

• “Secrecy”
  • If the information is “readily available” or “easily accessible”, it is not a secret and therefore cannot be protected as a trade secret.

• “Reasonable Measures”
  • Businesses must take reasonable measures to keep the trade secret a secret
  • These measures may include confidentiality agreements (NDAs), restricting access to information, and using physical and technological security measures.

Do you have to register your trade secret?

There is no need to file an application to register your trade secret. Although the courts will sometimes step in to prevent employees of the business or others from stealing trade secrets, there is no law that prevents competitors from analyzing your product, provided that they obtained your product legitimately.

It is very important that you do not let the information become known to your competitors or to the public. Once the secret is out, the owner has no rights of exclusive ownership. That means anyone can use your trade secret once it is no longer a secret.

How can a business protect a trade secret?

As the owner of a trade secret, you must take proper steps to protect your trade secrets. You can try to keep the information secret by limiting access to the area of your business in which the information is used and only disclosing the information to employees who need to know it. Employees must be advised that they are obligated to secrecy, and this obligation should be written into their employment contracts.

What if the rights to a trade secret have been infringed?

Trade secrets are legally protected via the Criminal Code and the common law. If an owner of a trade secret believes their rights have been infringed, they can ask the court to compensate them for the loss of their exclusive right to the secret. In determining compensation, the court considers:

• how well-kept the trade secret was;
• how valuable the trade secret is;
• how expensive it was to create the trade secret;
• how difficult it would be for others to come up with the secret;
• how much the owner cares about the confidentiality of the trade secret;
• whether anyone who learned the trade secret should have known it was supposed to be kept secret; and
• whether using the trade secret improperly hurts the owner

It is often extremely difficult to keep the trade secret from being discovered. You should consider applying for a patent or other type of intellectual property protection in circumstances where the information cannot be kept secret.

Get help

For more information about patents, refer to the Canadian Intellectual Property Office.

For information about intellectual property investigations, click here.

To conduct an investigation regarding intellectual property infringement, and for other investigation services, contact our preferred Investigators, MADPI GLOBAL .

								
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