What is a Trade Secret?

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What is a Trade Secret?

Broadly speaking, trade secrets include any information or process which provides a competitive edge.  Trade secrets must not be known or reasonably ascertainable. 

United States law provides that a trade secret may include:

  • all forms and types of financial, business, scientific, technical, economic, or engineering information, including patterns, plans, compilations, program devices, formulas, designs, prototypes, methods, techniques, processes, procedures, programs, or codes, whether tangible or intangible, and whether or how stored, compiled, or memorialized physically, electronically, graphically, photographically, or in writing if—
    • the owner thereof has taken reasonable measures to keep such information secret; and
    • the information derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable through proper means by, the public[1]18 U.S.C. § 1839

Usually, a trade secret is kept within a company by some type of an agreement (e.g. contractually binding non-disclosure agreement, etc.).  Additionally, although it has a sense of folklore, some assert that a trade secret may be divided up between several individuals within a company so that no “one” individual has the complete knowledge.[2]I’ve heard this with respect especially to companies that have a highly desired “recipe.”

Although it is perhaps obvious, a trade secret remains in force only as long as it is a secret.  Some famous trade secret examples include the Coca-Cola recipe, Google’s proprietary search algorithm, Mrs. Field’s cookie recipe, the WD-40 recipe, and the Kentucky Fried Chicken recipe.


1 18 U.S.C. § 1839
2 I’ve heard this with respect especially to companies that have a highly desired “recipe.”