Keep your trade secrets secret

Keeping your trade secrets – secret!

Some of the most important assets of many startups or small businesses consist of their intellectual property and/or trade secrets such as market strategies and client lists.

However, in order to grow a business or even bring a product to market, it’s often necessary to discuss plans openly with potential investors or partners. So how does one go about negotiating deals without compromising confidential information?

Protect your intellectual property using an NDA

Many people still think of Alexander Graham Bell as being the inventor of the telephone. However, according to a resolution by the US congress in 2002, New York based Florentine Antonio Meucci, who could not afford the $250 needed at the time for a definitive patent for his “talking telegraph”, was its true inventor.

Bell just managed to secure a patent first. This controversial debate serves as a good example, not only of the value of patenting inventions as soon as possible, but also of the need to protect intellectual property prior to a patent application.

A dilemma faced by many inventors is the need to seek investment for their idea (which may not yet be protected with a patent), coupled with the danger that rich, resourceful and “lawyered up” potential investors may decide to simply “acquire” the idea for themselves. This is where a non-disclosure agreement can provide peace of mind, allowing budding entrepreneurs to seek funding or collaboration opportunities without putting their valuable ideas at risk.

Secure your trade secrets with a confidentiality agreement

All companies possess important business “know-how”, sensitive plans or competitive strategies and valuable client lists. These may be referred to as trade secrets, or confidential commercial information. Intellectual property lawyers have long treated confidential commercial information as a type of intellectual property, and UK law seems to support this view, although it is not entirely definitive.

The EU commission are currently in the process of proposing a Directive to harmonise the definition of trade secrets across member states. The Commission also seeks to align the laws across the EU which protect trade secrets, which will assist small businesses who cannot afford to keep a large IP portfolio.

If enacted, the Directive will prevent the misappropriation of trade secrets. This will support companies who wish to exploit and share their trade secrets with privileged business partners.

In the meantime – and in light of a potential Brexit – it’s crucial that you protect your valuable business information during discussions with a potential partner, collaborator, supplier or employee. This can be done using a two-way non disclosure agreement (where both parties are divulging trade secrets) or a one-way confidentiality agreement (where just one party is giving away information).

Camilla Johnson

Camilla Johnson is the digital acquisition specialist for Rocket Lawyer UK. She has a law degree from Keele University, a post graduate diploma in professional legal practice and a diploma in digital marketing.