Question
What's the difference between trade secrets and confidential information in contracts?
A lot of my contracts mention both "confidential information" and "trade secrets" — are they legally the same thing?
Answer
No, trade secrets and confidential information are not the same. Confidential information is a broad contract term. Trade secrets are a narrower category with stronger legal protection under state and federal law.
What is confidential information?
Confidential information is defined by the contract. It includes any information the parties agree to keep private.
This can cover pricing, customer lists, internal documents, business plans, technical data, or personal information.
If someone discloses it, your main remedy is usually a breach of contract claim. The protection comes from the agreement itself.
What makes something a trade secret?
Trade secrets are a smaller, high-value subset of confidential information. To qualify, the information must:
- Have economic value because it is not generally known or easy to figure out.
- Be protected through reasonable efforts to keep it secret.
Examples include proprietary processes, formulas, specialized customer lists, internal systems, or unique business methods.
Trade secrets are protected by contract and also by laws such as the Uniform Trade Secrets Act. This can allow stronger remedies, such as injunctions or enhanced damages.
All trade secrets are confidential information. Not all confidential information is a trade secret.
What to do next
- Review how your contract defines confidential information.
- Identify which information may qualify as trade secrets.
- Ensure you take reasonable steps to protect trade secrets.
- Understand what legal remedies apply if information is misused.
What to consider in your specific situation
How these terms apply to your business may depend on:
- How your contract defines confidential information.
- Whether trade secrets are defined separately.
- The economic value of the information.
- What steps you take to protect secrecy.
- Whether employees or vendors have access.
- The remedies listed if a breach occurs.
Clear definitions and consistent protections help avoid confusion and strengthen enforcement.
Since every situation is different, consider getting tailored information through Rocket Copilot, a Legal Pro, or a contract review so your agreements protect the right information in the right way.
At Rocket Lawyer, we follow a rigorous editorial policy to ensure every article is helpful, clear, and as accurate and up-to-date as possible. This page was created, edited and reviewed by trained editorial staff who specialize in translating complex legal topics into plain language, then reviewed by experienced Legal Pros—licensed attorneys and paralegals—to ensure legal accuracy.
Please note: This page offers general legal information, but not legal advice tailored for your specific legal situation. Rocket Lawyer Incorporated isn't a law firm or a substitute for one. For further information on this topic, you can Ask a Legal Pro.
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Disclosures
- This page offers general legal information, not legal advice tailored for your specific legal situation. Rocket Lawyer Incorporated isn't a law firm or a substitute for one. For further information on this topic, you can Ask a Legal Pro.