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What are the limitations and protections of trade secrets?

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quanzi
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Trade secrets are typically for items that cannot be patented. In the case of the Coca-Cola example, the recipe cannot be patented because it is created using ingredients that are not novel in nature. There is no engineered technology that makes the soda more flavorful. There are no enzymes that make the beverage more carbonated. There is no special process that specifically modifies the flavor. It is simply ingredients. Since this, and other recipes, cannot be patented, trade secrets allow for some protection. The protection lies in the unknown. If competitors do not know what constitutes the product, they cannot replicate. This can allow for protection indefinitely compared to the 20 years of protection offered by a patent. However, the trade secret can be exposed before that time and little protection is offered thereafter. To protect trade secrets, it is best to have each party sign a non-disclosure agreement. This allows for secrecy as the product is being manufactured. 

 
Posted : 18/08/2020 10:58 am
jwashin3
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Protection of trade secrets can be nearly as impactful as an actual patent, and much less expensive.  Trade secrets create a "mystic" around a product.  Products that grow in popularity can thus build their brand around a secret sauce or secret herbs and spices.  Be mindful that trade secrets only become relevant if a product is well-made or is loved by multitudes of customers.  Poorly manufactured or mediocre-performing products negate any trade secret advantage.  Nevertheless, having all employees and contractors sign a confidentiality regarding the trade secret is prudent management.

 
Posted : 21/08/2020 12:11 am
SalliRab
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Companies should always have their employers and vendors sign a non-compete agreement and a non-disclosure contract. Some of the trade secrets limitation to be considered is that it can be patented by others, and it is not easily enforceable.

 
Posted : 25/11/2020 11:31 pm
Jafar reacted
nm523@njit.edu
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Additionally, a trade secret only works if no one else comes up with the same idea, recipe, design, etc. on their own. If another company is able to replicate your product without any of their employees having violated any confidentiality agreements, then you lose your trade secret and legally it is difficult to protect your right to exclusively create that product.

 
Posted : 29/11/2021 8:06 pm
sseal98
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While trade secret is an excellent way of keeping a part of your business secret and allowing you to make money on it, it also gives you absolutely no protection from others inventing the same thing that you have made. For example, with coca cola, if another company was able to crack their formula, they could theoretically patent it and coca-cola would not be able to use their trade secret or would not be able to garner as much profits as they would have. So in terms of risk of not being protected, having a trade secret garners the risk of no protection for others, however for some companies who have complicated forumlas and ideas, it is a justifiable risk that they are taking for long term profits.

 
Posted : 05/12/2021 5:37 pm
jadebowale
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A good example of the importance of trade secret protections is Coca Cola’s recipe, a secret so closely guarded that it's locked safely away in a vault and is known only to two executives, and these two individuals are forbidden from flying together. Security measures can reduce theft of a trade secret and loss of valuable assets. In 2006, Coca Cola employee Joya Williams, and two accomplices, attempted to sell Coca Cola’s classified information to arch-rival Pepsi. Pepsi had alerted Coca Cola of the attempted theft, and this allowed Coca Cola to coordinate a sting operation with the FBI. Williams was caught and sentenced to federal prison for eight years and was ordered to pay restitution. 

Trade secrets can become effective immediately and they do not require many of the upfront fees that are typically associated with patent prosecution. Filing for a patent, for example, generally requires hiring an attorney to complete a patent search and a specification that details how the invention is made and how it is used. In some instances, companies use their trade secret status to not only gain protection, but to gain notoriety.

Halligan, R. M. (2009). Trade secrets v. patents: the new calculus. Landslide2, 10.

 
Posted : 17/04/2022 6:42 pm
shavondraleak
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So I remember my interview for a company I worked for previously hired me as a result of my stance on confidentiality and being able to hold trade secrets. The interview was very laid back but with about five managers asking me the same question in several different ways. I didn't realize at the time that was the strategy they used to determine who would be trustworthy with the company's secret information.  

A trade secret is specific details original to a design, recipe, technique, etc that is formulated and used to produce a product or device. It's in the combination of the protocol or specific ingredient amounts that are not legally patented but hold high value for the success of your product. 

Most often you will have to sign a confidentiality contract for trade secrets however, a patent is more involved. Patents are legal binding documents that cost a fee and you must hold a license to use a patent for a certain amount of time. It is a process that involves lawyers, regulators, and agreements for the US and sometimes the EU or international patent process.

The limitations of a trade secret agreement are that someone can just get upset and break the agreement and sell or give information to a competitor.   

 
Posted : 19/04/2022 12:14 am
Alexia Coffer
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Trade secret law is a source of protection for intellectual property that serves as an alternative to patent or trademark law. Whereas patent and trademark law require that the intellectual property to be protected be publicly “disclosed” (for example, through a patent application), trade secret law requires precisely the opposite, that is, that the intellectual property to be protected not be publicly disclosed. The subject matter of a trade secret may be virtually any information that is of value as a result of not being generally known. One of the main advantages of trade secret law is that it provides indefinite future protection. Unlike the 20-year time limit that underlies the protection granted to a patent holder, there is no definite time limit placed on the protection granted to a trade secret owner. This indefinite future protection granted to trade secrets is appealing, assuming that the intellectual property to be protected is likely to remain generally unknown well into the future. For example, if the intellectual property to be protected is a method of manufacturing a product that can be determined from examining the product, then the best way to protect the new method of manufacture might be through a patent. On the other hand, if the new method of manufacturing the product cannot be determined from examination of the product, then the best way to protect the intellectual property might be to treat it as a trade secret. Although there is no definite expiration of the protection granted to trade secrets, the protection prohibits only the disclosure or use of the trade secret by one to whom the secret was disclosed in confidence. Unlike patent law, trade secret law does not offer any affirmative protection against the use of the same intellectual property that is independently derived or reverse engineered by a competitor. Consequently, if the intellectual property to be protected is a new method of manufacturing a product, and if that method of manufacture is ascertainable from an examination of the product, then the best form of protection for the intellectual property is most likely that offered by patent law. The same analysis applies to intellectual property that is likely to be independently derived by a competitor. For as the U.S. Supreme Court noted in Bonito Boats v. Thunder Craft Boats, state trade secret law has never given the holder of a trade secret protection against reverse engineering by the public or a competitor. The Supreme Court commented that in order to receive protection from reverse engineering, the holder of the intellectual property must seek the protection of federal patent law. Whereas patent and trademark law involve an affirmative assertion of an intellectual property right, trade secret law only actively operates after a misappropriation or threatened misappropriation of the trade secret has occurred. Due to this difference in the way trade secret law protects intellectual property, the protections given to trade secrets are largely dependent on classifications of information made by courts. Thus, the foundation and development of trade secret law in the United States is inherently tied to the statutes protecting trade secrets, and the court decisions defining and interpreting the statutory protections created for trade secrets.

 
Posted : 21/04/2022 5:20 pm
Alexia Coffer
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Trade secret law is a source of protection for intellectual property that serves as an alternative to patent or trademark law. Whereas patent and trademark law require that the intellectual property to be protected be publicly “disclosed” (for example, through a patent application), trade secret law requires precisely the opposite, that is, that the intellectual property to be protected not be publicly disclosed. The subject matter of a trade secret may be virtually any information that is of value as a result of not being generally known. One of the main advantages of trade secret law is that it provides indefinite future protection. Unlike the 20-year time limit that underlies the protection granted to a patent holder, there is no definite time limit placed on the protection granted to a trade secret owner. This indefinite future protection granted to trade secrets is appealing, assuming that the intellectual property to be protected is likely to remain generally unknown well into the future. For example, if the intellectual property to be protected is a method of manufacturing a product that can be determined from examining the product, then the best way to protect the new method of manufacture might be through a patent. On the other hand, if the new method of manufacturing the product cannot be determined from examination of the product, then the best way to protect the intellectual property might be to treat it as a trade secret. Although there is no definite expiration of the protection granted to trade secrets, the protection prohibits only the disclosure or use of the trade secret by one to whom the secret was disclosed in confidence. Unlike patent law, trade secret law does not offer any affirmative protection against the use of the same intellectual property that is independently derived or reverse engineered by a competitor. Consequently, if the intellectual property to be protected is a new method of manufacturing a product, and if that method of manufacture is ascertainable from an examination of the product, then the best form of protection for the intellectual property is most likely that offered by patent law. The same analysis applies to intellectual property that is likely to be independently derived by a competitor. For as the U.S. Supreme Court noted in Bonito Boats v. Thunder Craft Boats, state trade secret law has never given the holder of a trade secret protection against reverse engineering by the public or a competitor. The Supreme Court commented that in order to receive protection from reverse engineering, the holder of the intellectual property must seek the protection of federal patent law. Whereas patent and trademark law involve an affirmative assertion of an intellectual property right, trade secret law only actively operates after a misappropriation or threatened misappropriation of the trade secret has occurred. Due to this difference in the way trade secret law protects intellectual property, the protections given to trade secrets are largely dependent on classifications of information made by courts. Thus, the foundation and development of trade secret law in the United States is inherently tied to the statutes protecting trade secrets, and the court decisions defining and interpreting the statutory protections created for trade secrets.

 
Posted : 21/04/2022 5:20 pm
knd26
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I agree with many of the above posts that some of the major advantages of using a trade secret is that if it is kept well, it will be more than 20 years that anyone can figure out what your item is made of. A big limitation in my opinion for at least medical device companies is that everything you build or develop needs to be disclosed to the governing agency in order to be approved. In the medical devices in order to develop trust, transparency is necessary.  For recipes like Coca-Cola and other brands it is part of the allure of the company and impressive they have kept the secrets as long as they have for such big companies. Non-disclosure agreements would be crucial in that scenario to ensure that the secrets never get out, whereas in medical device companies they may be signed for new and upcoming technology so competitors cannot take the information and use it to get ahead. It may become less important to keep the technology a secret once it is out and the public is using it, but how it was developed could be an indefinite NDA.  

 
Posted : 30/11/2022 1:13 pm
jt63
 jt63
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There are some limitations of trade secrets. Trade secret protection does not protect one's rights as the exclusive owner. It is also harder to enforce its protection than patented works. It only extends to the illicit acquisition of information. It is also harder to license and sell trade secretes compared to patents due to their secret nature. On the other hand, it enjoys protection under US law, and the associated costs are significantly lower.

 
Posted : 04/12/2022 6:28 pm
ms2768
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I find the point of another company having the same product without breeching any confidentiality violations very interesting. From the example provided in the lectures, it is a very rare situation that another company would be able to reproduce the coca cola recipe to an accurate degree. Trade secrets protect the said secrets (for limited periods of times in some cases) from the parties involved, but these have the same risks as confidentiality agreements when it comes to the information being possibly leaked. I do agree with the original discussion point that parties signing the agreements would help precent leaked information, but there are many instances where these means still don't work and important/valuable information is shared to competing companies. 

 
Posted : 04/12/2022 9:31 pm
Atharva
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Trade secret protection does not safeguard your rights as the sole owner. The benefits of trade secret law include indefinite future protection. This complete future protection granted to trade secrets is appealing, assuming that the intellectual property to be protected will remain widely unknown for the foreseeable future. The disadvantage of trade secrets is that they have no definite expiration date, and the protection only prohibits the disclosure or use of the trade secret by one to whom the secret was disclosed in confidence. Trade secret law does not provide affirmative protection against a competitor independently reverse engineering the same intellectual property.

 
Posted : 04/12/2022 10:29 pm
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