Trade secrets are crucial to the success of many businesses. Although there are many laws that help businesses protect their trade secret information, businesses need to understand these laws to benefit from them. This article provides a brief overview of what trade secrets are under Illinois law and some ways for businesses to identify and protect their trade secret information in Illinois. Federal, local, and other states’ laws may differ from Illinois. Businesses seeking to protect their trade secrets should consult an attorney for advice specific to their unique situation and needs.
What is a “trade secret”?
In Illinois, trade secrets are protected under the Illinois Trade Secrets Act (“Act”). Under the Act, a trade secret is defined broadly as “information” that:
(1) is sufficiently secret to derive economic value, actual or potential, from not being generally known to other persons who can obtain economic value from its disclosure or use; and
(2) is the subject of efforts that are reasonable under the circumstances to maintain its secrecy or confidentiality.
765 ILCS 1065/2(d).
Thus, any information that is generally known to the public (or even information that is not known to the public, but which is generally known within an industry) is not a protectable trade secret. Further, for a business to obtain trade secret protection of its information, the business must take substantial affirmative steps to prevent others from using that information.
Although any information might be able to receive trade secret protection, the Act does provide a non-exhaustive list of information that might be protectable. Specifically, information that is “…technical or non-technical data, a formula, pattern, compilation, program, device, method, technique, drawing, process, financial data, or a list of actual or potential customers or suppliers…” might be protectable as a trade secret. 765 ILCS 1065/2(d).
The Importance of Identifying Trade Secrets
The first step for any business looking to protect its trade secrets is to identify them. This step may seem unnecessary and obvious, but for many businesses, their trade secrets are evolving constantly. For example, information that was once a trade secret may no longer have any economic value to a business and, therefore, no longer qualifies as a trade secret. In another example, if a business does not have a protocol to identify trade secrets as they are created, it might miss out on protecting valuable new information. Thus, it is critical for businesses to establish a procedure to identify and keep track of their trade secrets.
In addition to the Act, Illinois courts often look to six common-law factors to help them identify whether information is protectable as a trade secret. Many businesses may find these factors useful in analyzing what information they have that might be a protectable trade secret. Here are the factors to consider:
(1) the extent to which the information is known outside of the company’s business;
(2) the extent to which the information is known by employees and others involved in the business;
(3) the extent of measures taken by the company to guard the secrecy of the information;
(4) the value of the information to the company;
(5) the amount of effort or money expended by the company in developing the information; and
(6) the ease or difficulty with which the information could be properly acquired or duplicated by others.
Information does not necessarily need to satisfy all six factors to be a trade secret, but these factors exemplify the types of questions businesses should be asking in identifying what information they have that might be protectable. An attorney can help a business with the fact-intensive process of identifying what information is protectable as a trade secret.
Creating a Trade Secret Protection Program
Any business with trade secrets should develop a trade secret protection program. If someone misappropriates the business’s trade secrets, this program will be critical in helping the business establish to a court or other body that its information should be protected as a trade secret. Even more crucial, having a trade secret protection program may help a business avoid having its trade secrets misappropriated in the first place. Like identifying trade secrets, creating an adequate trade secret protection program is highly fact intensive. Any business implementing a trade secret protection program should consult with attorney.
Although trade secret protection programs vary widely depending on a particular business’s trade secrets and needs, any good trade secret protection program will restrict access to the trade secret information on a need-to-know basis. In some cases, this restriction may be as simple as keeping files containing the trade secret information in a locked filing cabinet to which only key personnel have access. Most likely, however, more steps will be needed to ensure adequate protection. One step that a business might take is to have its employees, independent contractors, vendors, and other third parties sign confidentiality and nondisclosure agreements. A business also may establish written confidentiality policies and regularly provide these policies to its personnel. These policies might be included in an employee handbook. A business may want to hold trainings for its personnel so that they can understand what trade secrets the business has and how to protect them. These examples are not exclusive and there are many additional ways that businesses can protect their trade secret information. A knowledgeable attorney can provide a business with specific advice to the business’s unique trade secrets and needs.
Final Thoughts
For many businesses, their trade secrets are critical to their success and may be their most valuable asset. Any business with trade secrets should be able to identify their trade secrets as the information is developed and have an adequate protection program in place.
For more information on this article, trade secrets, or business law in general, please contact Albee Law PC at (312) 279-0115 or by email at info@albeelaw.com.
