Nondisclosure Agreements
Trade secrets and the confidentiality surrounding them are fundamental to competitive invention and innovation. The Uniform Trade Secrets Law protects businesses from trade secrets being disclosed. The Economic Espionage Act of 1996 makes the theft or misappropriation of trade secrets a federal crime. Determining when something is no longer a trade secret can vary under different circumstances designated by the business that owns the secret, patent law, and nondisclosure agreements signed by employees. Under certain circumstances an owner can protect a secret in perpetuity and the status as "trade secret" never expires.
Defining a Trade Secret
The Uniform Trade Secret Act, known as UTSA, is a federal law that provides consistency in defining trade secrecy. Before the act each state had its own laws regarding trade secrets. The UTSA defines a trade secret as information or product that derives independent economic value from not being known to other persons who would obtain economic gain from its disclosure and which is the subject of efforts to maintain its secrecy. There is no registration of secrets.
Patents
Once something has been patented, it is no longer a secret. The very act of making a patent takes the information in to the public realm, even if the information is copyrighted and the owner charges fees for use of the patent and copyrighted material. At this point something is no longer a secret. The status of confidentiality may still apply however if an employee has signed a nondisclosure agreement. As an example, if a product is developed at a business then patented but the employees who worked on the development of the product have signed a lifelong confidentiality agreement regarding the process of making the product, then there is still an element of secrecy and confidentiality by which the signers of the nondisclosure agreement, or NDA, must abide.
Nondisclosure Agreements
An NDA protects businesses against disclosure of secret information by limiting what an employee can discuss. An owner can sue for breach of contract and be awarded financial compensation if an employee violates a nondisclosure contract. An NDA specifies exactly what the business owner considers secret, the methods for resolving any disputes about the agreement, and the geographic area when the disputes will be aired, and the length of time the trade secret must be kept.
Timing in Nondisclosure Agreements
The general time in most nondisclosure agreements in the United States is five years. In Europe, the standard can be as long as 10 years. Timing can be negotiated when drafting a nondisclosure agreement with business owners (disclosers) wanting a longer period of time and employees (receivers) wanting a shorter period of time. The end result can come down to the negotiating skills of the parties. Some businesses will require the time period have no limit if the secret, such as a recipe for a particular food product, is maintained as a secret within the business.
