The Tool Desk
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What qualifies as a trade secret?
Under the federal Defend Trade Secrets Act (DTSA), information can qualify if it derives independent economic value from not being generally known or readily ascertainable by people who could benefit from it, and if its owner takes reasonable measures to keep it secret. The definition covers technical and business information, including programs and codes, in tangible or intangible form and regardless of how it is stored. A label or agreement by itself does not establish that these conditions are met. Read the federal definition in 18 U.S.C. § 1839.
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For a technology company, candidate information might include source code, build and deployment details, technical designs, prototypes, algorithms, methods, nonpublic product roadmaps, pricing or business plans, and customer or supplier information. These are examples, not automatic legal classifications: assess each item against the statutory criteria.
The DTSA provides a federal civil cause of action for trade secret misappropriation. It does not create an exclusive right over information that is generally known or readily ascertainable, nor does it bar lawful independent development or reverse engineering. The USPTO summarizes federal trade secret protections.
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How should a company identify and prioritize candidate secrets?
Build an inventory around information and risk
Have business and technical owners identify candidate information and record, for each item or coherent group of items:
- What the information is, where it is stored, and who owns it or has licensed it.
- How secrecy contributes to its economic value, and what harm could follow from disclosure.
- Which employees, teams, vendors, customers, or other outside parties need access, and why.
- How information is shared, including repositories, devices, accounts, and external transfers.
- What safeguards currently apply and who is responsible for them.
Prioritize information by considering its secrecy value, likelihood and impact of loss, number and type of authorized users, internal versus external access, operational burden, and evidence that controls are followed. This is a practical risk framework, not a statutory scoring formula.
Use a workable handling scheme
Choose labels and handling instructions staff can apply consistently. The following is an example company scheme, not a set of legal categories; even material marked as a trade secret must satisfy the legal criteria.
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| Example label | Possible handling expectation |
|---|---|
| Internal | For routine company use; do not publish or share externally without authorization. |
| Confidential | Share only with people who need it for work; use approved storage and sharing methods. |
| Restricted / trade-secret candidate | Limit access to named roles or individuals, use stronger access controls, and require approval before external disclosure. |
Mark documents and repositories so people can recognize the expected handling. Revisit classifications when a product, business relationship, or information’s value changes.
How should access and security controls be designed?
Apply safeguards proportionate to the information’s value and exposure. DOJ guidance says security need not be absolute, but must be reasonable under the circumstances; it specifically considers physical and computer security and practices for sharing with third parties. See DOJ Justice Manual § 1127.
- Restrict access: use role-based or otherwise limited permissions, and separate especially sensitive material where practical.
- Control accounts and repositories: use authentication and logging appropriate to risk, approved storage locations, and secure backups.
- Manage the access lifecycle: define who can approve access, review permissions periodically, and revoke access promptly when a role or relationship ends.
- Protect physical copies and spaces: set practical rules for offices, labs, prototypes, printouts, and removable media.
- Make expectations visible: mark relevant documents and repositories and train staff on approved handling and sharing methods.
There is no single required tool or control set in the cited federal materials. Select controls that fit the specific risk and can be followed reliably rather than promising perfect security.
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What rules should apply to employees and outside parties?
Employees
Use confidentiality and invention-related agreements suited to the relationship and applicable law. Train employees regularly to recognize protected information, handle it, share it only as authorized, and report suspected loss or misuse. The USPTO’s toolkit identifies agreements, training, need-to-know access, marking, and digital and physical controls as examples of protective measures. See the USPTO Trade Secret Intellectual Property Toolkit.
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Vendors, contractors, customers, and other recipients
Before sharing, establish the recipient’s permitted purpose and access scope. Agreements and operating procedures should address onward disclosure, security responsibilities, incident notification, and return or deletion of information when the relationship or need ends. Apply these expectations to vendors, contractors, licensees, prospective customers, and other recipients as appropriate; adapt terms to the relationship and applicable law.
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How should external disclosure and suspected loss be handled?
Approve and document disclosures
- Require approval from an identified owner before sensitive information is shared externally.
- Confirm the recipient, purpose, and minimum information needed; verify that appropriate agreements and safeguards are in place.
- Use an approved transfer method and limit access to the authorized recipients.
- Record what was shared, with whom, when, for what purpose, and under whose approval.
Respond to suspected misappropriation
Maintain a process to report and assess suspected disclosure or misuse. Preserve relevant records and evidence, restrict or suspend access where appropriate, and involve security staff and counsel. Tailor the response to the facts and applicable obligations; federal guidance discusses evaluating security measures and sharing practices but does not prescribe one universal incident playbook.
What should happen when an employee leaves?
Make departure steps part of the company’s normal offboarding process. The USPTO identifies return or destruction of trade secret materials and reaffirmation of continuing obligations as examples of reasonable measures. See the USPTO toolkit.
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- Revoke company accounts, credentials, and repository access promptly in coordination with the employee’s departure.
- Recover company devices, documents, prototypes, and other materials; address copies or company data on other devices as appropriate.
- Require return or destruction of trade secret material in the departing employee’s possession where appropriate, and document completion.
- Remind the employee of continuing confidentiality obligations and provide a channel for questions or return of materials.
Handle personal devices and accounts lawfully and proportionately, with counsel’s advice where needed.
How can the company show that its program is operating?
Assign accountable owners for the inventory, access reviews, training, agreements, vendor oversight, and incident response. Keep practical records of approvals, access reviews, training completion, agreement versions, incidents, and exit checklists. These records are an implementation practice, not a federally prescribed documentation format; they help the company assess whether safeguards are being applied and identify gaps.
Review the program when information, personnel, systems, vendors, or business risks change, and on a regular schedule set by the company. A useful review asks whether candidate secrets remain valuable because of secrecy, whether access remains limited to people with a business need, and whether the stated safeguards match actual practices.
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