Trade Secrets – Top 10 Questions
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Questions 7 – 9
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Question 7 – How Long Does a Trade Secret Last?

Trade secrets can last in perpetuity (i.e. forever) – if they are property maintained and protected. Remember, you do not register a trade secret with the government. Trade secrets are protected by the very fact of keeping them secret! A good way to think of how long a trade secret lasts is as such: "Once the trade secret is out, it’s likely finished."

Question 8 – Can I Transfer My Trade Secret To Others?

Yes. You can freely transfer your trade secret to others in any way you choose. This is because a trade secret is viewed as a piece of personal property in the eyes of the law – just like patents, trademarks, and copyrights. In other words, a trade secret owner owns the rights to sell, license, lease, or otherwise transfer the trade secret to others for pecuniary gain (e.g. to make money). Personal property like a book, computer, car, TV, clothes, etc. are bought and sold all the time. In the same way, trade secrets (and any other form of intellectual property) can be bought and sold. However, companies generally do not transfer trade secrets too often. Why? Because in order to maintain and protect the trade secret it must remain "secret." And the more people that know about the trade secret the more likely it will slip out to others who are not supposed to know.

Question 9 – Is It Legal to Try and Obtain a Trade Secret?

This depends on how one tries to obtain the trade secret. In other words, there are legal and illegal means in trying to obtain a trade secret.

Anyone can try to legally reproduce a trade secret – this is generally referred to as reverse engineering. Reverse engineering occurs when one take the trade secret (e.g. recipe) and breaks it down to determine all its components. For example, Pepsi Corporation could legally buy Coca-Cola and give the carbonated beverage to a team of chemists that it hires to try and reverse engineer the beverage to determine the exact components of the recipe. However, this would likely be a very difficult and costly thing to do. Plus, what benefit would it really bring to Pepsi and it would likely offend many consumers.

There are also illegal ways to try and obtain a trade secret – referred to as misappropriation of a trade secret. Misappropriation occurs when another acquires a trade secret by improper means or discloses or uses the trade secret without the consent of the owner of the trade secret. Let’s go over an example to illustrate.

Assume Bob breaks into the Coca-Cola Corporation, searches for, finds, and steals Coca-Cola’s recipe for its Coca-Cola carbonated beverage. Here, Bob has misappropriated the trade secret (as well as committed many other crimes including burglary, theft, etc.). Then, assume Bob sells the trade secret to a few owners at Pepsi who pay Bob a hefty sum for the recipe. These Pepsi owners now have also misappropriated the trade secret because they knowingly acquired it by improper means.

What could happen to someone who misappropriates a trade secret?

Next, we’ll go over that in trade secret question 10.

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