If you want to protect your trade secrets, then you need to describe them in very specific terms. Generic and broadly defined trade secrets could be difficult to protect (or impossible).
That’s a lesson California’s New Castle Beverage, Inc. learned the hard way not that long ago. Under California law, a specific written description of a trade secret is required in order for that trade secret to be legally protectable. New Castle Beverage developed a formula for a spicy mix that adhered to the inside of specially-designed cups. New Castle claimed both the formula and cup design were trade secrets.
When a former employee (who had signed a nondisclosure agreement related to the company’s trade secrets) shared New Castle’s formula and cup design to his new employer, Spicy Beer Mix, Inc., New Castle filed a trade secret infringement lawsuit.
As you’d expect, having another company use the same (or a similar) spicy mix formula and cup design would mean that New Castle would lose a significant competitive advantage. Seems like an easy case, right?
Not so fast.
Remember, California law requires trade secrets to be specifically described or they might not be protectable. The court found that New Castle’s description of its relevant trade secrets was not specific enough and ruled in Spicy Beer Mix’s favor.
The descriptions of the trade secrets explained a “process of applying a secret solution,” “an apparatus specially designed,” and “the sequence in which pre-determined quantities of the ingredients of a second mixture are blended.” The court ruled that it couldn’t determine whether or not trade secrets had been exposed based on those broad and generic descriptions.
The lesson to learn is simple. Make sure you identify all of your trade secrets, and make sure your trade secrets are sufficiently defined such that employees cannot plead an ignorance defense regarding what the employer is claiming to be proprietary. There should be no room for confusion or misinterpretation.
This is where developing a comprehensive trade secret identification and protection program is so critical to all businesses—startup, established, small, and large. Your trade secrets are one of your most powerful and valuable business assets. Identify them, describe them well, educate your employees about them, and protect them with the rights documents and ongoing management!
4-Steps Every Trade Secret Protection Program Should Include