Documenting Trade Secrets | DCR Workforce Blog

Documenting Trade Secrets

Innumerable imitations all over the world have failed to dislodge Coca-Cola’s caramel colored Coke from its place of honor. Coca-Cola has been known to pull out of countries whose policies required them to divulge the ingredients of Coke, never mind the loss of business! The secrecy surrounding Coke has so captured public imagination that urban legend maintains that it’s recipe is split into two and each half is vested with one person, and that it is not known to anyone else, but just the two of them and of course, they are not allowed to come together at any time!

Companies, whose manufacturing processes are secret, stand the risk of having them pulled apart by competitors who try to expose their secrets or reverse engineer the products through studying the products. Trade secret law does not protect companies against such reverse engineering efforts. If such information is just posted on the Net, the company loses all its rights to the secret, though it may claim damages. Such things form the stuff of nightmares for companies which manufacture chemical products or food items, which can easily be evaluated to arrive at their chemical composition and exact quantities.

Companies protect their trade secrets through employing some of the methods, discussed below, which make it easier to keep them secret, and also provides them with  the ability to have any misappropriation or violation punished as a tort if not a criminal offense.

Non-Disclosure Agreement (NDA):

Companies entering into non-disclosure agreements with contractors who are granted access to their trade secrets ensure that they include a clause that they cannot reverse engineer the product after the end of the project. However, it is only for people who have been exposed to the secret by the company through a contractual relationship. But it does not preclude anyone else, who has not signed any agreement and gets an opportunity to take the product apart, and reverse engineer it. But anyone who has signed a non-disclosure agreement will need to be bound by it, and cannot claim ignorance of the nature of the information. An NDA helps to prove that the information has been misappropriated.

NDAs can be binding unilaterally on one party, or may be structured as mutual covenants where both the parties will be needed to keep secret the information received from the other party. It is possible and may be necessary at times to mail a notice enjoining non-disclosure on someone; subsequent to the actual disclosure.

Sticking Labels:

Document watermarking, clearly specifying “Do Not Copy” or ‘Secret Information’ (or other similar prohibitory conditions) across files and documents helps to establish the intention to keep the information secret and also helps to establishes the misappropriation charges with very little effort. Similar prohibitions may be specified with regard to printing/duplicating/copy-pasting/forwarding/ electronic documents also.

Breach of Confidentiality:

The nature of relationship between the parties and the circumstances surrounding the disclosure also make it possible to establish violation, even in the absence of a non-disclosure agreement. If a contractor were to misuse knowledge acquired with regard to a client’s project plans, cost estimates or quotations received; there is an intrinsic understanding that such information would be kept confidential.

Other side of the Coin: What if someone were to be wrongly accused of misappropriating trade secrets belonging to others? This is quite possible in these days of intensive efforts in software development, and other research efforts.

Use Clean Rooms:

This involves keeping the individuals involved in the innovation effort to be isolated and filtering all the information possessed by them through a technical expert or legal monitor. The team is provided with tools, documents and materials which are vetted for being publicly available. Their progress is also monitored and documented.  The records covering every single aspect of the team’s effort to reach its objective are maintained to establish its status as an independent creation.


A trade secret does not enjoy the kind of protection which copyrights, patents and trademarks do. In these days of global conglomerates and varying international laws, it becomes even more crucial for companies to protect their secrets in every possible way, using legally enforceable methods.

The content on this blog is for informational purposes only and cannot be construed as specific legal advice or as a substitute for competent legal advice. They reflect the opinions of DCR Workforce and may not reflect the opinions of any individual attorney. Do contact an attorney for advice specific to your issue or problem.
Lalita is a people/project manager with extensive experience in operations, HCM and training and development across industries like banking, education, business consulting, BPO and information technology. She believes in a dynamic approach to life and learning as change is the only constant.