I’ve been helping a client navigate a trade-secret dispute recently, and it reminded me how often this area of intellectual property is misunderstood — despite being one of the most important.

Trade secrets are the most common form of IP. In fact, many estimates suggest they account for more than 50% of the total value of intellectual property held by U.S. companies — more than the combined value of patents, trademarks, and copyrights.

But what exactly is a trade secret? A trade secret is confidential business information that provides a company with a competitive edge — think proprietary algorithms, manufacturing processes, customer lists, or product roadmaps. Unlike patents or trademarks, trade secrets are not registered with the government. Their legal protection depends entirely on the company’s ability to keep them secret. And that protection can be lost.

If a company fails to take “reasonable measures” to maintain secrecy, the information may no longer qualify as a trade secret under intellectual property law — and with that, its value and legal protection may vanish. So what counts as “reasonable measures”? Here are a few standard practices:

1. Restrict access (physical and digital) to sensitive information;
2. Use password protection, encryption, and secure servers;
3. Limit visibility to those with a clear “need to know”;
4. Label documents as “CONFIDENTIAL” or “TRADE SECRET”;
5. Require NDAs and confidentiality clauses in employment and contractor agreements; and
6. Train employees on internal trade secret policies and procedures.

A company’s efforts don’t have to be perfect — but they do need to be reasonable given the value of the information and the risk of exposure. As more companies rely on proprietary data, software, and know-how, understanding how to protect trade secrets is becoming critical. It’s a space worth watching closely — and treating seriously.

The cost of litigating trade secret matters is high, in part because the fact patterns can be complex and interaction with legal standards messy - e.g., it's easy for lawyers to argue over whether a company in fact took "reasonable measures" to keep secret its trade secrets. And because the cost of litigation is high here, it pays for companies to fully understand what trade secrets are and how to fully protect them.

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