A trade secret can be a technique, a formula, a process, a design, a device, or some information that a company uses to manufacture its products or deliver its services. No one outside the company knows what this is, and it gives the business an economic advantage over competitors.
It’s like the secret sauce that makes your favorite dish at the local restaurant taste incredibly delicious. This sets it apart from other establishments, which try their best to duplicate the dish but can’t.
Other interesting terms…
Read More about “Trade Secret”
Based on Article 39 of the Agreement on Trade-Related Aspects of Intellectual Property Rights, trade secrets can only be legally applied if the company has exerted significant efforts to make sure that they conceal the information from the public. The “secret,” indeed, has an economic value, and the information is valuable for the company and its operations.
For this reason, many companies go to great lengths to protect their trade secrets, which are part of their intellectual properties.
How are Trade Secrets Protected?
While intellectual property rights cover trade secrets, they don’t require registration like patents and trademarks. Since there are no procedural formalities involved, protecting trade secrets can vary per company. However, most would follow the same principles:
- Identification of trade secrets
- Marking trade secrets as strictly confidential
- Limiting the list of critical positions with access to the trade secrets
- Securing confidentiality agreements
- Preparing a plan to identify security processes to protect trade secrets
Want to know what some of the most-guarded trade secrets are? Read on.
Famous Examples of Trade Secrets
1. Google Search Algorithm
The Google Search Algorithm is one of the many trade secrets that continue to puzzle many search engine optimization (SEO) experts and digital marketers. For years, Google continues to refine its processes to prevent people from beating its algorithm.
2. Coca-Cola Secret Recipe
The company did not patent its recipe and instead chose to keep it as a trade secret because patenting would force it to reveal the ingredients it uses to concoct the famous carbonated drink. In 2006, a Coca-Cola employee plotted to steal the formula of a new product and sell it to Pepsi. Luckily, Pepsi reported the conspiracy to Coca-Cola executives, which led to the perpetrator’s arrest.
3. WD-40 Formula and Ingredients
One of the most popular products formulated to prevent corrosion is WD-40. The formula of this rust remover was never patented and revealed to anyone except its CEO. When it required transportation to a different location in time for the company’s 65th-anniversary celebration, the organization hired an armored van to transport the trade secret.
4. The New York Times Bestsellers List Criteria
Most book authors would be thrilled to make it to the New York Times Bestsellers List because it profoundly influences a book reader’s choices. However, the company has never divulged the criteria it uses to identify a bestseller. Based on previous lists, the number of copies sold is not a requirement.