The facts about start-ups and trade secret protection

Companies in Texas often go to great lengths to protect their proprietary information. Many businesses, especially ones just getting started, often have important information they don't want to be made public. This knowledge can include everything from creative or manufacturing methodologies to unique in-house technology. While legal options are available to both start-ups and existing businesses looking to protect important trade secrets, there are some important facts about this type of intellectual property (IP) about which newly launched businesses should be aware.

Trade secret battles may result in ongoing business law issues sometimes because there is a debate over what is considered a "trade secret." According to the Uniform Trade Secrets Act (USTA), the definition of this term extends to devices, formulas, techniques and methods, programs and compilations with independent economic value. In 2016, a federal law known as the Defend Trade Secrets Act (DTSA) became effective. It gives parties with trade secrets the option to pursue legal action in state or federal courts for misappropriation claims.

Trade secrets are a unique form of IP in that they have no expiration date. Also, there is no legal requirement to submit trade secrets to government agencies like with patents. Enforcement rights, which may belong to more than one person, exist until the trade secret becomes public knowledge. Trade secret holders do have the right to take reasonable actions to protect such information. However, it is not illegal for secret information to be discovered through certain methods, such as reverse engineering. In some instances, it's necessary to disclose trade secrets if a start-up decides to seek a patent on proprietary technology.

With the assistance of an attorney, a business start-up may be able to take legal steps if a trade secret is obtained through improper methods that might include hacking into a competitors' computer system. As far as legal protections go, a lawyer can prepare IP, confidentiality and employment agreements that clearly spell out the trade secrets and what responsibilities are associated with having this knowledge. If signers of these documents willingly violate stated terms, a start-up typically has the right to pursue legal action.

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