A trade secret is any information that gives a business or for instance, manufacturer a competitive edge. Industrial type trade secrets are that found in manufacturing while one also gets commercial type trade secrets found in normal business.
The information is confidential and unauthorized usage of such then constitutes a violation for which the offended party can take legal action against the perpetrator. Trade secrets form a type of intellectual property as the information has value. The trade secret or secrets can include from distribution methods to supplier lists, client lists and means of production. Forms of violation with regards to a trade secret are that of industrial espionage and an employee selling information to competitors.
There is no formal process for registering a trade secret. This also means that the trade-secret can have an unlimited lifespan. To be a trade secret the information must not be generally known, must have exceptional commercial value for the holder and the holder must have taken reasonable measures to keep the information secret by means of non-disclosure and confidentiality agreements.
Steps that can be taken to protect the trade secrets of a company include that of confidentiality clauses in dealings with suppliers and for employee contracts. If the specific secret is patentable one can also obtain patent rights to ensure adequate protection.
Benefits of trade secrets include that of being immediate, not requiring registration or any formal procedures to be effective and the secrets have unlimited lifespan periods. There are additional requirements such as compliance with regulations stipulating disclosure of information to the government. Companies need to understand the scope and importance of trade secrets as this will also influence the selling prices of the companies.