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You protect a trade secret in two ways: the Trade Secrets Protection Act offers statutory protection, and you can take measures yourself such as confidentiality agreements, access restrictions, and security. Crucially, the information must be and remain truly confidential — anything that is generally known or easy to obtain does not qualify as a trade secret. Below, you can read what is and is not protected and how to keep your secrets safe.
What is a trade secret?
A trade secret is confidential information known to only a limited group of people that you deliberately keep secret. The Trade Secrets Protection Act aligns with this. The Chamber of Commerce cites work processes, secret formulas, recipes, research data, technical knowledge, and customer databases as examples. These are merely examples; other information can also be a trade secret.
In short, to qualify as a trade secret, information must be secret, have commercial value precisely because it is secret, and you must have taken reasonable measures to keep it secret.
What is NOT a trade secret?
Not everything a company considers valuable is legally a trade secret. For example, the following are not trade secrets:
- information that is generally known or easy to obtain;
- information that the company itself has made public, for example in a press release or a public patent application.
The dividing line can be thin. This is evident from a case before the District Court of North Holland (ECLI:NL:RBNHO:2022:10719). A company had obtained information via a former employee of a competitor. The judge ruled that it concerned a selection of semi-public information, which could also have been gathered from semi-public sources and therefore did not have to originate exclusively from the CRM database. Consequently, it did not constitute a trade secret.
How does the law protect trade secrets?
The Trade Secrets Protection Act offers protection, specifically for smaller companies that do not have the resources to apply for patents. The Act protects against, among other things:
- theft of trade secrets;
- copying it without permission;
- economic espionage;
- the unlawful disclosure of secrets.
If this happens nonetheless, you can take legal action. The judge can, among other things, award damages, order the destruction of infringing products, and impose a ban on publication — possibly reinforced with a penalty payment.
How do you protect your trade secrets yourself?
In addition to legal protection, you can do a lot yourself to keep your secrets safe:
- Confidentiality agreements. Require a confidentiality agreement from employees, suppliers, customers, and other parties who come into contact with secrets. Optionally, attach a contractual penalty to this.
- Restrict access. Limit access to sensitive information with digital and physical security (think of authorizations, encryption, and locked rooms).
- Monitor and audit. Supervise who has access and how information is used.
- Patent. Sometimes applying for a patent is an alternative. The knowledge then becomes partially public, but competitors are not allowed to copy the protected product or process. You no longer have to keep it secret.
Frequently Asked Questions
Is a customer database a trade secret?
That is possible, provided it is confidential, has value precisely because of that secrecy, and you have taken measures to protect it. If the file consists largely of semi-public information, it may not be a trade secret, as the case at the District Court of North Holland demonstrates.
What can I do if a former employee takes secrets?
You can take legal action under the Trade Secrets Protection Act and, if there is a confidentiality clause, rely on it. The court may order damages, an injunction, or the destruction of products.
Is a confidentiality agreement sufficient?
A confidentiality agreement is important, but works best in combination with technical and organizational measures (access restrictions, security, monitoring).
What is the difference between a patent and confidentiality?
With confidentiality, you keep the information hidden; with a patent, you make the knowledge (partially) public in exchange for an exclusive right. A patent offers stronger protection, but is not suitable or feasible for all information.
Need help protecting your trade secrets?
Whether it concerns a recipe, a work process, or a customer database: the right mix of contractual and practical measures determines how well your secrets are protected. Our specialists assist you with confidentiality agreements, policies, and procedures.
Read more about our expertise in trade secrets and intellectual property, or schedule a no-obligation consultation.
