Words like “entrepreneur” and “trade secrets” conjure up images of wall street tycoons and mega-deals when in reality, most small business owners are entrepreneurs and have great ideas which they want to exploit. The trick to success is harnessing that entrepreneurial spirit into a business plan to launch those ideas also known as trade secrets.
First of all, you should know that you really can’t protect an idea per se: you can’t copyright it; trademark it; or patent it. Something needs to be in tangible form, the touchy feely kind of thing you can lay your hands on and that federal inspectors at the Copyright Office and Patent and Trade mark Office can inspect in order for you to apply for protection.
So, what’s a person to do with that great idea that they are sure will make thousands, if not millions of dollars? The quick answer is to use a non-disclosure agreement (NDA) with anyone with whom you discuss the idea. Basically, you’ve invested your time and sweat equity, not to mention financial resources, to generate this idea and you do not want anyone else capitalizing on it and rightfully so.
The trade secret may involve a special car wax formula or secret ingredients for the next great soda pop, or maybe just a way to build the proverbial better mousetrap. If it’s special to you than you need to guard it and keep it confidential. Currently, many states have adopted a model statute called the Uniform Trade Secrets Act which sets forth some guidelines: The act defines a trade secret as information: including a formula, pattern, program, device, technique, or process which is not generally known and that derives independent economic value and is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.
States, such as New York and a handful of others, rely on common law based on court decisions and state statutes to deal with the willful misappropriation of such “secrets.”
That being said you do not want to tie the hands of eager business people and spirited entrepreneurs, preventing them from seeking partners or investors to realize their “secret” potential. A well-drafted NDA should be used in situations where such misappropriation is possible. The agreement should specify the confidential nature of the discussion and the financial risk and exposure to the creator if such idea were stolen or misappropriated. It may further set forth what the potential partner/investor may or may not do with the data in order to further the relationship and how long they may keep samples or materials beyond the initial discussion and how they may return or dispose of them at termination.
Money never starts an idea. It is always the idea that starts the money. ~Owen Laughlin