Trade secret definition

A trade secret is any formula, pattern, device, or compilation of information used in a business that gives the owner an advantage over competitors who do not know or use it, such as a chemical formula, manufacturing process, machine pattern, or list of customers (Definition in 1910.1200 App E).

• This definition is a reprint of the Restatement of Torts 757, comment b (1939), and is the mandatory definition provided in 1910.1200 App E.

No. Information about single or short-lived business events—such as the amount or terms of a secret bid, an employee's salary, or the date for a product announcement—does not qualify as a trade secret because a trade secret must be a process or device for continuous use in the operations of the business (1910.1200 App E definition and contrast).

• The Appendix explains trade secrets differ from ephemeral or one-off business information and generally relate to ongoing production, sale, or management methods.

No. A trade secret does not have to be novel or meet the invention standards required for a patent; patentability is not a prerequisite for trade secret protection (Novelty and prior art in 1910.1200 App E).

• The Appendix explains patents protect against independent discovery while trade secret protection is limited to preventing breaches of faith or improper means of discovery. It also notes that a trade secret may be patentable, but it need not be.

No. Communicating the secret to employees who need it for their work or to others who are pledged to secrecy does not automatically destroy trade secret protection (Secrecy and disclosure in 1910.1200 App E).

• The Appendix states the owner may share the secret with employees involved in its use or with others who are bound to keep it secret without losing protection, provided a substantial element of secrecy remains and improper acquisition would still be difficult.

A determination whether information is a trade secret should consider these factors: the extent it is known outside the business; how widely it is known among employees and others inside the business; measures taken to guard secrecy; its value to the owner and competitors; effort or money expended developing it; and how easily it could be acquired or duplicated by others (Factors in 1910.1200 App E).

• These six factors are listed explicitly in the Appendix and are commonly used to evaluate whether sufficient secrecy and commercial value exist to qualify information as a trade secret.

No. Information that is public knowledge or generally known within an industry cannot be appropriated as one company's trade secret (Secrecy requirement in 1910.1200 App E).

• The Appendix says the subject matter must be secret and that matters of public or general industry knowledge are excluded from trade secret protection.

Independent discovery does not automatically negate trade secret protection; another party that independently discovers the same process or formula and keeps it secret can also possess it as a secret (Independent discovery in 1910.1200 App E).

• The Appendix notes that others may know of the subject matter independently, but a substantial element of secrecy must otherwise exist and improper means of acquisition would be required for others to obtain it without independent discovery.

Trade secrets can relate to production (e.g., a manufacturing machine or chemical formula), the sale of goods (e.g., codes for discounts), or other operations like specialized customer lists, bookkeeping methods, or office management systems (Examples in 1910.1200 App E).

• The Appendix gives multiple examples to show trade secrets are not limited to manufacturing—they can also cover sales, pricing codes, customer lists, and administrative methods.

A substantial element of secrecy must exist so that, except by improper means, it would be difficult for others to acquire the information (Secrecy threshold in 1910.1200 App E).

• The Appendix emphasizes the information should be known substantially only within the particular business where it is used and that measures to guard secrecy are an important factor in the analysis.

Yes. If the subject matter is completely disclosed by the goods one markets, it cannot be claimed as a trade secret (Disclosure by goods in 1910.1200 App E).

• The Appendix explains that matters which are completely revealed by the marketed goods cannot be appropriated as the seller's secret because they are effectively public.

The nature of the secret affects relief: a novel invention wrongfully acquired will usually support an injunction and an accounting for profits, while mechanical improvements that a skilled mechanic could make may result only in damages and not an injunction against future use (Remedies in 1910.1200 App E).

• The Appendix explains remedies vary depending on how distinctive and inventive the secret is—more novel secrets attract broader equitable relief.

No. It is not necessary that only the proprietor of the business know the secret; others may know of it (even independently) and protection can still apply if substantial secrecy remains (Knowledge by others in 1910.1200 App E).

• The Appendix clarifies that sharing within controlled circles or independent discovery by others does not automatically destroy protection, so long as the secret retains a substantial element of secrecy.

Trade secret protection guards against breach of faith and other reprehensible or improper means of learning another's secret, not against lawful independent discovery (Protection scope in 1910.1200 App E).

• The Appendix contrasts the policy behind patents (rewarding invention) with trade secret protection, which is limited to preventing wrongful acquisition rather than prohibiting independent discovery.