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Trade Secrets FAQs

What is a trade secret?
 What factors are used to determine whether information is a trade secret?
 What practical steps should an employer take to protect trade secrets?



Q: What is a trade secret?

A: Under New Jersey law, a trade secret may consist of any formula, pattern, process, device or compilation which one uses in his business and which give him an opportunity to obtain an advantage over competitors who do not know or use it.



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Q: What factors are used to determine whether information is a trade secret?

A: The following factors are often considered by the courts to determine whether information or an idea is a trade secret: 1) whether reasonable steps were taken to safeguard the information, 2) whether the information was learned in confidence, 3) whether the information is public knowledge or general knowledge within the industry, 4) the commercial value of the information, 5) the resources expended in developing the information, and 6) the degree of difficulty to duplicate or ascertain the information through research, reverse engineering or otherwise.



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Q: What practical steps should an employer take to protect trade secrets?

A: An employer should consider establishing a trade secret program to reduce the risk of disclosure of trade secrets by employees and others. Employers should utilize non-compete and non-disclosure agreements to avoid later difficulties of proof and definition of what constitutes a trade secret. Employers should establish internal secrecy and security measures such as limiting dissemination of confidential information, restricting employees from certain areas and conducting initial and exit interviews with employees to discuss the employee's obligations regarding trade secrets.



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Giordano, Halleran & Ciesla, P.C. | Middletown, NJ | Trenton, NJ | www.ghclaw.com | 1-800-842-1LAW