Importance of Trade Secrets to Companies Essay

Trade secrets are any valuable information to a business that any outside sources are unaware of its existence. The other names for trade secrets are intellectual property or propriety information. In essence, trade secrets give any company a competitive advantage in the market. They can be in the form of business plans, client lists, prototypes, devices, formulae, and financial information. Intellectual property is advantageous because it is boundless, effective, and does not require any disclosure to government agencies. Due to the advancements in technology, maintaining trade secrets is a challenge to many companies because of the movement and duplication of information. Nevertheless, due to today's competitive business environment, employees, either current or former are the primary threat to intellectual property. Particularly, former employees of any firm can become market rivals if they incorporate their former company's trade secrets in their new company. The article discusses the significance of trade secrets for companies so that former employees do not turn out to become market rivals.

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Intellectual property is significant is because of the digital era. Almeling (2012, p.1098) asserts that the new technology is making the misappropriation of trade secrets easier. The author explains that before new advancements in technology came into place, trade secrets were stored in physical form (2012, p.1098). He adds that during those times, files were stored in cabinets in blueprint form and a thief had to break in the sore to steal them (2012, p.1098). However, today, the technology has enabled hackers to attempt to get access to these blueprints. Moreover, regarding trade secrets misappropriation, the author speaks of cloud computing which puts a company's intellectual property at risk (2012, p.1099). However, he affirms that due to the misappropriation, the techniques for detecting have improved as well. For example, real-time computer monitoring technology, key cards to track employee movement, and forensics enable a company to know the person who has accessed a certain file. Besides that, Brant & Lohse (2014, p.5) adds that due to the digital age, companies are able to recover where misappropriation of trade secrets especially in jurisdictions that offers little or no protection. Seemingly, the new technology can enable companies to know and track their propriety information. Particularly, key cards and surveillance cameras can allow firms to know the person who has accessed certain information. In the case of former employees, the new technology gives them a hard time to attempt to hack or go back to the company to steal crucial information. Even so, companies should know the employees who they entrust their confidential information with so that in the case of any exposure, they know where to look.

Intellectual property is significant because they are flexible. Almeling (2012, p.1107) indicates that the flexibility of the trade secrets allow courts to determine which one of them qualify for protection or whether they are misappropriated. He explains that some of the trade secrets recognized by the courts include business plans, source codes, chemical formulas, financial budgets, contract terms, pricing, prototypes, methods, salaries, experiments, supplier and customer information, recipes, specifications as well as laboratory notebooks (2012, p.1107). Largely, when employees leave a company, they are required to prevent any disclosure of the intellectual property of their previous company because they may risk a lawsuit. Furthermore, since the definition of trade secrets is continuously expanding, the breath contributes to litigation (Almeling 2012, p.1107). As the author adds, the trade secret law is suitable to the progression of old ideas and the creation of new ones (2012, p.1108). Essentially, companies can keep on changing their trade secrets to provide security in the case of litigation. Even so, through the process, former employees will be unable to copy their former company's trade secrets because it would have incorporated newer and better plans and products that help them maintain the competitive edge. Through litigation, a company can obtain a restraining order or a preliminary injunctive relief to prevent former employees from exposing their secrets. On a broader perspective, litigation appears advantageous to a greater degree because the court system can take action or thwart any dissemination of the propriety information. Obviously, through litigation, former employees are unlikely to become market rivals because they will keep their mouths shit to prevent lawsuits.

Intellectual property is significant is because a company can seek patent protection. Almeling (2012, p.1112) indicates that the subject of patents increase a company's reliance on trade secrets. More to the point, the author indicates that companies often chose patents over trade secret protection because they protect certain types of inventions and business strategies (2012, p.1116). As the author explains, even though the cost of obtaining patent rights in every country is costly, it is the best option because a company can manage to use propriety information law. As the author implies, patents have a strong interaction with trade secrets because they protect the same type of information. Obviously, when current employees are aware that their firm has acquired a patent, they will be afraid to expose any secret information of their former business to their current one because of the fear of lawsuits. Seemingly, patent protection has added over the significance of trade secrets to prevent former employees from becoming market rivals. Furthermore, Kumar, Mohanty, & Nandakumar (2006, p.397) affirm that when trade secrets are made privy to many people, a company can face exposure. Besides that, the authors indicate that even though most companies prefer trade secret protection over patents, they have significance because they give reward sustainability (2006, p.399). The research on patents reveals that company owners become less vulnerable when employees about knowledge of trade secrets leave a firm. On a broader perspective, patents derive the independent economic value to a company as well as keep former employees from exposing their former company's secrets.

Conclusion

In summary, companies have to develop new trade secrets continuously to remain competitive in the market. If firms renew their secrets annually, then they will continue to remain on top of the market because even if former employees expose their secrets, it will not affect their business. The paper discusses the advancements in technology, flexibility, and interaction with patent law as the importance of trade secrets that prevent former employees from becoming market rivals. Many employees do quit or get fired from their positions on a daily basis. Due to that, it is important for firms to develop better products and plans that will prevent their former employees from becoming their rivals in the market. Based on the research about intellectual property, it is apparent that companies have a difficult time to keep their trade secrets confidential. Companies have to ensure that build a strong protection system around information that they deem susceptible to market rivals. Besides that, employees, whether current or former have to ensure that they remain loyal to their company and keep their trade secrets confidential.

References

Almeling, D. S. (2012). Seven Reasons Why Trade Secrets Are Increasingly Important. Berkeley

Technology Law Journal, vol. 27, Issue 2, Article 4.

Brant, J., & Lohse, S. (2014). Trade Secrets: Tools for Innovation And Collaboration.

International Chamber of Commerce. Retrieved from file:///C:/Users/u/Downloads/Trade%20secrets,%20tools%20for%20innovation%20and%20collaboration.pdf

Kumar, A., Mohanty, P., & Nandakumar. (2006). Legal Protection of Trade Secrets: Towards a

Codified Regime. Journal of Intellectual Property Rights, vol. 11, pp. 397-408.