Trade secret

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A trade secret is a confidential practice, method, process, design, or other information used by a company to compete with other businesses.

The concept is that, sometimes, Company A is more successful than Company B, or is successful at all, not so much due to access to markets, resources, or personnel, but due to special knowledge owned by Company A. If others had access to the same knowledge, then Company A's ability to survive in an otherwise equal markeplace would be impaired. Thus, such secrets are guarded jealously.

Trade secrets are neither necessarily nor always protected by law in the same manner as a trademark or patent. Instead, owners of trade secrets seek to keep their special knowledge out of the hands of competitors through a variety of civil and commercial means, not the least of which is the employment of confidentiality agreements. In exchange for the opportunity to be employed by the holder of secrets, a worker will sign an agreement not to reveal his prospective employer's proprietary information. Often, he will also sign over rights to the ownership of his own intellectual production during the course (or as a condition) of his employment. Violation of the agreement generally carries stiff financial penalties, agreed to in writing by the worker and designed to operate as a disincentive to going back on his word.

Historically, trade secrets have been with us after a fashion since early times in the form of keeping advanced military technology from one's enemies - and in more recent times, in keeping Industrial Revolution-era technology secret.

Industrial espionage is the common name given to the practice of trying to discover other companies' trade secrets