Trade secrets are the cornerstones of many Nevada companies. As such, many business owners are greatly concerned with protecting these assets. Naturally, this often involves a desire fully understand the legal definition of this type of intellectual property.
According to the Intellectual Property Owners Association, a trade secret is information which derives value from its secrecy. The majority of states in America—including Nevada—have passed laws specifically dealing with trade secrets. Most of these state’s legislatures utilized the Uniform Trade Secrets Act when drafting their laws. The USTA was compiled by the National Conference of Commissioners on Uniform Laws.
Under the USTA, it is not enough that a piece of confidential information is valuable due to its secrecy. In order to be considered a trade secret, the information must also be protected by reasonable efforts to guard that secrecy. Examples of recognized trade secrets include computer code, scientific data, designs and manufacturing methods. Negative information, such as failed attempts at formulas, may also be considered trade secrets.
It is important to note that this type of intellectual property does not need to be unique in order to be protected. Compilations of public information may qualify, as long as these compilations are not readily available to competitors.
Trade secret laws may carry criminal penalties. Since 1996, for example, there has been a federal law dealing with trade secrets which criminalizes misappropriation. It is important to keep in mind, however, that in the majority of cases, trade secret protection is enforced via civil lawsuits.