Trade secret

What it means

A trade secret is business, manufacturing or technical information of a company that has actual or at least potential value, is not generally available in the relevant circles, and which the company protects from disclosure. It may be a recipe, a customer list, a pricing policy or a technical process.

Unlike a trademark or a patent, a trade secret is not registered anywhere. Protection lasts as long as all its features are met, including the company’s will and effort to keep the information confidential. If the company does nothing to protect the secret, it loses legal protection.

The Commercial Code prohibits the unlawful acquisition, use and disclosure of trade secrets, and a breach is also an act of unfair competition. The company can seek an order to stop, surrender of unjust enrichment and damages.

How it works in practice

We advise clients first to write down what they consider trade secrets and to label such information. Access is restricted through access management on a need-to-know basis and backed contractually by a non-disclosure agreement with employees, suppliers and potential investors.

When key people leave, a non-compete clause helps, although it is valid only on the Labour Code’s conditions and against appropriate compensation. Leaving also means revoking access and returning devices, which is often neglected in practice.

In our own work we handle clients’ sensitive data daily: wages, margins, contracts. Confidentiality follows from the contract and the nature of our work, and we protect the data technically and procedurally just as we advise clients to.

What to watch out for

The biggest risk is people, not hackers. Social engineering, careless file sharing through private cloud storage or a departing employee with the customer list are more common than technical attacks. Training and clear rules therefore matter as much as encryption.

Trade secret protection does not cover everything. Information a competitor obtains through its own development or by reverse-engineering a lawfully bought product is not a breach. For key innovations we therefore consider whether a patent or copyright protection would be better.