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Understanding and Protecting Your Trade Secrets: A Practical Guide for Businesses

April 29, 2026

Padmini Cheruvu

Trade secrets are among a company’s most valuable intellectual property assets. They can give a business a competitive edge, provided that they are properly safeguarded. Whether you are a startup refining a go‑to‑market strategy or an established enterprise safeguarding manufacturing know‑how, understanding what qualifies as a trade secret and what you can do to preserve it is essential.

What Is A Trade Secret?

A trade secret is information that derives independent economic value, actual or potential, from not being generally known or readily ascertainable by others who can obtain economic value from its disclosure or use, and that is subject to reasonable measures to maintain its secrecy. In plain terms, a trade secret refers to any unique and secret information that gives an owner or business a competitive business advantage because it is secret, and businesses must take reasonable steps to keep it confidential.

A wide range of information can be considered a trade secret. Common examples include:

• Customer lists, pricing models, and business strategies
• Formulas, recipes, and manufacturing processes
• Source code, algorithms, and data models
• Supplier terms, margin analyses, and market intelligence
• Nonpublic product roadmaps and R&D data (negative information)

Unlike other forms of intellectual property, trade secrets do not require registration in order to be protected. Additionally, there is no time limit on a trade secret’s protection; it can last indefinitely so long as secrecy and value are maintained.

What Is Not A Trade Secret?

Not all business information is a trade secret. Examples include:

• Information that is publicly known or easily reverse-engineered without breach of a duty not to do so
• General skills and knowledge an employee carries from job to job
• Ideas disclosed without confidentiality obligations (e.g., a public representation)
• Information kept secret but without reasonable protective measures

Practical Steps to Protect Your Trade Secrets

To preserve trade secret status, a business must implement reasonable measures appropriate to the sensitivity of the information, the business’s size and resources, and industry practices. What is reasonable for one business may not be reasonable for another.

1. Identify and classify trade secrets: Businesses should inventory their sensitive information and determine what qualifies or may qualify as a trade secret. Once this determination is made, businesses should classify the information by sensitivity (e.g., “Confidential” or “Highly Confidential – Trade Secret”). This is the first step because proper identification of trade secrets is necessary to implement other protective orders and maintain them over time.
2.  Draft strong confidentiality policies: Businesses should create strong written confidentiality policies governing the use of trade secret or confidential materials. Additionally, businesses should provide notice of these policies to employees (e.g., via an employee handbook) and obtain written acknowledgement of receipt and review. Such policies should (a) require maintaining the confidentiality of such information both during employment and after termination of employment; (b) prohibit employees from emailing company documents to their personal accounts or transferring them to personal devices; (c) require employees to return all company equipment and information, including any social media accounts owned by the company, upon termination of employment; and (d) prohibit the use or disclosure of a prior employers’ trade secrets. Any business document that governs the use of trade secret or confidential information should include clear definitions of the trade secret or confidential information and explicit statements that this information is owned by the business.
3. Draft strong confidentiality agreements: Businesses should draft strong confidentiality agreements both internally and externally to protect their sensitive information. Internally, businesses should implement confidentiality and invention‑assignment agreements with employees, contractors, and advisors, clearly defining trade secrets, ownership, permitted use, and obligations upon separation. Externally, businesses should implement nondisclosure agreements with customers, suppliers, and potential partners before sharing nonpublic information, ensuring that the definition of confidential information is comprehensive and that restrictions on use, disclosure, and reverse engineering are explicit.
4. Educate/train employees: Businesses should educate employees about the company’s trade secret information, including what is considered trade secret information, why confidentiality matters, and how such information should or should not be handled or disseminated. This education should be done in writing during onboarding, periodically throughout employment, and during offboarding with a reminder that confidentiality obligations survive termination. Additionally, during offboarding, businesses should require departing employees to certify that they are not taking any trade secrets and have returned all company documents, devices, and accounts.
5. Implement security measures: Businesses should secure both physical and technical environments, and restrict access to employees and managers who need the trade secret information to perform their duties. For physical environments, security measures could include badges, alarms, and locked storage. For technical environments, security measures could include multi-factor authentication, encryption, and segregation of especially sensitive information in repositories with additional access controls. Businesses should revoke an employee’s access to sensitive information immediately upon termination, and ensure that all company devices and data are returned.
6. Periodically monitor/update policies and protective measures: Businesses should regularly monitor who has access to their trade secret information, and conduct audits to ensure compliance with their policies.

What to Do if Your Trade Secrets Are Misappropriated?

Even with robust safeguards, trade secret misappropriation can occur. When it does, swift action can preserve your rights, mitigate damage, and position you for effective legal and business outcomes.

This topic will be covered in Part 2: What to Do if Your Trade Secrets Are Misappropriated: A Practical Guide for Businesses.

Trade secrets are valuable business assets. Understanding the basics of trade secrets and how to best protect them is essential for a business. Furthermore, protection is not a one-time task, but involves ongoing efforts and clear policies and contracts. Padmini Cheruvu and Donahue Fitzgerald’s Intellectual Property and Litigation practice groups have extensive experience in all trade secret matters. If you have any questions, need assistance with strengthening your trade secret protection through appropriate policies and contracts, or need urgent help addressing suspected trade secret misappropriation, please feel free to contact Padmini at pcheruvu@donahue.com.