What are trade secrets?

Trade secrets are best defined as confidential business information that provides a competitive advantage. This includes any practice, process, design, formula, or information that is not generally known or reasonably ascertainable by others and that a business takes reasonable steps to keep secret. The value of a trade secret lies in its confidentiality; this secretiveness allows the business to maintain an edge over its competitors by leveraging proprietary information that cannot be easily replicated.

This unique aspect of trade secrets distinguishes them from patents; while patents grant exclusive rights to an invention or process for a limited period, trade secrets can, in theory, last indefinitely as long as they are kept confidential. Additionally, unlike publicly available information or documents required by financial regulations, trade secrets depend on their selective disclosure and the active measures taken by a company to protect that information. This ensures that only authorized individuals have access to this critical data, which can include customer lists, manufacturing techniques, marketing strategies, and formulas.