William Penn said, “To keep yoursecret is wisdom; but to expectothers to keep it is folly.” Walter

Winchell put it more bluntly: “I usually getmy stuff from people who promised some-body else that they would keep it a secret.”

Winchell may have been referring tonews sources, but he might just as wellhave been describing the competitive mar-ket. The bottom line is that if you have anycompetitive advantage in the market, youlikely have something worth keepingsecret. This is where trade secret lawcomes into play.

The Georgia Trade Secrets Act of 1990(GTSA) protects a company’s trade secretsfrom misappropriation. Remedies for mis-appropriation under the GTSA can includean injunction prohibiting others from usinga trade secret or conditioning its use onpayment of a reasonable royalty; actualdamages or payment of a reasonable royal-ty where damages cannot be proven; andreasonable attorney’s fees and punitivedamages if the misappropriation is willfuland malicious.

Trade secret information can include pro-prietary formulas, special processes, mar-keting plans, pricing information, andresearch and development data. Infor-mation in any form with actual or potentialeconomic value is protected if it is not gen-erally known or readily ascertainable toothers, and reasonable efforts are taken tomaintain its secrecy.

Most companies consider their customerinformation off-limits to others, and cus-tomer lists can be trade secrets. But, thereis a distinction between a tangible list andsomeone’s knowledge of information onthe list. While the list may qualify as a tradesecret, the information on the list is gener-ally not protected under the GTSA.

Information that is “readily ascertaina-ble” to others is fair game under the GTSA.This includes information in trade journals,reference materials and other publications.Even if individual components of a tradesecret are publicly known, however, asecret and unique compilation, arrange-ment or integration of the components canbe a trade secret. Coca-Cola’s formula is aclassic example.

Processes and formulas that someoneelse can independently develop or reverseengineer are also fair game. Yet, theoreticalability to develop or reverse engineer atrade secret will not make it “readily ascer-tainable” if it will be difficult, costly ortime-consuming. Further, a trade secret isprotected until someone else acquires it orcan readily acquire it by proper means.

So how can you protect your tradesecrets? The GTSA requires “reasonableefforts,” so the amount of effort requiredwill vary based upon the circumstances.There are many options to consider.

� Secure nondisclosure agreements fromemployees in contact with trade secrets.

� Secure nondisclosure agreements frommanufacturers, suppliers and other thirdparties in contact with trade secrets.

� Limit access to only those who need toknow or use trade secrets in their jobs.

� Use password-protected computers.

� Identify trade secrets for employees andgive specific instruction on maintainingtheir confidentiality.

� Prevent unauthorized entry into facilitieswhere trade secrets are located.

� Mark trade secrets and tangible evi-dence of trade secrets with a proprietarylegend restricting their use and disclosure.

Nondisclosure agreements are very com-mon and are useful because the GTSA pro-hibits acquisition of a trade secret throughthe breach of a confidential relationship orother duty. Nondisclosure agreements cancreate or clarify a company’s confidentialrelationship with key employees and theirduties with regard to the company’s tradesecrets.

They can also clarify the company’s tradesecrets, so there is no misunderstanding asto what the company is trying to protect.Nondisclosure agreements can also offermore limited protection for confidentialinformation that doesn’t qualify as a tradesecret but is nonetheless valuable to thecompany.

Now ask yourself, can you keep a secret?

Can you keep a secret?What every business should know about trade secrets By Kevin A. Stine

Matter of Law is brought to you by Gambrell & Stolz LLP

Matter of Law Georgia Trade Secrets Act

KEVIN A. STINE is an associate at

Gambrell & Stolz LLP. He specializes in

general corporate law and litigation.

Reach him at (404) 223-2207 or

kstine@gambrell.com.

© 2005 Smart Business Network Inc. Reprinted from the July 2005 issue of Smart Business Atlanta.