Protecting Trade Secrets

Protecting Trade Secrets

What is a trade secret?

In Australia, a trade secret is a type of IP that a business owns that gives them a competitive advantage and/or a point of difference in the market.  It might be a secret formula or maybe a secret technique.  If you’re looking for official definitions, IP Australia defines a trade secret as “any confidential information of value”. 

Obviously the most famous example of this is the seven secret herbs and spices.  We all have some sort of idea of what a few of them are but the combination is the best kept secret in the world (I’ve got salt, garlic and onion so if anyone has any idea of a few more PLEASE DO let us know!).

The difference between a trade secret and many other types of Intellectual Property is that there is no way of registering them in order to lay claim to them.  The only way to protect them is to keep them secret.  Except, you can’t run a business if no one knows what to do, so we’ve got some top tips on how to protect your trade secrets while still being able to run your business.

How can you protect it?

Keep it safe

FULL BOND! Red laser beams that you can only climb through in a skin-tight cat-suit, safes with fifteen different combination and verification checks, the whole shebang!

Okay, okay, yeah maybe that’s a bit much but the idea is still the same, if it’s of value to the business then you need to keep it safe, and best practice is to keep a tight lip.  Make sure that the people you tell are trusted and it might be worth putting password access requirements on documents which discuss it so that only those with permission are able to access the information.  Another measure that can be taken, particularly in larger businesses, is to tell half of the information to one person and the other half to one (e.g Sarah knows 4 of the herbs and Jeff knows the other 3) so that no one knows the entire thing.  Encryption and other online security measures can also assist in these protection measures.

Unless you’re as flexible as Anne Hathaway in Get Smart - then honestly the red laser beams sound kinda fun! No? Just me - cool cool.

Confidentiality Agreements

While it’s all well and good to have a booby-trap obstacle course just to get access to the secret, at the end of the day, the business isn’t going to run very well if no one can actually action the things to make the trade secret so valuable!  I mean, someone has to make the herb mixture - and I’ll put full disclosure I’m not entirely up on the day-to-day running of KFC - but I’m pretty sure the colonel himself doesn’t, or frankly couldn’t, make the entire global supply in a secret basement bunker.

So where you have to let people in on the secret, it's best to have a confidentiality agreement in place.  This might be a whole contract relating to that trade secret and its confidentiality exclusively or it could be a clause within another contract about the business’s relationship with that person (for example, an employment contract).

Something to think about when drafting a confidentiality agreement is what will happen when the business’s relationship with that person ends.  It’s important to make sure the confidentiality clause is still binding even when that occurs.

Due diligence

It’s important to consider strongly who you will and will not disclose the information to (who will, as we’ve just discussed, obviously be signing confidentiality agreements beforehand).  Something you can do is your due diligence before you enter into the relationship with them.  For employees, this may be a police check.  If you’re contracting with another business, then it may be worth doing a google about the business.

If there are previous cases of, for example, fraud or stealing confidential information, then it might be a hint to maybe find a different person to disclose the information to. Obviously this isn’t fool proof, but when the information is that valuable to the business, it’s worth taking all steps possible to protect it.

So how are you gonna protect your herbs and spices!?


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Riz McDonald is an e-commerce business owner, business coach, podcaster and a lawyer for over 16 years. She’s also a mum and a lover of good wine.


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This article is for general information purposes only and should be used solely as general guidance.  It does not and is not intended to represent legal advice or other professional advice.  


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