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What is a Trade Secret?

By Garry Crystal
Updated May 16, 2024
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A trade secret is a piece of information used in business that is an ingredient of a product. This does not necessarily mean that it is a food or drink secret, although it is well known that many food and drink manufacturers claim to have a secret ingredient in their products. Coca Cola, for example, claims to have a secret ingredient, and that is their trade secret.

Although Coca Cola claims to have a secret ingredient, the drink is regularly consumed by millions of people. The secret ingredient would have to have passed numerous safety and health tests before being deemed safe for consumption. Although Coca Cola has a trade secret, there are certain people who do not work at Coca Cola who know what this secret is.

A trade secret can be used in any business or product. It can be used to make a product, or it can be a part of marketing and sales methods. Many companies have their own zealously guarded customer lists, and these are considered trade secrets. The secret is information that is not available to the public. The best way to keep hem secret is to limit the amount of people who know about them.

Many employees have to sign a trade secrets document that forbids them to talk about the methods and processes used within their company. They are not allowed to disclose any information, even if they are no longer working for the company. If they disclose the secrets after signing the document, they may face severe penalties. An employee who discloses a secret can be sued.

Once a trade secret has been disclosed, it is almost impossible to keep it a secret once again. Trade secrets are different from patents and copyrights. With both of these business practices, the product information will become public knowledge. Patents and copyrights also lapse after a limited amount of time.

Trade secrets have virtually no specific lifespan. As long as they remain secret, they can be secrets for eternity. There is, however, a risk associated with claiming a trade secret. One is not allowed to claim copyright or patent rights. This means that if the secret becomes public, the creator will need to prove ownership of the secret.

Because a trade secret cannot have copyright or patent status, another person may claim to be its originator. This is why Coca Cola’s secret is locked safely away in a bank vault in Atlanta, Georgia. A less expensive way of claiming rightful ownership is to mail the original details of the secret in a sealed, postmarked envelope. This will go some way towards proving the date and original details of the secret.

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Discussion Comments

By burcidi — On Jun 04, 2011

Even if a company doesn't sign a trade secret agreement with its employees, there is a law on trade secret in the United States that protects companies' rights if the secret is stolen.

The only two ways people can use the secret is if they were sold the right to use the trade secret information by that company ( I don't know why anyone would do that, but I guess some do) or if someone discovered the secret on their own. So if you developed the same ingredient or technology on your own, you have the right to use it even if someone else found it before you since it was never publicized.

By discographer — On Jun 01, 2011

I saw a documentary on TV about a glass company that has been coloring glass decorative items for many years. They also have trade secrets about the techniques and ingredients they use to do it which they apparently keep in a diary.

I used to think before that a trade secret is just one ingredient or technique. But in this case, it was a diary full of experiences of the founder of the company. It has information about all of the ingredients, proportions and techniques that have ever been tried by the company in its glass coloring. So it doesn't just list things that worked but that didn't work as well.

In a sense, the founder's experiences is their trade secret. He is no more, and his son is running the business. They say that not even the people who work there know the ingredients they are working with. They are simply told to follow procedures. I guess it's the best way to keep things secret.

By serenesurface — On May 30, 2011

I think trade secrets attract customers too. If a business has a trade secret, that means it has something that others in that sector or industry don't have. And if other businesses in that same sector try to find out what that secret is, it can make that product even more attractive, don't you think?

Coca Cola is a good example. I know many Coca Cola drinkers who refuse to try competitor sodas. They are devoted customers of the brand, maybe because they are intrigued by its trade secret. It might make them feel that this brand is unique among all others.

By anon1170 — On May 18, 2007

Can a person patent a food idea???

If yes, can you then try to sell the idea to a Manufactuer or a place like MM Foods???

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