To this day, no one knows what KFC’s 11 herbs and spices include, not even KFC’s head chef! It’s one of the most tightly guarded trade secrets in the food industry and, while many have tried, no one has succeeded in replicating the recipe.

Trade secrets are secrets for a reason. If your company has a winning formula, competitors are going to want to know what it is and copy it. If that happens, you lose your competitive edge.

So, how can you protect your company’s intellectual property and trade secrets?

What are trade secrets?

Secret recipes are not the only type of trade secret. A trade secret can be any of the following:

  • a formula or method
  • a process
  • a design
  • devices / tools / technology

How to protect your business trade secrets

Australian law provides a few ways for companies to protect their confidential information:

  • Under common law, by way of contract
  • As a result of an obligation arising under the law or equity, such as an obligation of confidence (also called duty of confidence)
  • Under the Patents Act 1990

Here’s how you can apply this to protect your business trade secrets.

  1. Limit the number of employees who know confidential information

One of the biggest threats to your trade secret are your employees. Those that work closely with your production processes and other types of intellectual property may reveal it to others, whether consciously or inadvertently.

The first thing you should do is limit your trade secrets to the most essential employees in the company. With fewer people in the know, the less chance there is of information leaking out.

  1. Ask people to sign non-disclosure agreements (NDA)

You can ask employees who have access to trade secrets to sign non-disclosure agreements. These NDAs can also forbid ex-employees from sharing your company’s trade secrets with a new employer or other competitors. Suppliers, distributors and contractors who are privy to this information can also be asked to sign an NDA. Should any of these parties breach the agreement, you can take legal action against them.

  1. Ask people to sign non-compete clauses

Closely related to an NDA is a non-compete clause, which can be added to employment contracts or supplier and contractor agreements.

Non-compete clauses prevent people no longer contracted to your company from using confidential information and intellectual property in their own business to compete in the same industry.

  1. Patent your trade secret

If you have invented a new device, method, process or substance, you can have it patented. There are two types of patents you can apply for: a standard patent or innovation patent.

Standard patents must be new, useful and inventive and last 20-25 years. Innovation patents must be new, useful and innovative and last up to 8 years. The latter may be something that you plan to continue improving, such as computer software – hence the shorter shelf life.

Some of the most successful companies achieved their success because they created something unique and took steps to guard it. If your company trade secrets are exposed, you risk losing your competitive edge. A commercial lawyer can advise you on the best way to protect your own secret herbs and spices.

Blaine Hattie is a business lawyer at Sutton Laurence King Lawyers.

Sutton Laurence King’s offers commercial law services that help businesses protect their intellectual property and trade secrets. For a consultation, call us on 03 9070 9810.

 Sutton Laurence King Lawyers articles are intended to provide commentary and general information. They should not be relied upon as legal advice. Formal legal advice should be sought in particular transactions or on matters of interest arising from this article. Persons listed may not be admitted in all States and Territories.