To effectively compete in the modern economy, businesses need something that sets them apart from others. Some companies spend decades developing relationships with individual consumers or other businesses.
Sometimes, certain suppliers and vendors can give a company an advantage. Other times, unique knowledge, such as a patented production process, can help one company offer products that others cannot or keep their prices lower than others in the same sector.
A company’s trade secrets consist of non-public information that may give the business a competitive advantage. Technically, trade secrets have protection from infringement under federal rules. However, competitors frequently try to uncover information that can increase sales or decrease operating expenses.
In some cases, they may intentionally try to infringe on another organization’s intellectual property rights by intentionally trying to uncover certain trade secrets. How do some organizations attempt to learn competitors’ trade secrets?
Infringement can occur in many ways
A competitor could try to gain access to an organization’s trade secrets through a variety of questionable practices. One of the most common involves attempting to hire workers who may have had access to those trade secrets while working for the targeted company. Businesses may try to poach or lure away existing workers or may eagerly hire former workers as a way of learning more about a competitor’s trade secrets.
Occasionally, organizations may engage in corporate espionage by intentionally arranging for someone to infiltrate the competing organization to gain access to trade secrets. Such practices do theoretically violate the law, but they can cause substantial economic harm before a business realizes what has transpired.
Other times, one company may attempt to reverse-engineer a recipe, formula or manufacturing process based on the available information about another company’s operations and its products or services. That reverse engineering process can be lawful in some cases or potentially illegal in others.
Seeking out vendors and service providers as a way of gleaning inside information about a competitor’s operations might also cross the line between appropriate attempts to duplicate another company’s offerings and inappropriate conduct.
Protecting trade secrets involves proactive preparation
The best-case scenario for a business worried about protecting trade secrets involves establishing a workable system before any significant infringement occurs. Limiting the access that individual employees have to crucial company information can be helpful.
For example, keeping a single salesperson from having access to the entire roster of clients might be a helpful decision. Splitting up the production process could prevent any one worker from learning the exact process from beginning to end. The inclusion of the right clauses and terms in employment contracts can also provide a degree of protection.
Companies aware of trade secret infringement may need to take the matter to the civil courts. Pursuing business litigation in response to intellectual property violations can potentially help organizations protect that which gives them a competitive edge.