Protecting your Business: Identifying and Safeguarding your Company’s Trade Secrets

By: Court Anderson , Benjamin (Ben) Hamborg , Eric Friske | June 20, 2018
Owning a Business


Most companies have no difficulty understanding how and why to protect their physical assets like machinery, buildings, and real estate. But many of those same companies fall short when it comes to protecting their most valuable assets: business models, customer lists, pricing schemes, and sales and manufacturing techniques, which are the real drivers of profitability in today’s economy.

And even when companies do recognize that their proprietary information can be legally protected, they often fail to take the reasonable measures required by law to safeguard that information as a trade secret. Because many businesses depend on proprietary information, the failure to understand what trade secrets a company owns, and how best to protect those secrets, can have dire consequences if that information is lost or taken.

What is a trade secret?

In Minnesota, trade secrets are protected by a combination of both state and federal statutes. Under state law, Minnesota has adopted a version of the Uniform Trade Secrets Act, Minn. Stat. Chapter 325C (“MUFTA”). At the same time, trade secrets in Minnesota are also protected by the federal Defend Trade Secrets Act of 2016 (“DTSA”).

Both the state and federal laws broadly define trade secrets to include nearly all types of information that may be valuable to a company:

  • State law: Under MUFTA, a trade secret is defined as any “information, including a formula, pattern, compilation, program, device, method, technique, or process, that . . . derives independent economic value . . . from not being generally known to . . . other persons,” so long as the owner has made reasonable efforts to maintain that information’s secrecy.
  • Federal law: Similarly, under the DTSA, a trade secret is defined as “all forms and types of financial, business, scientific, technical, economic, or engineering information,” where the owner has taken “reasonable measures to keep such information secret” and the information has “independent economic value” as a result of not being generally known.

Under these definitions, trade secrets can potentially include any form of information that has value. Because nearly any type of proprietary information can theoretically be a trade secret, whether that information is actually a trade secret often depends on the measures taken by the company to protect it. As a result, it is critical for companies to take appropriate steps that protect their valuable information before problems arise, so that they can not only prevent release of that information, but they can be on proper legal footing if litigation becomes necessary.

How to protect trade secrets

Companies that want to protect their trade secrets under the law must make reasonable efforts to maintain their secrecy. Maintaining that secrecy depends heavily on the nature of the information, and could involve taking a variety of precautions, including the following:

  • locking computer terminals;
  • placing confidentiality labels on documents and login screens;
  • incorporating confidentiality provisions into employment contracts;
  • restricting access to certain employees and contractors; and
  • taking any other reasonable steps that make employees and other personnel aware of the confidential nature of certain information.

With today’s increasingly fluid workforce and information-based economy, companies need to take these reasonable measures to safeguard their proprietary information and prevent their secrets from being stolen or inadvertently released. Information can be purposely copied by dishonest competitors and employees, or it could be accidentally released because it was not properly safeguarded. In the event that those secrets escape into the wild, companies need to know how to prevent their competitors from using those secrets and to recover compensation for any damages that may have resulted.

At Henson Efron, our attorneys have extensive experience advising companies on how to protect their trade secrets, as well as representing employers and employees in litigation where trade secrets have allegedly been taken. If you’d like to learn more about how our experience and knowledge can help protect your business, please contact Henson Efron.

The purpose of this article is merely to provide general information and may not be construed as legal advice.

Court Anderson
With diverse and extensive courtroom experience, I know how to sell a case. I relentlessly and aggressively work to convince judges and juries that your position is equitable and right. I guarantee that I will care for your case as if it were my own. I have handled well over 500 depositions and litigated cases in federal and state courts throughout the United States regarding:...
Benjamin (Ben) Hamborg
I begin with the end in mind when gathering evidence and investigating facts. Extracting the critical information, I craft it into a convincing story, whether it’s for a demand letter, a motion for summary judgment, or a trial. I advise and resolve complex legal and business disputes for both plaintiffs and defendants, on issues regarding: business torts construction defects breaches of contract intellectual property issues...
Eric Friske
I represent individuals and businesses in a wide range of complex business, estate, and trust litigation matters.  At each stage along the way, I work closely with my clients to develop a successful strategy for their case, focusing on what is most important to them and their goals. In my litigation practice, I have a proven track record of advocating for my clients in the...