Trade secrets are a type of intellectual property for proprietary, confidential information that has a significant value. Examples of trade secrets can include certain program code of software, algorithms used by software to perform one or more functions, secret recipes, secret manufacturing processes, and customer lists. The formula for Coca-Cola soda pop is often mentioned as an example of a trade secret.
States often have a particular statute that outlines the basis for protection of a trade secret in that state. For example, most states have enacted a variation of the Uniform Trade Secrets Act (UTSA).
To protect a trade secret, reasonable precautions usually must be taken to ensure the trade secret is kept secret. Precautions that limit access to information about a trade secret are often necessary to show such reasonable precautions have been taken (e.g. limiting access to a secret recipe to only employees that need to know it, limiting computer or physical access to important commercially sensitive documents, etc.).
It can sometimes be necessary to discuss commercially significant, but confidential information with third parties when trying to commercialize a particular product or service. When discussing commercially significant information to personnel that are not part of the owner of a trade secret (e.g. personnel for a particular vendor or customer), contracts can be used to help preserve the confidentiality of such information. For example, non-disclosure agreements (NDAs) can be used to try and preserve the confidentiality of such information. Use of NDAs in addition to taking other types of precautions to preserve the confidentiality of information about a trade secret and limit access to such information can be helpful in establishing that the existence and ownership of a trade secret.