Keeping Your Trade Secrets Secret

IP theft is not just for high tech and big corporations. It can happen anywhere – even at your local hair salon.

hair color formula

A stylist allegedly stole top-secret hair ‘Color Formula Cards’ from a high end hair salon in New York City catering to a clientele of celebrities. Apparently, the stylist took the formulas to the competition. The trade secrets in question are cards that detail the specific hair color needs of each client and the precise formula used to create the custom color. The hair stylist then contacted her former customers telling them she now worked at the competitor.

If you think you haven’t invented anything, you probably have intellectual property you don’t recognize. Do you have a formula, method, or information that gives you a competitive advantage? It can be a manufacturing process, a “secret sauce,” or products in development. Trade Secrets also include customer lists, business plans and “negative know-how” – things that you tried that led nowhere. If so, you have a trade secret.

Here are important three important steps to make sure you protect your trade secret IP:

  • The first step is to prioritize your proprietary information and categorize the results. Have a reasonable policy that requires all proprietary material as just that — with a big CONFIDENTIAL stamp on the document itself. When the IP is a process or formula, some companies fragment the process so that no one employee knows it from beginning to end. KFC, for instance, separately mixes parts of its “11 herbs and spices” at two locations. Once the material has been labeled as secret, the next step is simply to keep it confidential.
  • The second step is a company policy (in writing and given to every employee) that clearly explains why keeping information confidential is important to the company.
  • And third, make sure you have a procedure to verify that employees leaving your company do not take any confidential information. It’s important to remind them of their obligation (and signed agreement) not to disclose any trade secrets to their new employer.

Trade secrets are important and valuable IP assets. If you haven’t done so, make sure you put in place procedures to protect it’s confidentiality.

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Rand Brenner Administrator
Rand Brenner is an IP professional whose passion is helping inventors, startups, and businesses of all sizes use licensing to turn their IP into income-producing products, services, and technologies. His decades of experience run the gamut from medical devices to food technology to consumer products. He’s licensed some of the biggest Hollywood entertainment blockbusters including the Batman Movies (1 and 2), and the number one kid\'s action TV show, the Mighty Morphin Power Rangers. Rand speaks about licensing and is a featured speaker at investment conferences, trade shows, colleges, and startup events. He’s a published writer with articles appearing in several prestigious trade magazines including The Licensing Journal, Intellectual Property Magazine, and License India.

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