A technology company protects trade secrets by identifying information whose secrecy gives it economic value, limiting access and disclosure to what is necessary, and consistently applying safeguards suited to the information’s value and risk. A confidentiality label or agreement helps, but neither makes information a trade secret by itself. This guide covers the federal-law foundation; state and foreign requirements, contracts, and company-specific decisions should be reviewed with qualified counsel.
What qualifies as a trade secret under federal law?
Under the federal definition, information can qualify as a trade secret if its owner has taken reasonable measures to keep it secret and it derives independent economic value from not being generally known or readily ascertainable by others who could benefit from using or disclosing it. The definition covers technical and business information in tangible or intangible form, regardless of how it is stored; it expressly includes programs and code. 18 U.S.C. § 1839
That means a company should not treat every confidential file as a trade secret automatically. A marking such as “Confidential” communicates handling expectations, but the underlying information still needs secrecy-based value and reasonable protective measures. Nor does trade secret protection grant an exclusive right against lawful independent development or reverse engineering. Federal law excludes those activities from “improper means,” along with independent derivation and other lawful conduct. 18 U.S.C. § 1839
The Defend Trade Secrets Act (DTSA) provides a federal civil cause of action for trade secret misappropriation. Whether a particular asset meets the legal definition, whether conduct is misappropriation, and which remedies may apply are fact-specific legal questions. USPTO trade secret resources
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How should a company identify and prioritize candidate secrets?
Start with information that could give a competitor, supplier, or other recipient a meaningful advantage if disclosed. The following are illustrative candidates, not categories that automatically qualify as trade secrets:
| Candidate information | Examples to consider | Qualification to assess |
|---|---|---|
| Software and operations | Source code, build and deployment details, internal tools, system configurations | Does secrecy provide a business advantage, and is access actually restricted? |
| Technical know-how | Algorithms, methods, designs, prototypes, test results, development processes | Is the information nonpublic and valuable because others cannot readily obtain it? |
| Product and business planning | Nonpublic roadmaps, pricing strategy, forecasts, business plans | Would disclosure reveal an advantage or weaken the company’s position? |
| Commercial relationships | Customer or supplier information, negotiated terms, nonpublic requirements | Is the information protected, valuable from secrecy, and not generally known or readily ascertainable? |
For each candidate, create an inventory record that is specific enough to guide controls. Avoid vague entries such as “all company information.” Record:
- What the information is, where authoritative copies and working copies are stored, and who owns or licenses it.
- Why its secrecy has economic value and what harm or lost advantage could follow disclosure.
- Which roles need access, which people currently have it, and whether any external party receives it.
- How it is shared, the permitted purpose, and what safeguards or agreements apply.
- A responsible business owner and a date or trigger for reassessing its value and access needs.
Use a small classification scheme employees can apply consistently—for example, public, internal, confidential, and restricted—with clear rules for handling each level. Reserve the most restrictive tier for information that merits additional controls; if everything receives the highest label, the label will not help staff distinguish risk.
How should access and security controls match the risk?
Reasonableness is the standard, not perfect security. The DOJ’s Justice Manual says safeguards “need not be absolute” but must be reasonable under the circumstances, considering the facts of the specific case. Its guidance discusses both physical and computer security and the risks of sharing information with third parties. DOJ Justice Manual § 1127
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Translate that risk-based approach into controls staff can follow:
- Restrict access: Grant access by role or documented business need, not by default. Separate especially sensitive material when practical.
- Secure repositories: Keep authoritative copies in controlled systems. Set permissions for shared folders, code repositories, collaboration tools, and backups; avoid uncontrolled personal storage or broad public links.
- Authenticate and log appropriately: Use authentication and access logging proportionate to the asset’s sensitivity and exposure risk. Review unusual access or sharing where the available systems support it.
- Control physical copies: Protect prototypes, printouts, lab notes, and devices from casual access, loss, or unapproved removal.
- Mark and explain: Mark relevant files, repositories, or physical materials and train staff on what the classification means in practice.
- Manage access over time: Document who approves access, periodically review whether it is still needed, and revoke it when a role or relationship ends.
Choose controls by weighing the information’s secrecy-based value, likelihood and impact of loss, number and type of authorized users, internal versus outside access, operational burden, and evidence that safeguards are followed. A smaller group with a clear need may justify tighter separation; broadly used information may call for stronger repository controls, monitoring, and training. These are implementation choices, not a legal checklist that guarantees protection.
What rules should apply to employees and outside parties?
Employees
Use confidentiality and invention-related agreements suited to the employee’s role and applicable law. Make sure the terms align with actual practices: a written promise cannot substitute for access controls, training, or careful sharing. Train employees at onboarding and periodically thereafter to recognize protected information, use approved systems, share only for authorized purposes, and report suspected loss or misuse. The USPTO identifies agreements, recurring training, need-to-know access, marking, and digital and physical safeguards as examples of protective measures. USPTO Trade Secret Intellectual Property Toolkit
Employee agreements governing confidential information must include the DTSA whistleblower-immunity notice, or an appropriate cross-reference to a policy document that states the employer’s reporting policy for suspected legal violations. Ask counsel to review the notice language and how it applies to employee, contractor, and other agreements. 18 U.S.C. § 1833
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Vendors, contractors, customers, and other recipients
Before sharing sensitive material externally, identify the purpose and minimum information needed. Put terms in place that address permitted use, authorized access, onward disclosure, security obligations, incident notification, and return or deletion when the relationship or purpose ends. Apply safeguards to the actual channel and recipient, not just to the contract. The USPTO toolkit discusses confidentiality agreements for employees and outside parties as examples of reasonable measures. USPTO Trade Secret Intellectual Property Toolkit
Assign an internal owner for each material external disclosure. Record what was shared, with whom, when, for what purpose, and under which agreement or approval. This makes it easier to confirm that access remains justified and to respond if information is later exposed.
What should happen when information is shared or a loss is suspected?
Approve and record disclosures
- Identify the information and confirm its classification and business owner.
- Confirm the recipient’s need and the limited purpose for access.
- Check that appropriate contractual terms and technical or physical safeguards are in place before sharing.
- Use an approved transfer method, grant only the needed access, and record the disclosure and any expiry or deletion requirement.
Respond to suspected loss or misuse
Maintain a response process that brings together the appropriate security, business, and legal staff. Depending on the situation, practical first steps may include preserving relevant records, restricting or suspending access, identifying what information and systems were involved, and documenting actions taken. Involve counsel promptly before taking steps that could affect evidence, employee rights, contractual duties, or legal options. DOJ guidance emphasizes assessing security measures and third-party sharing practices, but does not prescribe one universal incident playbook. DOJ Justice Manual § 1127
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.How should a company manage employee departures?
Make trade-secret handling part of the departure checklist rather than relying on a reminder after access has ended. Coordinate timing with the employee’s final work and applicable HR, security, and legal procedures.
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- Revoke accounts, tokens, credentials, and remote access promptly when appropriate.
- Recover company devices, prototypes, documents, and other materials; determine whether company information remains in approved storage locations.
- Require return or destruction of trade secret material in the employee’s possession where appropriate, and document completion.
- Remind the departing employee of continuing obligations under applicable agreements.
- Handle personal devices and accounts lawfully and proportionately, with counsel’s guidance; do not assume the company may search or delete personal material without limits.
The USPTO identifies return or destruction of trade secret information and reaffirmation of continuing obligations at departure as examples of reasonable measures. USPTO Trade Secret Intellectual Property Toolkit
How can the program stay operational and reviewable?
Assign named owners for the inventory, access approvals and reviews, training, agreements, vendor oversight, and incident response. Set review intervals that fit the asset’s sensitivity and the pace of change; revisit controls when an employee changes role, a vendor relationship changes, a system is replaced, or a product or process becomes public.
Keep practical evidence that the program operates, such as inventory updates, approvals, access-review records, training completion, agreement versions, external disclosure records, incident notes, and completed exit checklists. This documentation is a useful implementation practice—not a format specifically mandated by the cited sources—and helps the company show what safeguards it actually used. The statutory definition requires reasonable measures, while DOJ guidance evaluates security in the circumstances of the particular case. 18 U.S.C. § 1839; DOJ Justice Manual § 1127
The DTSA is a federal foundation, not a complete compliance plan for every company. State law, non-U.S. rules, industry obligations, employment requirements, and contractual commitments may also matter. Have counsel tailor the program and agreements to the company’s jurisdictions, workforce, technology, and disclosure practices.
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