Firstly, when an employee joins a firm, they must be warned that the certain information in the company is a trade secret. They can use the trade secret within the firm but not disclose it to anyone outside the firm, not even to exposed working methods to their friends or any third parties. Then there needs to be a management system to outline how you keep the information as trade secrets. For example, the client list is not easily available. It should be given to employees only on a need-to-know basis. This applies also to suppliers list, manufacturing processes, engineering drawings, chemical formulas, cost calculations, even plans for advertisement. So no one employee can reproduce the product somewhere else. Documents need to be properly identified and marked, computers need to have proper access controls such as password entries. So these practical steps need to be taken to keep information confidential. A company can do an audit of their trade secrets, perhaps done by a professional firm and get advice on how trade secrets should be identified and managed.

Non-disclosure agreements (NDA) are legal documents or contracts where parties exchange information in a non-confidential basis. These types of agreements are necessary when parties need to negotiate something. You can’t negotiate something if you don’t know certain facts but you don’t know whether the negotiations will go through. So in this case you’ll expect an undertaking from the other party receiving the information that he will keep the information confidential, even if the negotiations fail. This allows frank discussions and exchange of confidential information, purely for the purpose of negotiations. If the negotiations are successful, then the terms of a non-disclosure agreement will be embodied into the main agreement itself.

Parties might discuss confidential information with third party, sometimes unknowingly, but also deliberately at times for monetary gains. Sometimes employee leave and they use their own information to start their own business. For example, there was a case in the UK where a company was distributing dress chicken to various restaurants in London and the staff knew which restaurants the company supply to, the delivery times and the parts of chicken each restaurant wanted. These are very valuable information to a company distributing a need in central London. An employee left the firm and bought his own refrigerator van and he followed the same route supplying to the same restaurants. The court held that he unlawfully used trade secrets of the previous company. But if he had used his knowledge of understanding how to identify the restaurants to supply to, what the demands are and what are the expected time of delivery to supply another type of product, for example, bread, then he’s not using trade secrets of the first company. He is using the skill acquired but he is using it in a non-competing manner. So it is important to employers to identify what are the skills acquire in the job, and what is confidential information.