Guarding the Crown Jewels: Why SMEs Must Protect Their Trade Secrets
For small and medium-sized enterprises (SMEs), trade secrets can be invaluable assets, offering a competitive edge without the time and expense of patenting. Whether it’s an innovative manufacturing process, a unique product formula, or customer lists, these confidential details can drive growth and innovation. However, their value depends entirely on maintaining secrecy.
This is where non-disclosure agreements (NDAs) come into play. NDAs are critical tools for safeguarding trade secrets when sharing them becomes necessary—be it with investors, partners, or employees. A well-drafted NDA clearly outlines confidentiality obligations, legal remedies for breaches, and ensures accountability.
Failing to protect trade secrets can result in devastating losses, especially for SMEs, as the unauthorized disclosure of sensitive information can lead to losing a market advantage or customer trust. Prioritizing trade secret protection through NDAs isn’t just smart—it’s essential for long-term business success.
Below is an excerpt from an article discussing trade secrets, published by WIPO:
While most large multinational companies have the resources and funds to invest in the patenting process, which can be costly and time-consuming, small and medium-sized enterprises (SMEs) often struggle with it. Trade secrets, on the other hand, are relatively straightforward, entail no registration costs or lengthy legal processes and can add real value for small businesses. That is why it is so important to raise awareness among SMEs about the value of trade secrets and how to protect them effectively. To benefit directly from trade secrets, an SME may:
Consider keeping undetectable manufacturing techniques or hidden components in their products as trade secrets.
Consider keeping lists of suppliers and customers as trade secrets, especially if operating in a niche business.
Consider keeping patentable inventions as trade secrets if they are short of funds, and only file for patent protection when funding becomes available or a keen investor is identified.
Consider licensing their trade secrets, but ensure a confidentiality agreement and enforceable contracts are in place before revealing the secrets to third parties.
Educate their employees and decision makers about trade secrets.
Various intellectual property authorities and educational institutions around the world are reaching out to the business community to improve awareness of the usefulness and value of trade secrets, but there is still a long way to go to raise their profile and strengthen the laws surrounding them.
Works cited:
Nirwan, Prajwal. “Trade Secrets: The Hidden IP Right.” WIPO, 1 Dec. 2017, www.wipo.int/web/wipo-magazine/articles/trade-secrets-the-hidden-ip-right-40225. Accessed 6 Dec. 2017.
