A few years ago, while its corporate headquarters were being renovated, KFC temporarily moved Col. Sanders’ secret recipe of eleven herbs and spices from a vault in those offices to a secure, undisclosed location. A 2008 article from Elissa Elan of Gale, Cengage Learning (viewable here: http://findarticles.com/p/articles/mi_m3190/is_37_42/ai_n29482754/) described the “usual,” pre-move treatment of the handwritten formula:
According to KFC, only two executives know the recipe, while a third knows the combination of the safe that held it. Only a handful of colleagues know the identities of those three officials, who are not allowed to travel on the same plane or in the same car.
Given the security precautions taken to protect the formula – which reportedly had not been removed in decades – it is perhaps unsurprising that the recipe was delivered to the temporary location under police escort.
KFC’s zealous protection of its formula is prudent. In addition to the obvious reason – a clear desire to prevent competitors from learning the formula’s contents – the company also strengthens its “legal” position in the event that the formula does somehow become public. In addition to other legal protections that they might offer, all but a few states have adopted the Uniform Trade Secrets Act (“UTSA”). UTSA provides legal recourse to those businesses whose trade secrets have been wrongfully taken by third parties. In order to receive such protection, however, the misappropriate information must actually satisfy the criteria of “trade secret.”
According to UTSA, a trade secret is information (including but not limited to a formula, compilation, program, method, or technique) that (i) is economically valuable because it’s not generally known, and (ii) “is the subject of efforts that are reasonable under the circumstances to maintain its secrecy” (emphasis added). UTSA § 1.4. The second prong requires the holder of the information to take “reasonable” steps to maintain confidentiality. Without such steps, the information will not be considered a trade secret – and won’t be protected under the statute.
So what does all this mean for your own independent business? Well, I’m not suggesting that you have to “go all KFC” on us and transport your secrets by armed guard. I, do, however, recommend that you identify what you believe to be secret and, as the law says, take those precautions “that are reasonable under the circumstances.” If you seek “trade secret” protection for a unique and successful business strategy, for example, you probably shouldn’t reveal it on your website or boast to the media about its specifics. In your situation, in fact, it may be wise to keep related hard copy documents in a locked area (with restricted access to the key), password-protect computer files containing the information, limit access to that information to as few individuals in or out of the company as needed to effectuate the plan, and require those individuals to sign confidentiality agreements. (A confidentiality agreement could be legally useful beyond its application to UTSA. A “trusted” colleague who violates the agreement could also be held liable for breach of contract.)
Again, UTSA requires one to use efforts that are “reasonable under the circumstances,” and I am in no way suggesting that there is a “magic” strategy for transforming your information into a “trade secret.” Each set of circumstances is unique, and different courts interpret reasonableness differently. Be aware of the issue, however, and consult your attorney as to how to best protect your secrets.