Trade secrets are an important facet of intellectual property law that have not received sufficient attention in the cannabis industry. In general, any confidential business information that provides a company with a competitive edge can be considered a trade secret.
Trade secrets can include manufacturing or industrial secrets like recipes, formulas, processes or techniques, as well as commercial secrets, such as client lists or business plans that have commercial value because of their secrecy. Unauthorized use of this information by anyone other than its owner is an unfair practice and violation of the trade secret. The key to trade secret law is that something is only regarded as a trade secret so long as it’s kept secret.
Trade secrets are at the opposite end of intellectual property protection from patents, in that patents exist so that inventors can disclose their inventions to the public and receive a limited duration of exclusivity to exploit those inventions. Trade secrets provide their owners with protection only so long as the secrets are not disclosed to anyone. There are no procedural formalities like registration in protecting a trade secret. Perhaps the most famous example of a trade secret is the recipe to Coca-Cola. Coca-Cola claims this to be the “world’s most guarded secret,” as it is known to only a few key employees at any given time. The recipe is locked in a purpose-built vault in the company’s museum in Atlanta.
The measures employed by Coca-Cola highlight the importance of taking adequate steps to prevent trade secrets from being revealed. In a case for misappropriation of trade secrets, one of the factors considered by the court is whether the owner of a purported trade secret implemented adequate measures to keep their secrets secret.
Steps that can be taken to protect trade secrets include limiting the number of individuals who know the secret, implementing security protocols in the facility that holds the secret, and requiring employees and others with access to the trade secret to sign a confidentiality and non-disclosure agreement.
In a nascent industry such as the cannabis industry, trade secrets abound. But the cannabis industry is also unique in that people have been growing cannabis for a very long time, and have shared information and techniques for doing so freely. Information that has already been shared is not subject to trade secret protection. However, even if certain secrets don’t qualify for trade secret protection under the Uniform Trade Secrets Act or the Defend Trade Secrets Act of 2016, they may still have value as proprietary information. This is why we encourage all of our clients to have confidentiality and non-disclosure agreements in place with their employees and with other key individuals with whom they transact business. Even without a claim under trade secret law, it may be possible to go after someone in court to try to stop them from disclosing your confidential information or for damages for having disclosed such information.
For more on how to protect your cannabis intellectual property, check out the following: