What Are Trade Secrets?

Trade Secrets are a form of Intellectual Property that include any confidential information such as secret formulas, processes and methods used in production. ⠀

Trade Secrets give creators certain rights and privileges depending on the type of IP protection. They are not the same as trade marks as you don’t ‘register’ trade secrets.⠀

A trade secret is proprietary knowledge and it is up to you to protect that knowledge. One way you might keep this knowledge out of competitors’ hands is by ensuring employees or distributors sign confidentiality agreements.⠀

Examples of trade secrets include:⠀

  • The age-old recipe for Coca-Cola⠀

  • The combination of herbs and spices used in Kentucky Fried Chicken

Common law provides protection for infringement of trade secrets, breach of confidentiality agreements and passing off trade marks. Proving a breach of confidentiality under common law can be complex and is potentially more costly than defending registered rights.⠀


Secrecy doesn’t stop anyone else from inventing the same product or process independently and exploiting it commercially. It doesn’t give you exclusive rights and you are vulnerable when employees with this knowledge leave your firm.⠀

Trade secrets are difficult to maintain over a long time or when many people know the secret. When contractors and employees leave, you should ask them to provide written undertakings that they will not compete with your business after they leave, in addition to signing a confidentiality agreement. It is often much easier to prove competition than breach of confidentiality.⠀

These undertakings are difficult to enforce and need to be prepared by your legal adviser. You need to be careful that the undertaking doesn’t restrict the contractor’s or employee’s right to earn a living.⠀

At Litton Legal we can advise the best course of action for legal proofing your business, specific to your business’ needs. Contact us on hello@littonlegal.com.au⠀