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You may have heard lots of rumours about what could possibly be KFC’s 11 herbs and spices, or Big Mac’s “special sauce”. But you often find yourself without the answer you’re looking for.
Well, these are all trade secrets and are carefully guarded for a very good reason. The methods, recipes or innovative processes behind a product are integral to a business’s success, so it’s critical that this information doesn’t fall into the wrong hands. If these secret ingredients or methods were just floating around, competitors would quickly erode your competitive advantage.
So, how do successful companies manage to protect this sensitive information?
First, let’s go through the basics.
What Is A Trade Secret?
A trade secret can refer to anything from the way your business manufactures a particular product, to the unique ingredients used in a signature drink – and it doesn’t even have to be documented! This very flexibility makes trade secrets a valuable form of Intellectual Property for many businesses.
Because trade secrets are maintained through secrecy rather than formal registration, business owners often employ a range of strategies to protect them. While they are governed by common law and contractual obligations such as Non-Disclosure Agreements (NDAs), there is no statutory term of protection like in the case of patents. If you need that extra layer of legally binding protection, you might consider registering a patent – we’ll discuss what this involves shortly.
Are My Trade Secrets Protected?
As mentioned, trade secrets are protected under common law via confidentiality obligations, but this protection is not as robust as that provided by registered patents. For example, a trade secret might be safeguarded by an implied duty of confidence in an employment relationship – however, this protection can be less clear-cut compared to the comprehensive framework set out in the Patents Act 1990 (Cth).
There are plenty of real‐life examples where businesses have deliberately opted for trade secret protection over patent registration. Consider Coca‑Cola: one of the most famous trade secrets in the world. Despite numerous attempts to uncover its formula, Coca‑Cola continues to thrive by relying on the perpetual protection trade secrets offer when maintained diligently.
| Coca‑Cola: one of the best‑hidden trade secrets in the world Coca‑Cola is renowned for guarding its secret recipe for over a century. Surprisingly, this key formula is not protected by patent legislation – meaning it never expires legally, although its secrecy must be vigilantly maintained. Originally, the recipe was never formally written down; when it was eventually documented by Candler’s son in 1919, it was secured in a series of vaults to prevent leaks. The seriousness of its confidentiality is underscored by incidents where ex‑employees faced arrest and legal penalties for attempting to sell the recipe. Even though trade secrets do not have the binding statutory protection of a patent, in 2025 many leading companies still choose this route due to the indefinite nature of protection if the secret remains undisclosed. |
5 Ways You Can Protect Your Trade Secrets
Protecting trade secrets can be more straightforward than registering a patent or managing its expiration date. However, it does require you to implement robust internal measures and consider legal agreements to safeguard your valuable information. You can learn additional tips on safeguarding your intellectual property by exploring our comprehensive guide.
Restraint of Trade Clause
It’s common for businesses to include a Restraint of Trade Clause in their contracts. This clause, typically embedded in an Employment Contract, prevents employees from divulging trade secrets to competitors if they leave your organisation. In 2025, ensuring that these clauses remain reasonable – and in line with current legal standards – is essential. Employers may include one or more of the following:
- Non‑Compete Clause: Prevents a former employee from working with a competitor or starting a similar business. You can read more about this here.
- Non‑Solicitation Clause: Restricts employees from taking your clients with them when they leave.
- Non‑Poach Clause: Prevents former employees from recruiting your key staff members.
Remember, these clauses must be reasonable; overly restrictive measures may be deemed unenforceable if they unnecessarily limit future employment opportunities.
Non‑Disclosure Agreements (NDAs)
Another effective method to protect your trade secrets is to have employees sign a Non‑Disclosure Agreement (NDA). This legally binds them not to reveal any confidential or proprietary information they encounter during their tenure. NDAs are equally important for contractors, particularly when working with overseas teams whose confidentiality obligations might differ. Additional guidance on contractual confidentiality can be found in our contract review service page.
Policies
Many businesses bolster their trade secret protection by implementing robust internal policies. In today’s digital age, investing in strong cybersecurity measures and clearly defined data breach protocols is non‑negotiable. This might include regularly updated Information Security Policies and comprehensive Data Breach Response Plans, ensuring that confidential information remains secure even when employees work remotely. For more on maintaining robust data privacy, take a look at our cyber security legal issues guide.
Copyright
Although trade secrets do not require written documentation to receive legal protection, putting your ideas in writing can bolster their protection via copyright. Once expressed in material form – whether in digital or print – your creative work is automatically safeguarded by copyright law. It’s important, however, to include appropriate copyright disclaimers on your website and in your contracts. For more detailed advice on copyright protection, refer to our article on how to copyright something.
Patents
If you require formal legal ownership and want to prevent others from using your invention, you can protect your trade secrets by registering a patent. A standard patent in Australia lasts up to 20 years and requires that the invention is new, useful and inventive.
Note: The Innovation Patent scheme was phased out in Australia in 2021. As such, in 2025 you will only be able to protect your inventions through the standard patent route. For a detailed overview of what can be patented, please read our article on what can be patented.
My Trade Secret Has Been Stolen – What Do I Do?
Even when you have taken all the necessary precautions, there can still be instances where trade secrets are misappropriated, whether by external parties or by former employees. In such circumstances, what legal recourse do you have?
Cease and Desist Letter
If you discover that someone has disclosed your confidential information, the first step is often to issue a cease and desist letter. This letter demands that the recipient immediately stop sharing your confidential information and, if possible, return any materials that contain it.
If informal negotiations fail, you may need to take legal action. In many cases, the court can issue an injunction preventing further disclosure of the confidential information, and you might also be entitled to compensation for any losses incurred.
Breach of Confidence
Should you decide to take the matter to court, you would generally pursue a claim for breach of confidence. In such cases, you must establish three key points:
- The information in question is confidential.
- There existed an obligation of confidence in the relationship between the parties.
- The unauthorised use of this information caused you measurable loss.
Depending on the circumstances, the court may award damages or enforce an injunction to prevent further misuse. For more assistance on legal remedies, you might want to check out our Contract Review service.
Need Help?
Trade secrets remain a critical asset in today’s competitive landscape, and as we progress through 2025, it’s essential to review and update your protection strategies regularly. Consider whether you should register a patent or continue to rely on the secret-keeping measures outlined above. You might also be questioning whether to document your trade secrets, the effectiveness of your copyright protection, or if your existing policies are robust enough to deter disclosure.
If you need assistance navigating these complex issues, Sprintlaw’s team of experienced lawyers is here to discuss your options and ensure your intellectual property remains secure. In today’s evolving digital world, protecting your IP means not just relying on traditional legal instruments but also incorporating modern cybersecurity strategies. For additional expert advice, feel free to explore our IP protection guide and other related resources.
You can reach out to us at team@sprintlaw.com.au or contact us on 1800 730 617 for an obligation‑free chat.
As we advance further into 2025, the technological and regulatory landscapes continue to evolve. Regular reviews of your data security measures, NDAs, and internal policies – alongside timely legal advice – are more important than ever to safeguard your trade secrets. Whether you are updating your NDAs or implementing new cybersecurity protocols, Sprintlaw is here to help you stay protected.
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