Clashing Concepts: Trade Secrets and Social Media Networking

A company’s trade secrets have always been an integral and valuable part of its business assets. Social media networking is fast becoming an integral and valuable part of business practice. By their very nature, these two concepts clash and create unprecedented risks of trade secret exposure and challenges for trade secret law.  

Secrecy itself is at the core of the definition of a trade secret:  Trade secret information must derive its value “from not being generally known to the public or to other persons who can obtain economic value from its disclosure or use.” CC §3426.1(d)(1).  Even inadvertent or unintentional disclosure of trade secrets to the public, whether generally or only to a limited external audience, destroys the “secret” status of the subject information and thus trade secret protection for such information.

Of course, trade secrets can’t be kept completely secret because a company’s activities usually require it to communicate trade secret information, both within and often outside the company, in carrying out its business activities. Ironically, it’s this necessary communication that can jeopardize a company’s trade secret.

Law.com’s Corporate Counsel offers the following suggestions for reducing the risks to trade secrets from social media networking:

  • Develop, disseminate, and train all employees on company policies covering the use of social media. Policies can range from a total ban to limited employee use of social media with express approval.
  • Make sure your employees properly set “privacy” settings or preferences. Keep in mind, however, that even the most “limiting” privacy setting will not protect trade secrets, because information disclosed to a limited group will not necessarily stay within that group.
  • Carefully check out the social media site’s policies for terms relating to “ownership” of material that is disclosed or posted. Depending on the site’s policy, using a social media site could result in the site operator owning the proprietary information and being able to disclose, use, or sell information in the site.

For everything businesses need to know about protecting trade secrets, go to Trade Secrets Practice in California.  Also check out Privacy Compliance and Litigation in California and Intellectual Property in Business Transactions.

© The Regents of the University of California, 2010. Unauthorized use and/or duplication of this material without express and written permission from this blog’s author and/or owner is strictly prohibited.

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