Trade secret is a type of intellectual property protecting valuable confidential information. To qualify as a trade secret, the information must have independent economic value because others do not generally know it and cannot readily determine it by proper means, and the owner must take reasonable measures to keep it secret. Trade secrets can include business, financial, scientific, technical, economic, or engineering information, such as formulas, source code, manufacturing processes, customer lists, pricing information, marketing plans, or business strategies, if the information satisfies the legal requirements for trade secret protection.
Unlike a patent, a trade secret does not require an application, registration, or government grant. Trade secret protection depends on the information remaining secret, and on the owner taking reasonable steps to protect it. If the information becomes generally known, or if the owner fails to take reasonable measures to maintain secrecy, the information may lose trade secret protection.
Trade secrets are protected by both state and federal law. Many state trade secret laws are based on the Uniform Trade Secrets Act (UTSA). At the federal level, the Defend Trade Secrets Act (DTSA) allows the owner of a misappropriated trade secret to bring a civil action in federal court if the trade secret relates to a product or service used in, or intended for use in, interstate or foreign commerce.
Misappropriation generally includes acquiring another person’s trade secret by improper means, or disclosing or using another person’s trade secret without consent in circumstances covered by law. Improper means can include theft, bribery, misrepresentation, breach of a duty to maintain secrecy, or espionage. Improper means do not include reverse engineering, independent derivation, or other lawful means of acquisition.
Trade secret owners often use non-disclosure agreements (NDAs), confidentiality policies, employee training, password protections, limited-access files, and physical security measures to help maintain secrecy. Under the DTSA, civil remedies may include an injunction, damages for actual loss or unjust enrichment, a reasonable royalty, exemplary damages, or attorney’s fees in some cases. Some trade secret theft can also be prosecuted criminally under the Economic Espionage Act.
In 2025, the Uniform Law Commission authorized a drafting committee to update the UTSA. Unless and until a jurisdiction adopts any resulting amendments, that project does not change existing trade secret law.
[Last reviewed in June of 2026 by the Wex Definitions Team]