Trade secrets are considered another form of property and can be transferred just as regular property is transferred. It is, however, important to carefully document the transfer of the trade secret to avoid misuse or misunderstanding.
How do I transfer a trade secret?
Trade secrets, like other valuable property, are transferred through a contract and an exchange of value. In other words, the person you are transferring the trade secret to should pay you for the valuable information. The contract should be in written form and specify that the transfer of the trade secret is complete. It should also be signed by both parties and ideally notarized to prove validity should the contract ever be questioned.
What is the responsibility of the old owner of the trade secret once the transfer is complete?
The old owner, or the transferor, no longer owns any right in the trade secret. This means they must walk away and never use or mention the information again. While this idea sounds simple, there have been many cases where a transferor forgets their responsibility and sells their already transferred secret to someone else. Because of this problem, the courts have made it very clear that once a trade secret is transferred, the transfer is permanent and a transfer of trade secrets can only be done once.
What is the responsibility of the new owner of the trade secret?
The new owner can do whatever they desire with the trade secret. Simply put, it is their property. They are free to keep it a secret and use it to their advantage or they can make it public knowledge. The new owner can even patent the information to ensure absolute protection for 20 years regardless of public knowledge of the trade secret.
Trade secret transfer contracts are very complex and contain many provisions that deal specifically with the rights and responsibilities of both parties. If you are planning on transfering your trade secret, always consult with an intellectual property attorney to make sure that the contract is drafted correctly.