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What is a trade secret?

A trade secret is any confidential business information that gives your business a competitive edge. It is also referred to as intellectual property or proprietary information.

A trade secret can be many things, including the:

  • Research and development your firm has done
  • Algorithm your firm has defined
  • Formula, method or process your company uses
  • Ingredient that makes your product different or better
  • Design of your product
  • Invention or device your company uses 

3 famous trade secret examples

  1. A Formula: The Google search algorithm. Many businesses wish they understood how Google decides how to rank entries. Each time someone seems close to unveiling the formula or procedure Google makes a change and the game continues.
  2. A Process: Krispy Kreme doughnuts. The secret is the "assembly line" type process by which the company is able to have warm, fluffy doughnuts ready for consumers.
  3. An Ingredient: Coca Cola. While Coca Cola could have patented their recipe the company chose instead to brand it as a trade secret. No one knows for sure how the recipe is protected, who knows all of the ingredients or where the recipe is kept. There was a 2006 attempt  by three ex-Coca-Cola employees to sell Coco Cola trade secrets, product samples and prototype packaging to Pepsi.

When a trade secret fails
An August 2017 Huff Post news story  about a writer who outsmarted the New York Times Bestseller List algorithm has people scratching their heads and the NYT rethinking their method for picking which books qualify as best sellers.
Lani Sarem's Handbook for Mortals was on the NYT number one spot until other young adult (YA) genre authors started to question on social media the book's placement. The book had purportedly sold over 5,000 copies in the first week and was sold out on Amazon. But other YA authors questioned how a book that "no one has ever heard of" could take the number one slot.

Two authors looked deeper into how it happened. They found that bookshop owners had been contacted to find out if their store reported sales to the NYT. If the bookstore was on the list someone would go and buy out all of the copies of the book or order just one book fewer than was needed to qualify the purchase as a bulk buy.

Once the ploy had been uncovered the NYT removed Handbook for Mortals from their bestseller list.

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