GG Thinks: Confidentiality Alone is Not Enough to Protect Trade Secrets.

Unlike patents or copyright, trade secrets rely on secrecy for both their value and their legal protection. Every company holds information it wants to keep confidential in order to maintain an edge over competitors. Whether that information is technical (for example, a manufacturing formula or process), commercial (such as balance sheets or customer and client lists), or strategic knowledge (for example, a recipe, a chemical compound, a marketing study, pricing information, or details relating to the launch of new products), if it is commercially valuable, companies should ensure it is kept secret — particularly from competitors.

But how can this be achieved when employees need access to that information in order to perform their roles? You do not need to go as far as Benjamin Franklin and adopt the mantra that “three may keep a secret, if two of them are dead.” At the same time, this is not a free-for-all in which employers can prevent people from changing jobs simply to protect valuable information.

That said, effective trade secret protection requires that certain characteristics and standards be met, within clear legal boundaries. There are both requirements and restrictions that companies must consider when managing trade secrets.

As organizations move toward open collaboration, more dispersed teams, and higher workforce mobility, protecting trade secrets has become increasingly complex. These pressures are particularly visible during periods of talent movement, such as when employees change roles, departments, or employers.

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Restriction is not the only way

Balancing trade secret protection, employee mobility, and legal limits

Let’s take one option off the table from the outset: restricting employees’ or contractors’ freedom to pursue their professional lives is, in most cases, not the right solution. Restrictive agreements such as no-poach agreements are prohibited under antitrust law. Moreover, overly aggressive restrictions on freedom of movement can undermine employee trust and make it harder to attract top talent.

Companies must therefore identify alternative, legally admissible ways to prevent trade secrets from becoming public information, while balancing the protection of business interests with talent mobility.

Because any restriction on an employee’s freedom to work must be disclosed and duly compensated, one possible solution is the use of non-compete agreements, provided they offer appropriate compensation and are limited in duration to a reasonable and proportionate period. However, non-compete agreements cannot always be implemented and depend on the employee’s acceptance, which limits their effectiveness in preventing talent leakage and safeguarding trade secrets.

Does this mean that companies should keep everything secret and refrain from disclosing information to employees and contractors? No. Trade secrets are meant to provide a competitive advantage, and companies should be able to leverage them accordingly. If Coca-Cola discloses parts of its manufacturing formula to local partners, McDonald’s shares approved supplier lists with franchisees, or Continental discloses rubber specifications to Adidas, why should companies keep all their secrets entirely to themselves?

From the outset, trade secrets must be clearly identified so that protection efforts can be focused effectively. The broader the scope of information a company attempts to safeguard, the more complex — and potentially less effective — the protection becomes. Selectivity and precision in identifying trade secrets are therefore the first steps toward successful protection.

The risk exists both inside and outside the organization

From non-disclosure agreements, confidentiality clauses, and data-reuse conditions to internal trade secret and inventions policies, access permissions, and human resources management practices, companies have multiple tools at their disposal to implement adequate trade secret protection. Because the risk of disclosure exists both internally and externally, protective measures must address both fronts.

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Internal measures to protect trade secrets

Internally, technical measures such as role-based access permissions and data-access logs should be combined with legal and organizational mechanisms. These include employee confidentiality clauses, trade secret policies and audits, collaboration protocols, specialized training, performance metrics, response procedures for suspected misappropriation, exit processes, and assessments of potential conflicts arising from future employment. Together, these measures allow companies to implement a comprehensive and effective protection framework while still enabling employees and contractors to access the information they need to perform their work effectively.

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External protection: NDAs and confidentiality clauses

Externally, non-disclosure agreements, confidentiality clauses, and penalty clauses remain standard market tools. However, such agreements should not be treated as generic templates used indiscriminately. Each third-party relationship has its own characteristics, and the relevant contractual protections should reflect those specificities. Standardized terms may not always be enforceable or sufficient to protect the business.

If protection fails, here’s your strategic next move

Trade secret misappropriation and unfair competition risks

When trade secret protection fails and disclosure becomes imminent, companies are not without options. Where protection has been absent or insufficient, and a competitor poaches a significant number of employees — thereby materializing the risk of trade secret misappropriation — such conduct may amount to unfair competition and be legally actionable.

That said, the priority should always be to avoid litigation by implementing systems that effectively safeguard trade secrets and support talent retention.

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Are you comfortable with your current trade secret protection measures?

If you rely on the same non-disclosure template for all third-party engagements, or depend solely on confidentiality clauses when sharing commercially valuable information with employees, contractors, or business partners, your trade secrets may be at risk. Effective trade secret protection depends not only on the value of the information itself, but on the measures and practices implemented within the organization — and on the culture of confidentiality that supports them.

In cases of unlawful misappropriation by a third party, the first stage of enforcement is demonstrating that the information was secret and that its value derived from that secrecy. Are you confident that you would be able to prove that your trade secrets are, in fact, secret and adequately protected?

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Maria Beatriz Carmo
Associate, Competition

Rafael Martins Aguiar
Associate, Intellectual Property

Elisa Summavielle
Partner, Employment

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