Trade secrets – the basis for secure business

• Trade secret – definition
• What can be a trade secret?
• Disclosure of a trade secret – consequences
• Trade secret protection – tools
• Trade secret – examples of lawsuits

In the era of digital transformation and global competition, information has become the most valuable asset for any business. A clear understanding of the concept of trade secrets is more necessary today than ever, as the line between sharing knowledge and leaking strategic data becomes increasingly thin. 

Establishing strict rules and definitions is not just a legal formality, but a mechanism that ensures security for both parties in the employment process. These boundaries protect employers from unfair competition, while providing employees with professional ethics and clarity about their responsibilities and rights when handling confidential data.

Trade secret – definition

According to Bulgarian legislation, a trade secret is any commercial information, know-how or technological information that simultaneously meets three conditions: the information is secret (not generally known), has commercial value due to its secret nature, and measures have been taken to maintain confidentiality. 

However, to properly understand the essence of the term, we need to clearly define what is NOT a trade secret. Mistakes are often made in practice by attempting to protect information that is publicly available or legally excluded from this regime.

Here are some elements that are mistakenly perceived as trade secrets:

• Common knowledge and routine professional skills. The fallacy stems from the fact that these skills are important for the job, but they constitute the employee's professional experience and are not a unique possession of the company.

• Information about legal violations – it is often believed that confidentiality covers everything internal, but the law does not allow the concealment of illegal activities under the pretext of trade secrets.

• Publicly available information in public registers – data (such as UIC or address) is related to the business, but once it is in the Commercial Register, it is already public.

• Standard market prices and conditions – merchants often think that their price lists are a secret, but if they are freely available to every customer, they lose their “unknown” character.

What can be a trade secret? 

Determining the specific objects that fall under the protection of the law is crucial for building robust corporate security. These assets represent the intellectual and operational capital of the company, which provides it with an advantage over other market participants.

The main categories of information that are considered trade secrets include:

Customer and partner lists

Detailed databases with order history, specific preferences and individual contract terms.

Production processes and technologies

Unique working methods, non-patented software algorithms or specific technical drawings and diagrams.

Financial data

Detailed information about cost structure, profit margins and internal forecasts for future revenues.

Marketing strategies

Plans for upcoming campaigns, market research, and pricing methods before their official public announcement.

Know-how and recipes

Specific formulas, ingredients, or unique combinations of methods that directly generate a competitive advantage.

Business plans and expansions

Strategic documents for entering new markets, planned mergers or upcoming acquisitions.

Employee information

Specific skills, individual compensation levels and bonus schemes that are not publicly available.

Disclosure of a trade secret – consequences

The unlawful disclosure of a trade secret leads to serious legal consequences, regulated by both the Bulgarian Trade Secret Protection Act and Directive (EU) 2016/943. Violators can be ordered to pay significant damages for losses suffered and lost profits, and the court has the right to order the immediate cessation of the use of the information. 

In terms of employment law, this often means disciplinary dismissal without notice and full financial liability for the employee. European legislation further emphasizes reputational protection by allowing the publication of court decisions, which can have a detrimental effect on the image of the offender.

What exactly does “disclosure of a trade secret” mean? 

This is any act of acquiring, using, or disclosing confidential information without the consent of its owner. The disclosure can be accomplished through theft, fraud, breach of a non-disclosure agreement (NDA), or even by obtaining data from a third party that the offender knew was obtained illegally.

Trade secret protection – tools

Effective trade secret protection requires a comprehensive approach that combines legal, technical and organizational measures. Only by integrating these tools can businesses ensure that valuable information remains protected in the event of an attempt at unauthorized access or disclosure.

Non-Disclosure Agreements (NDA)

This is the main legal instrument that regulates the relationship between the parties. By signing a Non-Disclosure Agreement, employees, partners, and contractors undertake an explicit obligation not to share certain information, defining specific penalties for violation.

Internal rules and policies

Every organization should adopt clear internal rules for handling classified information. These include access levels (who has access to what information), procedures for document storage, and protocols for dealing with potential data leaks, which are made known to every employee.

Technical and software measures

Digital security encompasses the use of encryption, two-factor authentication, and specialized access tracking software (DLP systems). These tools allow for real-time access to sensitive file movements and block unauthorized data transfers outside the corporate network.

Physical security

Although often overlooked, physical protection is key for manufacturing secrets and samples. This includes controlled access to premises via chip cards, video surveillance, safes for storing information carriers, and document destruction using specialized machines (shredders) with a high level of protection.

Trade secret – examples of lawsuits

Trade secret litigation is rich in case law that illustrates the enormous financial and strategic stakes involved in trade secret infringement. Analysis of real cases helps businesses understand how courts interpret information protection and what the real damages can be in the event of misappropriation.

Waymo vs. Uber (Autonomous Technology)

One of the most iconic cases in the technology sector involves an accusation by Waymo (a division of Google) that a former engineer downloaded over 14,000 confidential files before leaving to found a company later acquired by Uber. 

The case ended with a settlement worth approximately $245 million in Uber shares after it became clear that information about Lidar sensors (a key technology for self-driving cars) had been misused.

Coca-Cola vs. Pepsi (Attempt to Sell a Recipe)

In 2006, a Coca-Cola employee tried to sell confidential information, including samples of a new product and secret documents, to competitor PepsiCo for $1.5 million. 

Instead of accepting the offer, Pepsi informed the authorities and cooperated with the FBI in solving the crime. The case is a classic example of how, even in the absence of actual harm, the attempt to reveal a trade secret can lead to severe criminal sentences – in this case, 8 years in prison for the main participant.

From legal framework to real protection

Protecting trade secrets is not a one-time act, but an ongoing process that requires precision, legal thought, and strategic planning. In a world where information is the primary currency, any mistake in defining or protecting company assets can cost a company its market leadership position. 

That is why building a comprehensive privacy strategy should not be left to improvised internal solutions. In order for your intellectual property to be truly protected, this process should always be entrusted to proven professionals. 
The IPfabrika team of lawyers has the necessary experience and expertise to transform your valuable information into an inviolable asset, ensuring long-term security for your business.