If your business has a trade secret and does not want anyone else to use it, then you must take steps to ensure it remains a secret, such as using written confidentiality agreements.
In Fail-Safe, LLC v. A.O. Smith Corporation, Fail-Safe developed a pump that prevents the suction created by pool drains from trapping swimmers underwater. A.O. Smith met with Fail-Safe to negotiate the possibility of marketing and selling the pump for Fail-Safe. During the negotiations, A.O. Smith had access to information regarding the pump, but Fail-Safe never asked A.O. Smith to keep that information confidential. For example, Fail-Safe never asked A.O. Smith to sign a confidentiality agreement, even though it had done so in the past with other potential marketing partners. The Court determined that because Fail-Safe did not take reasonable steps to protect its information, that information was not entitled to protection. Therefore, A.O. Smith was free to use that information to create and sell its own copycat product without having to share any profits with Fail-Safe.
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