Trade secrets are your company’s most valuable assets.  But what if your company’s secrets include public domain information?  Does the inclusion of public domain information destroy the secret?

Let’s say, for example, your company uses a process that consists of nine steps.  Assume that eight of the nine steps are either in the public domain, or have been disclosed to people outside of your company. 

Despite the fact that most of the elements of your company’s process are floating around in the general public, you still want to protect your company’s process as a trade secret. 

So, can it be done?  Can you protect a process that consists of components that are, for the most part, in the public domain?

The Tenth Circuit just said yes.  And I agree. 

The case of Hertz v. Luzenac Group, handed down by the Tenth Circuit last month, illustrates the circumstances under which information in the public domain can become a protectable trade secret.

In the Hertz case, the Luzenac Group sued two of its former employees for (among other things) revealing Luzenac’s trade secrets relating to Luzenac’s production and marketing of a certain type of talc.  The defendants claimed that the information they revealed was not a trade secret because virtually all of the information was in the public domain.

The defendants initially found a friend in the trial court.  The court held that out of the nine elements purportedly comprising Luzenac’s ‘trade secret’, “one of the elements was not part of the process at all, four were obtained from the public domain, two were publicly disclosed, and two were both obtained from and disclosed to individuals outside of Luzenac.”  Based on that summary, the trial court found that the information was not a trade secret.

Enter the Tenth Circuit Court of Appeals.

The Tenth Circuit reversed the case.  In doing so, the appellate court pointed out that a trade secret “can exist in a combination of characteristics and components each of which, by itself, is in the public domain, but the unified process, design and operation of which, in unique combination, affords a competitive advantage and is a protectable secret.” 

Does the Hertz case mean that any combination of public facts or components can be protected as a trade secret?  No.  Not remotely.  But it reminds us that a company’s processes or procedures may very well be protectable trade secrets, despite the fact that those processes or procedures are comprised of information in the public domain. 

Remember, your company’s trade secrets are undoubtedly its most valuable assets.  (If you don’t understand why or how, call me right away, and I’ll explain it to you).  Don’t lose those secrets to your competitors or give them away to unscrupulous employees.  It behooves you to call an attorney to determine how you can best protect your company’s trade secrets.  And don’t be dismayed by the fact that your company’s secrets may rely on, or use, public domain information—they still may be protectable under trade secret law.