Protecting business secrets and know-how

Not all of a company’s value can be patented or registered. Recipes, production processes, customer lists, algorithms, pricing strategies, research data: these are the know-how and the business secrets, often the most precious and at the same time the most fragile asset. Unlike trademarks and patents, there is no register that protects them: protection arises from the concrete measures you adopt to keep them confidential. If you do nothing, you have no protection.

What a business secret is

Information enjoys protection as a secret when it has three characteristics:

it is not public nor easily accessible to those operating in the sector;
it has an economic value precisely because it is secret (it gives a competitive advantage);
it is the object of reasonable measures by the holder to keep it confidential.

The last point is decisive: protection presupposes that you have taken action to protect it. Information left to circulate freely within the company will hardly be considered “secret” if it then ends up outside.

Secret or patent?

For many innovations the choice is strategic:

the patent gives a strong but temporary exclusivity (max 20 years) and requires the publication of the invention;
the secret lasts as long as it stays confidential — potentially forever — but does not protect against those who reach the same result independently or through lawful reverse engineering.

Practical rule: if the information is hard to reconstruct from outside (a recipe, a complex process), the secret can beat the patent; if it is easily reverse-engineered once on the market, it is often better to patent.

Internal measures: the heart of protection

Confidentiality is defended with organisational, technical and contractual measures:

Classification: identify which information is truly sensitive and mark it as confidential.
Need-to-know access: not everyone has to see everything; control access to files, systems and physical areas.
Technical measures: passwords, encryption, access logs, restrictions on copying and exporting data.
Internal policies: written rules on the use of company data, devices and cloud.
Managing departures: revoking access and recovering devices when an employee leaves the company.

It is precisely these measures that, in the event of a dispute, demonstrate that the information was treated as a secret.

Employment contracts and the duty of loyalty

Employees are bound by a duty of loyalty towards the employer (Code of Obligations), which includes confidentiality about company information during the relationship. To strengthen protection, the employment contract can provide for:

explicit confidentiality clauses, valid also after the end of the relationship;
post-contractual non-competition clauses, admissible within reasonable limits of duration, territory and scope and generally only if the employee had access to customers or manufacturing secrets;
clauses on ownership of the results created during the work.

Mind the limits: a non-competition clause that is too broad risks being scaled back or invalidated by the court.

NDAs with external partners

With suppliers, consultants, investors and potential partners, protection runs through non-disclosure agreements (NDAs) signed before sharing sensitive information. A good NDA defines what is confidential, for what purposes it may be used, how long the obligation lasts and what happens at the end (return or destruction of the data). Signing the NDA after the fact is of little use.

Protection when the secret is violated

The Swiss legal system offers civil and criminal instruments against the violation of business secrets and unfair competition: anyone who unlawfully misappropriates, exploits or discloses business secrets can be liable under civil law (damages, cease-and-desist) and in certain cases under criminal law. But the outcome depends once again on having adopted protective measures: without them it is hard to argue that the information was truly a secret.

Frequent mistakes

No internal measures: sensitive information accessible to anyone.
NDAs signed after the data has already been shared.
Employment contracts without clauses on confidentiality or departure management.
Disproportionate non-competition clauses, then ineffective.
Confusing value with the patent, forgetting that much of the know-how is protected only through secrecy.

How SIH ONE supports you

The Tax & Legal division helps SMEs and startups build a system to protect know-how — mapping of sensitive information, internal policies, confidentiality and non-competition clauses in employment contracts, NDAs with partners and a secret/patent strategy — integrated with the corporate structure. Before opening your data to a partner or hiring for key roles, we protect what makes you competitive.