A trade secret under California is defined as: information, including a formula, pattern, compilation, program, device, method, technique, or process, that:

(1) Derives independent economic value, actual or potential, from not being generally known to the public or to other persons who can obtain economic value from its disclosure or use; and
(2) Is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.

The law of other states have definitions that are very close to this one.

Thus a formula for a new plastic, a recipe for a unique apple pie, a process for making two colored paper, are among the things that can be protected as a trade secret. Customer lists and vendor lists can only be protected as trade secrets. They are clearly not patentable , nor copyrightable.

In order to be protected, a trade secret must remain just that - secret, protected from the general public.

Thus a baker who posts his apple pie recipe on the wall near the oven is not PROTECTING the secret, and once the secret is publicised, that is publicly disseminated, it is no longer a trade secret. Another example is the formula for a skin cream as put out by a leading cosmetology company. The only way to protect the formula may be as a trade secret if it is not patentable. In fact chemical steps can be taken to prevent reverse engineering by the use of specialized chemists tools such an infra red detector.

One must take only reasonable, not absolute, care to preserve the secrecy of the trade secret. The chief way to limit public dissemination is by the use of written nondisclosure agreements. Thus before I tell you my secret, you have to agree in writing not to disclose what I tell you. Thus the baker can hire an apprentice and teach the apprentice the secret way to make the apple pie. A metal treating process can be a lost trade secret if not protected.

In a nondisclosure agreement, the disclosure generally requires that the party to whom the secret will be told agrees to not disclose the secret:
Not copy the secret if written down; and
Not use the secret for the benefit of anyone else.

Inventors often request a patent attorney to prepare a nondisclosure agreement to be signed by a company to be engaged to make a prototype of a new invention. Another instance of use of a non-disclosure agreement is when an inventor seeks financial backing from friends and strangers. Once a process or item or procedure is made the subject of a patent application or a publication it loses its status as a trade secret, since it is no longer being protected.

The use of a nondisclosure agreement helps a person to maintain valuable intellectual property rights.

A trade secret will remain as a trade secret only so long as public disclosure does not transpire. Unlike a patent, a trade secret has no finite life. The formula for Tabasco sauce and Coke Classic and the formulae for other food products are trade secrets that have survived through confidentiality for long periods of time.

Trade secret protection can be an important element in the successful operation of a business. The secret gives you a leg up on the competition, and it is important to maintain that advantage - and maintenance means that reasonable efforts must be taken to limit dissemination. Usually, this requires the implementation of a need to know operation. If the mail clerk does not need the secret to do his or her job, then there is no reason for that person to have access to or knowledge of the secret.