What is Proprietary Information and How to Protect It?

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What is Proprietary Information?

Proprietary information, often known as a trade secret, is the knowledge that a business intends to keep private. Secret formulae, procedures, and methods employed in manufacturing might all be considered proprietary knowledge. It may also comprise its business and marketing strategy, compensation structure, client lists, contracts, and computer system specifications. In some circumstances, an employee's on-the-job particular knowledge and abilities are deemed confidential information by the corporation.

The first stage towards qualifying as proprietary information or confidential data is for the owner to make a reasonable effort to keep the knowledge private. There is no legal protection if the owner of confidential information fails to preserve the secret or if it is independently uncovered, disseminated, or becomes general knowledge. Anything regarded as extremely valuable that an individual or a firm created and that is not permitted to be transmitted or exhibited publicly is termed proprietary knowledge. That information is regarded as a valuable asset.

Companies must generally handle information as a secret to be considered proprietary. Courts will not consider publicly available information to be proprietary. Furthermore, confidential information must provide the company with a competitive advantage and should be widely unknown outside the organization. If a firm intends to get judicial help in safeguarding its rights, it must be able to establish that it has undertaken every reasonable precaution to keep the information private.

Importance of Proprietary Information

Most firms rely heavily on proprietary information to succeed. This property is not valued, although precious, especially given the marketplace's competitive character. Intellectual property is a highly sought-after commodity. These forms of data are important targets for corporate and economic espionage operatives, and much of it is now available on the Internet.

The method of maintaining private information is critical, and there are potential consequences if handled carelessly. Most businesses use a practical approach to reduce the number of exposed people to sensitive information. They also draw up non-disclosure contracts that must be signed by participants who come into contact with this type of information to form a legal duty to ensure the sensitive material. Unauthorized disclosure of private information will result in negative repercussions such as litigation and penalties, but it will also result in financial damage for the owner.

However, proprietary objects and methods will end up losing their legal protection. This is the point at which the information enters the public domain. After then, anybody can utilize the item or service in any way they see appropriate.

How to Protect from Data Breaches?

Every organization has numerous alternatives for keeping its information private. Key employees who have access to this inside information may be asked to sign clauses, also known as confidentiality, non-disclosure, or non-compete agreements, that prohibit them from disclosing that information to third parties or using it to compete with their employer for a while after leaving the company.

Courts usually enforce clauses if they are reasonable in terms of time and place and do not excessively restrict the previous employee's right to work. In some circumstances, the clauses are only enforced if the employee obtained private knowledge while working for the company.

Let us now highlight some of the key methods that you can use to protect proprietary information and prevent data breaches.

Information Assets Protection

This is a broad concept that encompasses the subdiscipline of information security and several developing disciplines aimed at safeguarding information and intangible assets under certain conditions. Information assets, according to the Protection of Assets Manual (POA), "comprise sensitive and proprietary information, privacy-protected data, intellectual property, intangible assets, and information designated under international, federal, and state laws governing trade secrets, patents, and copyrights."

Information Security

Information security includes standard information protection procedures such as information tagging, storage, correct transmission, and destruction. It also includes information technology (or IT) security to secure autonomous data systems, hardware, software, and the data stored, processed, or communicated through them. The conservation of intellectual property rights is the third component of information security (IPR).

Emerging Disciplines

The emerging disciplines involve conducting due diligence investigations as a vetting tool to enhance information security (to set up a proper level of trust with potential partners, contractors, vendors, and other third parties). They also cover market entry strategies and product security.


Any action made to prevent intelligence gathering activities against an individual or a group. Counterintelligence refers to programs meant to counter foreign intelligence agencies and recruited agents in the federal sector.

In the commercial sector, it is sometimes referred to as "counter competitive intelligence," and it can be used to protect against activities ranging from market research to industrial espionage. The phrase also refers to efforts taken to keep sensitive information out of the hands of criminal groups that may attack law enforcement agencies, people, or task forces.

Updated on 04-May-2022 13:27:54