What Is Proprietary: Everything You Need to Know
What is proprietary relates to ownership and the rights an owner may exercise in regards to his or her property or information.3 min read
2. Proprietary Information Can Include:
What is proprietary relates to ownership and the rights an owner may exercise in regards to his or her property or information. A proprietor is one that possesses, owns, or holds exclusive right to something.
Legally, what is proprietary often refers to proprietary information. Proprietary information is important, possibly sensitive information that a company owns. This information usually gives the company competitive advantage(s) in its market.
Things that can be used, known, produced, manufactured and/or marketed under the exclusive legal right of the inventor or maker may be proprietary. For example, a patented medicine is protected by intellectual property law against free market competition in regards to name, product, composition, or process of manufacture. If a manufacturer uses a particular manufacturing process that others do not know about (trade secret protection) or are forbidden to use (patent protection) then that is a proprietary process. A proprietary trademark is a name or logo that only the owner of that trademark can use.
If a business was in fact owned by and managed by an intelligence organization as a front, that would be proprietary to the intelligence organization.
Intellectual Property Protection
Protection to these proprietary articles are through intellectual property law: copyright, patents, trademark, etc. Unfortunately, however, at some time down the line, proprietary items and processes will lose their legal protection. This is when the information becomes a part of the public domain. Once that happens, anyone can use the item, process, or trademark as they see fit.
Baseball fans have proprietary attitudes toward their favorite team. When their team wins they say “we won,” not “they won,” as if they own or are part of the team.
Municipal corporations must act in the best interests of the citizens. This is a proprietary function. This proprietary function is different than its governmental functions, which are duties drawn from being a political part of a state.
Proprietary information is very important for the success of most businesses. This property may not be valued, but it is very valuable. Especially due to the marketplace and its competitive nature. Intellectual assets are highly sought-after commodities.
Because of the value and importance of such property, companies often prohibit directors, employees, and agents from disclosing confidential or proprietary information without proper authority in non-disclosure agreements/clauses. Sometimes this prohibition extends to after the employment relationship has ended.
If a contractor is hired and received proprietary information in order to do his or her work, a company often requires him/her to give back the information or property and to keep the information confidential.
Proprietary Information Can Include:
- Trade secrets
- Production methods
- Marketing strategies
- Salary structure
- Consumer contact information
- Past and present contracts
- Computer software
- Employee knowledge
- Employee skill
- Financial data
- Test results
For information to be considered proprietary by a court, a company must treat the information as confidential. Courts will not find readily available information or public information proprietary. The information must also give the company a competitive advantage to be considered proprietary.
If the information is known to others outside of the company, then it will not give the company advantage. In order to be granted protection by a court, a company must also prove that it has taken “reasonable steps” to keep the information secret.
Courts do not require that companies take all possible measures to keep the information private. Courts do not require the secret to be absolutely or completely private. Reasonable steps in order to keep the information confidential must be “reasonable under the circumstances.”
A company has different ways to keep its information proprietary:
- Confidentiality clauses in employee contracts
- Nondisclosure clauses
- Non-compete agreements
- Security systems
- Restricting employee access with codes
- Data protection codes and procedures
- Secure phone lines
- Secure conference rooms
Companies should make sure that their covenants are reasonable in both time and location. Otherwise a court will not enforce them and will not restrict the unreasonable restriction of the former employee’s right to find a new job. They should also ensure that the employees that they do reveal trade secrets to have signed a confidentiality agreement of some kind or a court may not protect a trade secret of that small business.
If you need help with what is proprietary, you can post your legal need on UpCounsel’s marketplace. UpCounsel accepts only the top 5 percent of lawyers to its site. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale Law and average 14 years of legal experience, including work with or on behalf of companies like Google, Menlo Ventures, and Airbnb.