A sauce formula that competitors haven’t been able to replicate for years, a pricing algorithm that gives a company a market advantage, and a technological process that reduces production costs by 20%. These aren’t inventions in the classic sense, but rather know-how: valuable information that a company deliberately doesn’t disclose and protects not with a patent, but with secrecy. The problem is that most businesses don’t formalize this protection legally at all, losing their know-how forever the moment an employee goes to a competitor or a partner “accidentally” shares the information. In this article, we’ll explore what know-how is, how it differs from a patent and trade secret, and how to effectively protect trade secrets with legal tools.

Know-how in simple terms

Know-how is information of a technical, organizational, commercial, financial, or other nature that has actual or potential commercial value precisely because it is unknown and inaccessible to third parties. Unlike a patent, know-how is not publicly disclosed; on the contrary, its value is based precisely on confidentiality.

In Ukrainian legislation, the closest legal equivalent to know-how is the concept of “commercial secret,” enshrined in the Civil Code of Ukraine. In fact, know-how is a colloquial, professional term, while commercial secret is its legal expression.

In simple terms, know-how is knowledge of “how to do something better, cheaper, or more efficiently” that a company has accumulated on its own and does not want to share it for free with competitors.

Examples of know-how from various fields:

• Production:the unique composition of the mixture, the temperature regime of material processing, the sequence of technological operations, which is not obvious;
• DOG:recommendation system algorithms, code optimization methods, architectural solutions that give the product an advantage;
• Food industry:recipes for drinks, sauces, and confectionery products (a classic example is the Coca-Cola recipe, which was never patented precisely in order not to disclose the composition);
• Marketing and Sales:client base management techniques, proven sales scripts, pricing algorithms;
• Business Management:internal regulations; personnel motivation systems; unique business processes.

The main difference between know-how and ordinary information is its commercial value due to its secrecy. If information has no value or is generally known, it cannot be considered know-how, no matter how hard a company tries to “secrete” it.

Know-how vs. patent vs. trade secret – which to choose?

These three concepts are often confused, although they have fundamentally different legal natures and logic of protection.

When to choose a patent:

• The solution can be easily “discovered” through reverse engineering (by disassembling the finished product, a competitor will still understand how it works) – in this case, there is no point in keeping it a secret; it is better to obtain exclusive rights through a patent;
• What is needed is maximum legal protection and the ability to prohibit use even by those who have come to an independent decision;
• You plan to commercialize the technology through licensing, selling rights, or attracting investment.

When to choose know-how (trade secret):

• The solution is impossible or very difficult to discover by analyzing the finished product (for example, the recipe, internal processes, algorithms that are not visible from the outside);
• Patenting is unprofitable because it discloses the essence of the solution to competitors;
• The solution does not meet the criteria of patentability (it does not involve an inventive step, is a way of organizing a business, etc.);
• You need protection that is unlimited in time and you don’t want to go through a lengthy and expensive patent procedure.

In practice, large companies often combine both approaches: patenting what will become obvious when examining the product, and keeping secret what is hidden “inside” the process and cannot be reverse engineered.

What objects can be classified as know-how?

The list of potential know-how objects is open—legislation does not limit a specific list, as long as the information meets the criteria for a trade secret. The most common categories include:

Technical information:

• technological processes and production modes;
• Recipes, compositions of mixtures, materials;
• Design and non-patented design documentation;
• Research and development (R&D) results, including negative results (“didn’t work”).

Commercial information:

• Customer databases and customer interaction history;
• terms of cooperation with suppliers, discounts, special agreements;
• marketing strategies, market analytics, pricing policy;
• Plans for entering new markets, development strategies.

Organizational and management information:

• internal regulations and business processes;
• systems of remuneration and personnel motivation;
• Financial performance and internal reporting are not intended for publication.

Program information:

• the source code of the software (in the part that is not disclosed publicly);
• Algorithms and methods of data processing;
• Databases and data structures that have unique value.

Important: information does not automatically become know-how, but only if the company takes measures to protect it. If the data is simply publicly accessible on a server with no access restrictions, legally proving its status as a trade secret will be nearly impossible.

How to ensure legal protection of trade secrets?

For information to acquire the status of a trade secret and be properly protected, it is not enough to simply declare it confidential. The owner of the information must implement a set of legal, organizational, and technical measures aimed at maintaining its secrecy.

First, it’s important to determine what information constitutes a trade secret. This list is typically set out in the company’s internal documents and may cover technologies, production processes, financial indicators, customer bases, marketing strategies, research results, and other information of commercial value.

It is important to ensure limited access to such information. Access to commercial secrets should be restricted to those employees or other individuals who need it to perform their job or contractual duties. This can be achieved through both organizational and technical security measures, including restricting access rights to information systems, using passwords, secure servers, and other information security tools.

One element of the security regime is the proper execution of documents and information media containing commercial secrets. If necessary, they can be marked with appropriate classifications indicating the confidential nature of the information and the established procedures for handling it.

Equally important is documenting the obligation to keep such information confidential. Relevant provisions may be included in employment contracts, civil contracts, contracts with counterparties, or formalized as separate non-disclosure agreements (NDAs). Employees and other persons granted access to commercial secrets must be familiar with the established confidentiality regime.

Only the combination of these measures demonstrates the existence of an adequate trade secret protection regime. The existence of a non-disclosure agreement or a “Confidential” designation alone does not provide legal protection for information and may be insufficient to confirm its trade secret status in the event of a dispute.

The Role of NDAs and Employment Agreements in Protecting Know-How

A Non-Disclosure Agreement (NDA) is one of the most important tools for protecting know-how in practice, since it defines the contractual obligations of the party not to disclose the information received.

When should you enter into an NDA:

• Before negotiations with potential investors or partners who need to disclose details of a technology or business process;
• when collaborating with contractors, freelancers, and outsourcing teams that gain access to internal developments;
• When hiring employees for positions involving access to sensitive information (developers, technologists, commercial director, etc.);
• During due diligence during a merger, acquisition or investment attraction.

What must be included in an NDA:

• A clear definition of what information is considered confidential (preferably with a list or reference to an internal regulation);
• The duration of non-disclosure obligations (it is often assumed that the obligation continues after the end of cooperation – from 2 to 5 years or indefinitely for critical data);
• Exception: information that was already public, obtained legally from third parties or developed independently;
• Liability for violation – specific penalties (fines, penalties) facilitate the recovery of damages in the event of a dispute, since there is no need to prove the exact amount of damage;
• The procedure for the return or destruction of materials after the end of cooperation.

Employment contracts– a separate and equally important tool. The employment contract or supplementary agreement should include:

• The employee’s obligation not to disclose commercial secrets both during work and after dismissal;
• prohibition on using acquired knowledge and developments for the benefit of competitors (within the limits permitted by labor legislation);
• The procedure for returning tangible information carriers (documents, flash drives, accesses) upon dismissal;
• Liability for disclosure, including the possibility of recovery of damages.

It should be noted that Ukrainian labor legislation limits the ability to impose a complete ban on a former employee from being employed by competitors (so-called non-compete clauses have limited effect), so the primary focus should be on the confidentiality of information, rather than on a ban on employment per se.

What to do if a trade secret is disclosed?

It’s impossible to completely eliminate the risk of confidential information leakage. However, a timely response and properly collected evidence significantly increase the chances of effectively protecting rights and recovering damages.

Once a breach has been identified, it’s crucial to first document all the circumstances of the leak. This could include email correspondence, information system access logs, documents, CCTV footage, screenshots, employee statements, and other evidence confirming the disclosure or misuse of information.

At the same time, it is necessary to establish what information became available to third parties, who had access to it, under what circumstances the disclosure occurred, and whether the obligation to maintain confidentiality of commercial secrets extended to the relevant persons.

Subsequent actions depend on the specific situation. In some cases, the dispute can be resolved out of court by demanding the cessation of the unauthorized use of the information, its return or destruction, and compensation for damages. If a settlement is not reached, the owner of the trade secret has the right to seek legal protection.

During legal proceedings, it is crucial to be able to prove that the information was indeed a trade secret, that it was protected by an appropriate security regime, and that the person who disclosed or used it had appropriate access and was obligated to maintain confidentiality. If there are legally established grounds, the unlawful collection, disclosure, or use of a trade secret may also entail other types of legal liability.

After resolving the situation, it is advisable to review the current system for protecting confidential information, assess its effectiveness, eliminate deficiencies and, if necessary, update internal documents, procedures for accessing information and mechanisms for protecting it.

Experience shows that the successful protection of a trade secret depends largely on whether a proper protection regime was put in place before a breach occurred. This is why preventative measures are one of the most effective ways to protect confidential information.

CTA – audit and protection of know-how

Trade secrets, unique technologies, and years-old business processes are often a company’s most valuable, yet least protected, asset. Unlike a patent, which provides a document in person, know-how is protected solely by a system of internal measures—and if this system isn’t properly designed, a company may be left without protection in the event of a dispute, even if a leak does occur.

If your business has technologies, recipes, customer bases, or business processes that your competitors prefer, it’s worth checking now:

• has an official list of information constituting a commercial secret been defined;
• Have NDAs been signed with all partners and contractors who have access to sensitive information?
• Do employees’ employment contracts contain confidentiality provisions?
• Is technical access to critical data restricted?

Conducting an audit of your know-how protection regime is a relatively inexpensive and quick procedure that can save a company from multi-million dollar losses in the event of an information leak or the defection of a key employee to a competitor. If you’re unsure whether your trade secrets are adequately protected, the best solution is to engage an intellectual property specialist to conduct such an audit and develop or update the necessary internal documents and agreements.

Frequently Asked Questions

Is it necessary to register know-how somewhere?No, know-how (trade secret) does not require state registration—unlike a patent. Protection arises automatically from the moment a company takes genuine steps to keep the information secret: restricting access, signing an NDA, or marking documents confidential. No registration means no public disclosure of the solution’s essence.

What is the difference between know-how and a patent?A patent provides for public disclosure of the essence of a solution in exchange for an exclusive right limited in time (10–20 years) and mandatory state registration. Know-how, by contrast, is protected precisely by non-disclosure, is not registered, and can retain its value indefinitely—as long as the information remains secret.

How to prove ownership of know-how in court?Three things must be proven: the information has real commercial value due to its secrecy; the company has taken specific measures to protect it (internal regulations, access restrictions, confidentiality clauses, NDAs); and the defendant had access to this information for reasons obligating them to maintain confidentiality and violated that obligation. Without documentary evidence of the protective measures taken, proving the status of a trade secret is very difficult.

How long does know-how protection last?Technically, it’s unlimited—as long as the information remains secret and has commercial value. Unlike a patent, there’s no fixed term. Protection ends only when the information becomes publicly known (for any reason) or ceases to have commercial value.