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Trade Secret Protection for Startups

Does a startup need to register a trade secret?

No, trade secrets are not registered with any government body. Protection comes from internal measures (NDAs, encryption, access controls). If you disclose it to register, it's no longer a secret.

What if a co-founder leaves with the code?

If you have a Founders' Agreement with IP assignment clauses and confidentiality provisions, the code belongs to the company. Without these documents, recovering the IP can be legally difficult.

How to protect my algorithm without a patent?

Keep the source code encrypted and limit access to key developers only. Use "obfuscation" techniques if deploying the code client-side, making it hard to reverse-engineer.

Can I stop a former employee from working for a competitor?

You can include a non-compete clause, but Georgian courts are strict about them. They must be reasonable in duration (e.g., 6-12 months), geography, and scope, and often require compensation to be enforceable.

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Trade secret protection is often a faster and more effective strategy for startups than patenting. For early-stage businesses lacking resources for lengthy and expensive patent procedures, or whose innovations (e.g., algorithms, customer lists, business models) are not patentable, trade secrets serve as the primary protection mechanism. However, the law does not automatically protect any information; for information to be considered a "trade secret," the company must take "reasonable measures" to protect it. This service helps startups build a secrecy protection system that withstands court scrutiny and safeguards them from competitors.

What Trade Secret Protection Services Cover

Specialists on Legal.ge offer full legal and technical support:

  • Information Classification: Determining what constitutes a trade secret versus general confidential information.
  • Drafting NDAs (Non-Disclosure Agreements): Preparing robust legal agreements for employees, partners, and investors.
  • Implementing Internal Policies: Establishing an information access hierarchy (Need-to-know basis) and security protocols within the company.
  • Modifying Employment Contracts: Correctly formulating confidentiality and non-compete clauses.
  • Audit and Risk Assessment: Identifying existing vulnerabilities regarding data protection.

Practical Examples and Scenarios

Startups face the threat of information leakage daily:

  • Pitching to Investors: A founder presents an idea to a VC fund. Without an NDA or marking information as a "Trade Secret," the investor might pass this idea to another portfolio company.
  • Employee Departure: A sales manager leaves and takes an exclusive client database to a competitor. If this database was not protected by appropriate measures, the court will not consider it a secret.
  • Outsourcing Development: A startup commissions part of its code to an external agency. Without a contract, the contractor might use the acquired know-how in other projects.

Georgian Legal Framework

The field is regulated by the Law of Georgia on Trade Secrets (adopted in 2020). The law defines a trade secret as information that has commercial value due to its secrecy and for which the owner has taken reasonable measures to keep secret. If a startup cannot prove the existence of reasonable measures (e.g., passwords, NDAs, safes), the information loses protection. Also important are the Labor Code, which obliges employees to protect employer secrets, and the Civil Code regarding damages.

The Process: Protecting Secrets with a Specialist

The protection process involves several stages:

  1. Identification: The lawyer helps the startup isolate critical assets (algorithms, recipes, business plans).
  2. Documentation: Creating NDA templates and internal regulations.
  3. Physical and Digital Protection: Recommendations on server security, password policies, and document marking ("Confidential").
  4. Training: Informing employees about their obligations.
  5. Response: In case of a leak, immediate legal action to minimize damage.

Why Legal.ge?

Many startups mistakenly believe their secrets are automatically protected. Legal.ge gives you access to IP lawyers who will help you create a trade secret protection system that meets strict legal requirements and truly defends your business. Find a specialist on Legal.ge and turn your know-how into real capital.

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