Can anyone gives an insight into how companies keep product or trade secret for long period?

Question

like the original recipe so people or workers disengaging from the company will not imitate the product

Answer 1

First of all, many companies have what is called a no-compete clause in their hiring contracts. What that means is that when you sign the contract, you agree not to work for a competitive business for a certain period of time if you quit working for the company. For instance, if you work at an advertising agency, you may be required to sign a contract that states that if you leave that agency, you will not work for another advertising agency for 5 years. Since it is a legally binding contract, the company you signed the contract with can sue you if you break the terms of the agreement. Basically, a no-compete clause makes it so that you can't take ideas from your old company and give them to a new company that offers you better money.

The second protection is patents and legal rights to things like recipes and designs. Most companies have patents or special registered legal rights to things which are important to their business. They also make employees sign contracts stating that they will not disclose that private information to anyone. And they do, very seriously, back those contracts up with legal action against people who break the agreement. As an example, both the Coca Cola Company and the Pepsi Company keep their recipes for their soft drinks a closely held secret. The recipes are registered as belonging to those companies, and any imitators who manage to get and use the recipes are sued for huge amounts of money. Also, employees who have access to the recipes sign contracts stating they will never reveal the recipe to anyone. They, too, can be sued if they breach that contract.

Even things like logos and packaging designs are patented. If someone wanted to make a cola soft drink, and wanted it to look just like Coca Cola, they might make a logo that looks like the familiar red and white logo, and use the same script, and simply call their product Coca Cooler. Companies watch for things like that, and in a case like that, the Coca Cola company would sue the Coca Cooler company for imitating their logo and their product, and basically trying to steal their business.

In the US, there is a whole area of law which pertains to companies, their legal rights, and their protection of their products and trademarks. It's a very big deal here, and companies who feel they have been cheated or violated in some way do not hesitate to sue for huge amounts of money. Depending on the size of the company they are suing, a favorable decision can put the smaller company out of business for good.

I hope that helps your understanding a bit.

Answer 2

Firstly, most of the famous trade secrets are not exactly secret. Eg, the formula for Coca Cola and The Colonels secret herbs and spices.

The real issue is that if someone were to make an exact copy then they would not have a new product and wouldn't be able to marekt it successfully. If they said it was an exact copy, then people wouldn't be interested. Finally, if they copy someone else they would have to deal with the legal consequences.

When a company wants to compete with another, they might take the secret and first copy it. They could steal it by paying an employee, or just reverse engineer it (which is what car companies do to each other). Then they improve it. Maybe they make it better, or they make more cheaply.

If you have a successful product, copying it is unlikely to produce a viable business. Because the original product already is in the market. You can cut the price, but the original can do that too, and force you out of the market.

Industry espionage and theft and big issues. With USB disks it is a trivial matter to steal vast stores of corporate data and sell it on. Some companies glue up all their computer's USB ports to stop this.

Executives have contracts that stop them working in related fields if they leave a company early, so they can't use their inside information.

In fact, legally speaking you can't work for 2 companies in the same area of business at the same time (it is in British common law, but never overrulled by any countries legislation).

In China this can be a big problem, with the car company that cooperates with Chrysler recently releasing their own brand car that is mostly a copy of a Chrysler car that they make under licence.

In fact, in business planning is the issue of how easy would it be for someone to copy your business. If you have a business that is easily copied, you can go out of business quiclkly.