In Pennsylvania’s innovation hubs, from the tech startups of Pittsburgh’s Robotics Row to the specialized manufacturing corridors of the Lehigh Valley, your most valuable asset is not just your equipment or real estate. It is your secret sauce.

Whether it is a proprietary algorithm, a highly curated client list, or a unique manufacturing process, this information qualifies as a trade secret. Unlike patents, which eventually expire and require public disclosure, a trade secret can protect your competitive advantage indefinitely, provided you keep it secret.

As we enter 2026, the legal landscape for protecting these crown jewels has shifted significantly. With non-compete agreements under intense federal scrutiny and recent Third Circuit landmark rulings, relying on a simple confidentiality clause is no longer sufficient. This guide outlines essential best practices for Pennsylvania small businesses to safeguard their trade secrets in today’s environment.

Because trade secret protection intersects with employment agreements, entity compliance, and internal governance, working with our experienced Pennsylvania business law attorneys can help ensure your safeguards are enforceable before problems arise.

In the Commonwealth, trade secrets are governed by the Pennsylvania Uniform Trade Secrets Act (PUTSA). To qualify for legal protection, the information must meet three specific criteria.

PUTSA’s Three Requirements

  1. Should be secret and not generally known to the public or competitors.
  2. It must derive independent economic value from being secret.
  3. Must be the subject of reasonable efforts to maintain its secrecy.

The 2026 Warning for Business Owners

Simply calling something a secret in an employee handbook does not make it one. If you have not taken active, documented steps to protect the information, Pennsylvania courts may rule that you have waived your trade secret protection. When that happens, your proprietary data may effectively become free for anyone to use.

2. The “Reasonable Efforts” Pillar: Beyond the Paperwork

A critical development in late 2025, NRA Group, LLC v. Durenleau, from the U.S. Court of Appeals for the Third Circuit, clarified an essential point for Pennsylvania business owners. Policy infractions are not always crimes.

The court ruled that if an employee shares a password or violates an internal policy to access data, it may be a breach of contract. However, it is not necessarily misappropriation of trade secrets if the employer lacked robust technical controls.

Best Practices for Technical Reasonable Efforts

Digital sequestration is essential. Do not give every employee access to every folder. Use a need-to-know architecture where sensitive data, such as pricing models or source code, is restricted to a limited group.

Encryption and multi-factor authentication are now baseline expectations. Trade secrets should be encrypted at rest and in transit. Multi-factor authentication is no longer optional and is considered a standard reasonable effort in 2026.

Monitoring and access logs are equally important. Maintain records showing who accessed what information and when. If an employee downloads an entire CRM shortly before resigning, you need a digital trail to prove intent.

3. The Non-Compete Shift: Why Trade Secrets Are Priority One

For decades, many small businesses relied on non-compete agreements to prevent employees from taking sensitive information to a competitor. Over the past two years, the Federal Trade Commission has aggressively moved toward a national ban.

Although a blanket ban faced legal challenges in 2024 and 2025, the FTC is hosting major workshops in late January 2026 to finalize narrower restrictions. The trend is clear. Employers can no longer rely on preventing employees from leaving; they must also prevent trade secrets from going with them.

The Move to PIIA Agreements

Instead of broad non-competes, many Pennsylvania businesses now use Proprietary Information and Inventions Assignment agreements. These agreements are designed to clearly define what the company considers a trade secret, state that work product created by the employee belongs to the company, and survive the termination of employment indefinitely.

4. Trade Secret Protection Throughout the Employee Lifecycle

Trade secret protection is as much a human resources issue as it is a legal one. Most leaks occur during transitions in employment.

Onboarding: The Clean Hands Certification

When hiring from a competitor, businesses must ensure that a new employee does not possess proprietary information. New hires should sign a certification confirming that they do not have, and will not use, any confidential information belonging to a former employer, which helps protect your business from misappropriation claims.

Offboarding: The Final Reminder

The exit interview is one of the most effective defensive tools available.

Conduct a secret audit and remind the departing employee of the specific trade secrets they accessed. Require a certification of return confirming that all company property has been returned and that all digital copies have been deleted from personal devices. Follow up with a professional letter to the employee’s new employer, placing them on notice that the former employee was exposed to trade secrets protected under the PUTSA.

5. Identifying the Invisible Trade Secrets

Many small businesses assume they lack trade secrets because they lack a formula or a patent. In Pennsylvania, the following commonly qualify. Customer data can include more than names. Lists of decision makers and purchasing habits often take years and significant expense to compile.

Vendor terms such as negotiated pricing and discounts reveal margins and competitive positioning. Negative knowledge, including documented failures and abandoned strategies, can save competitors significant time and money if disclosed.

6. Maintaining Good Standing Under Pennsylvania Law

To enforce rights under the Pennsylvania Uniform Trade Secrets Act, your business must remain a legally valid entity.

As of January 1, 2025, Pennsylvania’s Act 122 requires every LLC, corporation, and partnership to file an annual report. Failure to file can result in administrative dissolution. A dissolved entity may lose the ability to file a lawsuit in the Court of Common Pleas to protect its trade secrets.

Key Take-Away: Be Proactive - Do Not Wait for the Leak

Protecting trade secrets requires proactive planning. Once confidential information is disclosed, recovery is costly and often impossible. By combining strong legal agreements, technical access controls, and disciplined employee exit procedures, businesses can ensure their competitive advantage remains secure.

At Spengler & Agans, we help Pennsylvania entrepreneurs conduct IP and trade secret audits to identify vulnerabilities before they become liabilities.

Protecting Your Competitive Advantage Before a Dispute Arises

If you want to protect your company’s trade secrets before a dispute arises, working with experienced counsel can make the difference. Nathan Wenk of Spengler & Agans advises Pennsylvania businesses on trade secret protection, employment agreements, and compliance strategy. Schedule a consultation online to get guidance tailored to your business needs and ensure your most valuable information stays protected.