In the hypercompetitive corridors of Pennsylvania’s business landscape, from the Robotics Row of Pittsburgh to the biotech hubs of Philadelphia, your most valuable assets often do not show up on a physical inventory list. They are invisible, living in your servers, your spreadsheets, and the specialized knowledge of your team.

For a modern small business or tech startup, trade secrets are the crown jewels. Unlike patents, which expire after 20 years and require you to publish your invention publicly, a trade secret can protect your competitive advantage indefinitely.

As we move through 2026, the legal bar for what qualifies as a secret has evolved. In Pennsylvania, if you have not taken specific and documented steps to protect your information, the law may decide it is not a secret at all. We understand the strategic use of Non-Disclosure Agreements (NDAs) and internal protocols to build a defensive moat around your intellectual property. For employees and contractors, a Proprietary Information and Inventions Assignment (PIIA) that contains non-disclosure and non-use restrictions is preferable to a standalone NDA because it also addresses intellectual property ownership.

In the Commonwealth, trade secrets are governed by 12 Pa. C.S.A. § 5301 et seq., commonly known as PUTSA. To win a trade secret misappropriation case in a Pennsylvania court, you must prove three elements.

Independent Economic Value: The information must provide a competitive edge because it is not generally known.

Secrecy: The information is not readily ascertainable by others, meaning it does not appear on your website or in public documentation.

Reasonable Efforts: You must have taken active steps to keep the information confidential.

The Reasonable Efforts Trap: Many founders believe that simply telling an employee not to share information is sufficient. It is not. Without signed NDAs and digital access controls, a judge may find that you failed to take reasonable steps to protect the information. This can result in proprietary code or customer lists losing trade secret protection entirely.

Protecting Your Codebase and Algorithms

For tech startups, the codebase is the company. While copyright protects the expression of code, trade secret law protects the logic and algorithms behind it.

A Multi-Layered Defense

Segmented Access: Do not provide every developer with access to the entire repository. Permissions should be limited to what is necessary for each role.

Invention Assignment Clauses: Your PIIAs should clearly state that any code created by an employee or contractor belongs to the company.

Digital Fingerprinting: Modern version control systems, such as GitHub or GitLab, log exactly who accessed which files and when. In 2026, these logs frequently become central evidence in trade secret litigation.

The Secret Customer List: More Than Just Names

A common misconception in Pennsylvania is that any customer list qualifies as a trade secret. That is not the case. If a competitor can identify your customers through LinkedIn or public testimonials, the list is likely unprotected.

To qualify under PUTSA, a customer list must include negative knowledge or deep intelligence.

What Makes a Customer List a Trade Secret

  • Specific pricing tiers and negotiated discounts
  • Names of internal decision makers not listed publicly
  • Notes on customer preferences, pain points, and renewal cycles
  • Records of unsuccessful pitches that reveal what does not work

The NDA: Your First Line of Defense

The Non-Disclosure Agreement is the legal lock on your information vault. A generic online template can be worse than no NDA at all because it creates a false sense of protection.

Unilateral vs Mutual NDAs

Unilateral NDAs: Best used when only one party is disclosing confidential information.

Mutual NDAs: Common in partnerships or merger discussions where both sides exchange sensitive data and no other agreements govern disclosure.

Proprietary Information and Inventions Assignments

PIIAs are essential when hiring employees or contractors and should always be used in addition to or instead of a standard NDA.

Essential Clauses for 2026

  • A precise definition of confidential information that expressly includes source code, proprietary algorithms, and customer analytics
  • Caution around residuals clauses that allow the use of information retained in memory, which can create serious loopholes for tech companies
  • A clear return or destruction requirement confirming that all confidential information has been returned or deleted upon termination, with written certification

The 2026 Strategic Landscape and the Decline of Non-Competes

Recent action by the Federal Trade Commission and Pennsylvania lawmakers has significantly limited the enforceability of traditional non-compete agreements. As of 2026, many broad non-competes are unenforceable for lower and mid-level employees.

This shift makes trade secret protection more critical than ever. If you cannot prevent an employee from joining a competitor, you must ensure they do not take your data with them. Strong NDAs and well-enforced trade secret policies are now the primary tools for preventing intellectual property loss.

Maintaining Good Standing in Pennsylvania

Even the strongest NDA offers little protection if your company is not legally active. Under Pennsylvania Act 122, which took full effect in 2025 and 2026, all LLCs and corporations must file annual reports.

Failure to file can result in administrative dissolution. Once dissolved, enforcing contracts, including NDAs, becomes far more difficult.

Annual Filing Requirements

  • Corporation Annual Report due June 30 each year with a seven dollar fee
  • LLC Annual Report due September 30 each year with a seven dollar fee
  • Certificate of Good Standing available as needed for loans or transactions with a forty dollar fee

The Exit Interview Audit

The period when an employee leaves the company presents the highest risk of trade secret theft. A formal exit audit helps reduce that risk.

Recommended Exit Steps

  • Review the Signed NDA
  • Meet with the departing employee and review their ongoing obligations.
  • Confirm Return of Property
  • Ensure all devices, storage media, and access credentials are returned.
  • Notify the New Employer

In some cases, sending a professional notice of prior obligations to the new employer can prevent disputes before they arise.

Conclusion: Protecting Your Future

Trade secrets are the lifeblood of innovation. By combining Pennsylvania-specific NDAs with strong digital security and internal policies, you keep your competitive advantages where they belong.

Do not wait for a breach to develop a strategy. In intellectual property law, prevention is far more cost-effective than litigation.

Speak to Spengler & Agans Now

If your business relies on proprietary code, algorithms, or confidential customer information, now is the time to review your trade secret strategy. Nathan Wenk of Spengler & Agans works with Pennsylvania businesses to design enforceable NDAs, PIIAs, and internal protection policies tailored to modern technology companies.

Schedule a consultation online to receive guidance specific to your business and industry at Spengler & Agans.