Trade Secrets in Intellectual Property Rights (IPRs)

BlogIntellectual Property Rights    April 20, 2022
Trade Secrets in Intellectual Property Rights (IPRs) Posted On

In today’s highly competitive working environment, almost every other individual knows what Intellectual Property (IP) is and that the protection of IP assets is a matter of paramount importance. Patents, copyright, and trademarks have been the most widely recognized forms of IP to date; however, there are other forms as well, including geographical indications and industrial designs, which have been gaining attention in the past few decades. A still-new form of IP that has gained recognition in the past two decades is trade secrets, which we shall be discussing here in this blog.

In simple terms, trade secrets are Intellectual Property Rights (IPRs) granted on confidential or sensitive info, which may be licensed or sold.

The North American Free Trade Agreement defines a trade secret as “Information having commercial value, which is not in the public domain, and for which reasonable steps have been taken to maintain its secrecy.”

The Uniform Trade Secrets Act (UTSA), 1970 also provides the definition of trade secrets, which is:

“Information, including a formula, pattern, compilation, program device, method, technique, or process that:

  • Derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by other persons who can obtain economic value from its disclosure or use; and
  • Is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.”

After going through all the definitions mentioned above, we can say a trade secret refers to any piece of info or data relating to a brand or business that is generally not known to the public at large and for which its owner puts in a sincere effort to maintain its confidentiality. A trade secret gives a competitive edge to brands and businesses over their rivals in the industry. Kindly note that:

Almost every type of info, process, or data can be referred to as a trade secret only if it is intended to be kept secret and involves the economic interest of the owner.

Eligibility Criteria for Trade Secret Protection

For any info to qualify as a trade secret, it must, in general, be:

  • Commercially valuable as it is a secret;
  • Known only to a limited set of people; and
  • Subject to adequate measures and steps that are to be taken by the owner of the information to keep it a secret, which includes the use of confidentiality and non-disclosure agreements for business employees and partners.

*Any unauthorized disclosure, use, or acquisition of a trade secret in a way contrary to honest commercial practices by others is deemed as an exceedingly unfair practice and an infringement of Trade Secret Protection.

Information Protected by a Trade Secret 

Generally, any confidential piece of business info that provides a competitive edge to a company or firm and isn’t known to others may be safeguarded as a trade secret.

Trade secrets comprise both technical info, including designs and drawings of computer programs, pharmaceutical test data, information concerning manufacturing processes, etc., and commercial info, including the list of clients and suppliers, distribution methods, marketing strategies, etc.

Additionally, a trade secret may consist of a combination of elements, every element of which by itself lies in the public domain, but where the entire combination kept as secret provides a competitive edge in the industry.

Other pieces of info that may obtain trade secret protection include formulas, recipes, financial info, and source codes.

Protection Offered by a Trade Secret

As per the legal system prevalent in different nations, the legal protection offered by a brand or business secret forms a crucial part of the general protection offered against unfair competition or is based on the specific laws and provisions concerning the protection of confidential information.

Although the final decision of whether or not a trade secret is infringed upon varies from one case to another, unfair practices concerning confidential info usually include breach of contract, industrial or commercial espionage, and breach of confidence.

It is essential to note that the owner of a trade secret can’t stop others from using the same commercial or technical info in the scenario where they acquire or develop the said info independently through R&D, marketing analysis, reverse engineering, etc. Furthermore, since trade secrets aren’t disclosed publicly, they do not provide ‘defensive protection’ for being prior art, which exists in the case of patents. For instance, let us assume that there is a particular method for producing a product ‘A’ that has been protected by a trade secret. Now, some other person can obtain patent or utility model protection on the same invention only if he arrived at that invention independently.

Preventative Measures for Safeguarding a Trade Secret

Business companies and firms should take the following preventive measures for safeguarding their trade secrets against misappropriation or theft:

  • The employees and business partners of a firm should sign a Non-Disclosure Agreement (NDA) to prevent the disclosure of any piece of confidential information.
  • The employers of a firm should sign a Non-Compete Agreement (NCA) with the consultants, contractors, and employees to prevent them from entering into competition upon the termination of their employment or service agreement.
  • There should be robust infrastructure in place for IT security.
  • A person in every company should be in charge of controlling the accessibility of critical documents. ✅ For more visit:

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