Trade secret

Last updated

A trade secret is a form of intellectual property comprising confidential information that is not generally known or readily ascertainable, derives economic value from its secrecy, and is protected by reasonable efforts to maintain its confidentiality. [1] [2] [3] Well-known examples include the Coca-Cola formula and the recipe for Kentucky Fried Chicken.

Contents

Unlike other forms of intellectual property (IP), trade secrets do not require formal registration and can be protected indefinitely, as long as they remain undisclosed. [4] Instead, non-disclosure agreements (NDAs), among other measures, are commonly used to keep the information secret. [5] [6]

Like other IP assets, trade secrets may be sold or licensed. [7] Unauthorized acquisition, use, or disclosure of a trade secret by others in a manner contrary to honest commercial practices is considered misappropriation of the trade secret. If trade secret misappropriation happens, the trade secret holder can seek various legal remedies. [7]

Definition

The precise definition of a trade secret varies by jurisdiction, as do the types of information eligible trade secret protection. However, in general, trade secrets are confidential information that is:

The Coca-Cola formula has been a trade secret since 1891. 15-09-26-RalfR-WLC-0098 - Coca-Cola glass bottle (Germany).jpg
The Coca-Cola formula has been a trade secret since 1891.

All three elements are required. If any element ceases to exist, then the trade secret will also cease to exist. [4]

Trade secret protection covers confidential information, which can include technical and scientific data, business and commercial information, and financial records. [3] Even “negative” information, like failed experiments, can be valuable by helping companies avoid repeating costly mistakes. [3]

In international law, while "trade secrets" and "confidential information" are often used interchangeably, trade secrets are technically a subset of confidential information. [8] To qualify as a trade secret, confidential information must meet the specific requirements set by a country's national laws, which are often influenced by Article 39 of the TRIPS Agreement. [8] [9]

History

Early origins

Commentators like A. Arthur Schiller have argued that trade secrets were protected under Roman law by a claim known as actio servi corrupti, meaning an "action for making a slave worse" or "an action for corrupting a servant." The Roman law is described as follows:

[T]he Roman owner of a mark or firm name was legally protected against unfair usage by a competitor through the actio servi corrupti ... which the Roman jurists used to grant commercial relief under the guise of private law actions. "If, as the writer believes [writes Schiller], various private cases of action were available in satisfying commercial needs, the state was acting in exactly the same fashion as it does at the present day." [10]

The suggestion that trade secret law has its roots in Roman law was introduced in 1929 in a Columbia Law Review article called "Trade Secrets and the Roman Law: The Actio Servi Corrupti", which has been reproduced in Schiller's, An American Experience in Roman Law 1 (1971).

However, the University of Georgia Law School professor Alan Watson argued in Trade Secrets and Roman Law: The Myth Exploded that the actio servi corrupti was not used to protect trade secrets. Rather, he explained:

Schiller is sadly mistaken as to what was going on. ... The actio servi corrupti presumably or possibly could be used to protect trade secrets and other similar commercial interests. That was not its purpose and was, at most, an incidental spin-off. But there is not the slightest evidence that the action was ever so used. In this regard the actio servi corrupti is not unique. Exactly the same can be said of many private law actions including those for theft, damage to property, deposit, and production of property. All of these could, I suppose, be used to protect trade secrets, etc., but there is no evidence they were. It is bizarre to see any degree the Roman actio servi corrupti as the counterpart of modern law for the protection of trade secrets and other such commercial interests. [10]

Early case law

Modern trade secret law is primarily rooted in Anglo-American common law. [11] (p6) The earliest recorded court case was the 1817 English case Newbery v. James, which involved a secret formula for gout treatment. [12] [11] (p5) [13] In the United States, this concept was first recognized in the 1837 case Vickery v. Welch, involving the sale of a chocolate factory and the seller’s agreement to keep the secret recipe confidential. [14] [15]

Newbery and Vickery only awarded compensation for losses (damages) and did not issue orders to prevent the misuse of secrets (injunctive relief). [11] (p5) The first English case involving injunctive relief was Yovatt v. Winyard in 1820, where the court issued an injunction to prevent a former employee from using or disclosing recipes he had secretly copied from his employer's veterinary medicine practice. [16] [17]

In the United States, the 1868 Massachusetts Supreme Court decision in Peabody v. Norfolk is one of the most well-known and well-reasoned early trade secret case, establishing foundational legal principles that continue to be central to common law. [18] [19] In this case, the court ruled that Peabody’s confidential manufacturing process was a protectable trade secret and issued an injunction preventing former employees from using or disclosing it after they shared it with a competitor. [18]

Uniform lawmaking and legislation

In 1939, the Restatement of Torts, published by the American Law Institute, offered, among other things, one of the earliest formal definitions of a trade secret. According to Section 757, Comment b, a trade secret may consist of "any formula, pattern, device, or compilation of information which is used in one's business, and which gives the business an opportunity to obtain an advantage over competitors who do not know or use it." [20] (p278) This definition became widely used by courts across the United States. [20] (p278) As the first attempt to outline the accepted principles of trade secret law, the Restatement served as the primary authority adopted in virtually every reported case. [20] (p282)

Trade secret law saw further development in 1979 when the Uniform Law Commission (ULC) introduced a model law known as the Uniform Trade Secrets Act (UTSA), which was later amended in 1985. The UTSA defines the types of information eligible for trade secret protection, establishes a private cause of action for misappropriation, and outlines remedies such as injunctions, damages, and, in certain cases, attorneys' fees. [21] It has since been adopted by 48 states, along with the District of Columbia, Puerto Rico, and the U.S. Virgin Islands, with New York and North Carolina as the exceptions. [22] [23]

The UTSA influenced the Defend Trade Secrets Act (DTSA) of 2016, which created a federal civil cause of action for trade secret misappropriation, allowing plaintiffs to file cases directly in federal courts if "the trade secret is related to a product or service used in ... interstate or foreign commerce." [23]

International standards

Trade secret law is governed by national legal systems. [24] However, international standards for protecting secrets (called “undisclosed information”) were established as part of the TRIPS Agreement in 1995. [24] Article 39 of TRIPS obligates member countries to protect “undisclosed information” from unauthorized use conducted “in a manner contrary to honest commercial practices,” including actions such as breach of contract, breach of confidence, and unfair competition. For the information to qualify, it must not be generally known or easily accessible, must hold value due to its secrecy, and must be safeguarded through “reasonable steps” to keep it secret. [24] [25]

Value

Trade secrets are an important, but invisible component of a company's intellectual property (IP). Their contribution to a company's value can be major. [26] Being invisible, that contribution is hard to measure. [27] Still, research shows that changes in trade secrets laws affect business spending on R&D and patents. [28] [29] This research provides indirect evidence of the value of trade secrecy.

Protection

Unlike other forms of intellectual property, trade secrets do not require formal registration and can be protected indefinitely, as long as they remain secret. [4] Maintaining secrecy is both a practical necessity and a legal obligation, as trade secret owners must take "reasonable" measures to protect the confidentiality of their trade secrets to qualify for legal protection. [30] (p4) "Reasonable" efforts are decided case by case, considering factors like the type and value of the secret, its importance to the business, the company’s size, and its organizational complexity. [30] (p4)

The most common reason for trade secret disputes to arise is when former employees of trade secret-bearing companies leave to work for a competitor and are suspected of taking or using valuable confidential information belonging to their former employer. [31] Legal protections include non-disclosure agreements (NDAs), and work-for-hire and non-compete clauses. In other words, in exchange for an opportunity to be employed by the holder of secrets, an employee may agree to not reveal their prospective employer's proprietary information, to surrender or assign to their employer ownership rights to intellectual work and work-products produced during the course (or as a condition) of employment, and to not work for a competitor for a given period of time (sometimes within a given geographic region).

Violating the agreement generally carries the possibility of heavy financial penalties, thus disincentivizing the revealing of trade secrets. Trade secret information can be protected through legal action including an injunction preventing breaches of confidentiality, monetary damages, and, in some instances, punitive damages and attorneys’ fees too. In extraordinary circumstances, an ex parte seizure under the Defend Trade Secrets Act (DTSA) also allows for the court to seize property to prevent the propagation or dissemination of the trade secret. [31]

However, proving a breach of an NDA by a former stakeholder who is legally working for a competitor or prevailing in a lawsuit for breaching a non-compete clause can be very difficult. [32] A holder of a trade secret may also require similar agreements from other parties, such as vendors, licensees, and board members.

As a company can protect its confidential information through NDA, work-for-hire, and non-compete contracts with its stakeholders (within the constraints of employment law, including only restraint that is reasonable in geographic- and time-scope), these protective contractual measures effectively create a monopoly on secret information that does not expire as would a patent or copyright. The lack of formal protection associated with registered intellectual property rights, however, means that a third party not bound by a signed agreement is not prevented from independently duplicating and using the secret information once it is discovered, such as through reverse engineering.

Green Chartreuse liqueur protected by confidential information of the ingredients Chartreuse-bottle.jpg
Green Chartreuse liqueur protected by confidential information of the ingredients

Therefore, trade secrets such as secret formulae are often protected by restricting the key information to a few trusted individuals. Famous examples of products protected by trade secrets are Chartreuse liqueur and Coca-Cola. [33]

Because protection of trade secrets can, in principle, extend indefinitely, it may provide an advantage over patent protection and other registered intellectual property rights, which last for a limited duration. For example, the Coca-Cola company has no patent for the formula of Coca-Cola and has been effective in protecting it for many more years than the 20 years of protection that a patent would have provided. In fact, Coca-Cola refused to reveal its trade secret under at least two judges' orders. [34]

Trade secret legal protection can reduce the knowledge spillover, which enhances the knowledge spread and technology improvement. [35] Therefore, while trade secret laws strengthen R&D exclusivity and encourage firms to engage in innovative activities, broadly reducing knowledge spillovers can harm economic growth.

Misappropriation

In general, trade secret misappropriation occurs when someone improperly acquires, discloses, or uses a trade secret without the trade secret holder's consent. [36] [37] [38] Common scenarios include former employees taking proprietary data to a new employer in violation of non-disclosure agreements (NDAs), espionage, or unauthorized disclosure. [39] [36] [40]

To prove misappropriation, the trade secret holder must generally show—subject to the specific requirements of the applicable jurisdiction—that:

Exceptions and limitations

While the improper, dishonest, or unlawful acquisition, use, or disclosure of trade secret information by unauthorized third parties is generally prohibited, there are exceptions to this rule. The scope of these exceptions and limitations varies across jurisdictions:

By nation

Commonwealth nations

In Commonwealth common law jurisdictions, confidentiality and trade secrets are regarded as an equitable right rather than a property right. [44]

The Court of Appeal of England and Wales in the case of Saltman Engineering Co Ltd v. Campbell Engineering Ltd [45] held that the action for breach of confidence is based on a principle of preserving "good faith".

The test for a cause of action for breach of confidence in the common law world is set out in the case of Coco v. A.N. Clark (Engineers) Ltd: [46]

The "quality of confidence" highlights that trade secrets are a legal concept. With sufficient effort or through illegal acts (such as breaking and entering), competitors can usually obtain trade secrets. However, so long as the owner of the trade secret can prove that reasonable efforts have been made to keep the information confidential, the information remains a trade secret and generally remains legally protected. Conversely, trade secret owners who cannot evidence reasonable efforts at protecting confidential information risk losing the trade secret, even if the information is obtained by competitors illegally. It is for this reason that trade secret owners shred documents and do not simply recycle them.[ citation needed ]

A successful plaintiff is entitled to various forms of judicial relief, including:

Hong Kong does not follow the traditional commonwealth approach, instead recognizing trade secrets where a judgment of the High Court indicates that confidential information may be a property right. [47]

European Union

The EU adopted a Directive on the Protection of Trade Secrets on 27 May 2016. [48] The goal of the directive is to harmonize the definition of trade secrets in accordance with existing international standards, and the means of obtaining protection of trade secrets within the EU. [48]

Unlike other protections, like in the US, the trade secrets in the EU are not absolutely seen as an IP right, as it gives the holder no exclusive rights. It is more a protection against the unfair use or publication of the secret information. [48]

United States

Within the U.S., trade secrets generally encompass a company's proprietary information that is not generally known to its competitors, and which provides the company with a competitive advantage. [49]

Although trade secrets law evolved under state common law, prior to 1974, the question of whether patent law preempted state trade secrets law had been unanswered. In 1974, the United States Supreme Court issued the landmark decision, Kewanee Oil Co. v. Bicron Corp., which resolved the question in favor of allowing the states to freely develop their own trade secret laws. [50]

In 1979, several U.S. states adopted the Uniform Trade Secrets Act (UTSA), which was further amended in 1985, with approximately 47 states having adopted some variation of it as the basis for trade secret law. Another significant development is the Economic Espionage Act (EEA) of 1996 (18 U.S.C.   §§ 1831 1839), which makes the theft or misappropriation of a trade secret a federal crime.

This law contains two provisions criminalizing two sorts of activity:

  1. 18 U.S.C.   § 1831(a) , criminalizes the theft of trade secrets to benefit foreign powers.
  2. 18 U.S.C.   § 1832, criminalizes their theft for commercial or economic purposes.

The statutory penalties are different for the two offenses. The EEA was extended in 2016 to allow companies to file civil suits in federal court. [51]

On May 11, 2016, President Obama signed the Defend Trade Secrets Act (DTSA), 18 U.S.C. §§ 1839 et seq., which for the first time created a federal cause of action for misappropriating trade secrets. [52] The DTSA provides for both a private right of action for damages and injunction and a civil action for injunction brought by the Attorney General. [53]

The statute followed state laws on liability in significant part, defining trade secrets in the same way as the Uniform Trade Secrets Act as,

"all forms and types of financial, business, scientific, technical, economic, or engineering information, including patterns, plans, compilations, program devices, formulas, designs, prototypes, methods, techniques, processes, procedures, programs, or codes, whether tangible or intangible, and whether or how stored, compiled, or memorialized physically, electronically, graphically, photographically, or in writing if (A) the owner thereof has taken reasonable measures to keep such information secret; and (B) the information derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable through proper means by, another person who can obtain economic value from the disclosure or use of the information."

However, the law contains several important differences from prior law:

  1. Because it is a federal law, trade secret cases can be prosecuted in federal courts with concomitant procedural advantages.
  2. It provides for the unusual remedy of preliminary seizure of "property necessary to prevent the propagation or dissemination of the trade secret," 18 U.S.C. §1836
  3. It provides for remedies to include royalties in appropriate cases and exemplary damages up to two times the actual damages in cases of "willful and malicious" appropriation, 18 U.S.C. §1836(b)(3).

The DTSA also clarifies that a United States resident (including a company) can be liable for misappropriation that takes place outside the United States, and any person can be liable as long as an act in furtherance of the misappropriation takes place in the United States, 18 U.S.C. §1837. The DTSA provides the courts with broad injunctive powers. 18 U.S.C. §1836(b)(3).

The DTSA does not preempt or supplant state laws, but provides an additional cause of action. Because states vary significantly in their approach to the "inevitable disclosure" doctrine, [54] its use has limited, if any, application under the DTSA, 18 U.S.C.§1836(b)(3)(A). [55]

Comparison to other intellectual property laws

In the United States, trade secrets are not protected by law in the same way as patents or trademarks. While the US Constitution explicitly authorizes the existence of and the federal jurisdiction over patents and copyrights, it is silent on trade secrets, trademarks, etc. For this reason, Federal Law for the latter types of intellectual property is based on the Commerce Clause (rather than the Copyright Clause) under a theory, that these IP types are used for interstate commerce. On other hand, the application of the Interstate Commerce Theory did not find much judicial support in regulating trade secrets: since a trade secret process is used in a State, where it is protected by state law, federal protection may be needed only when industrial espionage by a foreign entity is involved (the States themselves cannot regulate commerce with foreign powers).

Due these Constitutional requirements, patents and trademarks enjoy a strong federal protection in the USA (the Lanham Act and Patent Act, respectively), while trade secrets usually have to rely on more limited state laws. Most states have adopted the Uniform Trade Secrets Act (UTSA), except for Massachusetts, New York, and North Carolina. However, since 2016 with the enactment of the Defend Trade Secrets Act (DTSA), some additional trade secrets protection has become also available under federal law. One of the differences between patents and trademarks, on the one hand, and trade secrets, on the other, is that a trade secret is protected only when the owner has taken reasonable measures to protect the information as a secret (see 18 U.S.C.   § 1839(3)(A)).

Nations have different trademark policies. Assuming the mark in question meets certain other standards of protectibility, trademarks are generally protected from infringement on the grounds that other uses might confuse consumers as to the origin or nature of the goods once the mark has been associated with a particular supplier. Similar considerations apply to service marks and trade dress. By definition, a trademark enjoys no protection (qua trademark) until and unless it is "disclosed" to consumers, for only then are consumers able to associate it with a supplier or source in the requisite manner. (That a company plans to use a certain trademark might itself be protectable as a trade secret, however, until the mark is actually made public.) [56] To acquire a trademark rights under U.S. law, one must simply use the mark "in commerce". [57] It is possible to register a trademark in the United States, both at the federal and state levels. Registration of trademarks confers some advantages, including stronger protection in certain respects, but registration is not required in order to get protection. [57] Registration may be required in order to file a lawsuit for trademark infringement.

To acquire a patent, enabling information about the method or product has to be supplied to a patent office and upon publication (usually, years before issuance of a patent), it becomes available to all. After expiration of the patent, competitors can copy the method or product legally. The most important advantage of patents (compared to trade secrets) is that patents assure the monopoly of their owners, even when the patented subject matter is independently invented by others later (there are some exceptions), as well as when the patented subject matter was invented by others prior to the patent's priority date, kept as a trade secret, and used by the other in its business. Although it is legally possible to "convert" a trade secret into a patent, the claims in such patent would be limited to things, that are easily discernable from examining such things. This means, that compositions of matter and articles of manufacture can not be patented after they become available to public, while processes can.

The temporary monopoly on the patented invention is regarded as a pay-off for disclosing the information to the public.[ citation needed ] In order to obtain a patent, the inventor must disclose the invention, so that others will be able to both make and use the invention. Often, an invention will be improved after filing of the patent application, and additional information will be learned. None of that additional information must be disclosed through the patent application process, and it may thus be kept as a trade secret. [58] That nondisclosed information will often increase the commercial viability of the patent. Most patent licenses include clauses that require the inventor to disclose any trade secrets they have, and patent licensors must be careful to maintain their trade secrets while licensing a patent through such means as the use of a non-disclosure agreement. Compared to patents, the advantages of trade secrets are that a trade secret is not time limited (it "continues indefinitely as long as the secret is not revealed to the public", whereas a patent is only in force for a specified time, after which others may freely copy the invention), a trade secret does not imply any registration costs, [59] has an immediate effect, does not require compliance with any formalities, and does not imply any disclosure of the invention to the public. [59] The disadvantages of trade secrets include that "others may be able to legally discover the secret and be thereafter entitled to use it", "others may obtain patent protection for legally discovered secrets", and a trade secret is more difficult to enforce than a patent. [60]

Public safety

United States

The Freedom of Information Act of 1966 (FOIA), which requires federal agencies to provide documents to the public on request, includes the discretionary exemption - to withhold information for trade secrets. [61] Thus trade secret regulations can mask the composition of chemical agents in consumer products which has long been criticized for allowing the trade secret holders to hide the presence of potentially harmful and toxic substances. It has been argued that the public is being denied a clear picture of such products' safety, whereas competitors are well positioned to analyze its chemical composition. [62] In 2004, the National Environmental Trust tested 40 common consumer products; in more than half of them they found toxic substances not listed on the product label. [62]

Cases

See also

Related Research Articles

<span class="mw-page-title-main">Intellectual property</span> Ownership of creative expressions and processes

Intellectual property (IP) is a category of property that includes intangible creations of the human intellect. There are many types of intellectual property, and some countries recognize more than others. The best-known types are patents, copyrights, trademarks, and trade secrets. The modern concept of intellectual property developed in England in the 17th and 18th centuries. The term "intellectual property" began to be used in the 19th century, though it was not until the late 20th century that intellectual property became commonplace in most of the world's legal systems.

<span class="mw-page-title-main">Non-disclosure agreement</span> Contractual agreement not to disclose specified information

A non-disclosure agreement (NDA), also known as a confidentiality agreement (CA), confidential disclosure agreement (CDA), proprietary information agreement (PIA), or secrecy agreement (SA), is a legal contract or part of a contract between at least two parties that outlines confidential material, knowledge, or information that the parties wish to share with one another for certain purposes, but wish to restrict access to. Doctor–patient confidentiality, attorney–client privilege, priest–penitent privilege and bank–client confidentiality agreements are examples of NDAs, which are often not enshrined in a written contract between the parties.

<span class="mw-page-title-main">Patent</span> Type of legal protection for an invention

A patent is a type of intellectual property that gives its owner the legal right to exclude others from making, using, or selling an invention for a limited period of time in exchange for publishing an enabling disclosure of the invention. In most countries, patent rights fall under private law and the patent holder must sue someone infringing the patent in order to enforce their rights.

<span class="mw-page-title-main">World Intellectual Property Organization</span> Specialised agency of the United Nations

The World Intellectual Property Organization is one of the 15 specialized agencies of the United Nations (UN). Pursuant to the 1967 Convention Establishing the World Intellectual Property Organization, WIPO was created to promote and protect intellectual property (IP) across the world by cooperating with countries as well as international organizations. It began operations on 26 April 1970 when the convention entered into force. The current Director General is Singaporean Daren Tang, former head of the Intellectual Property Office of Singapore, who began his term on 1 October 2020.

<span class="mw-page-title-main">Industrial property</span> Intellectual property applied to industry

Industrial property is one of two subsets of intellectual property, it takes a range of forms, including patents for inventions, industrial designs, trademarks, service marks, layout-designs of integrated circuits, commercial names and designations, geographical indications and protection against unfair competition. In some cases, aspects of intellectual creation, although present, are less clearly defined. The object of industrial property consists of signs conveying information, in particular to consumers, regarding products and services offered on the market. Protection is directed against unauthorized use of such signs that could mislead consumers, and against misleading practices in general.

Intellectual property rights (IPRs) have been acknowledged and protected in China since 1980. China has acceded to the major international conventions on protection of rights to intellectual property. Domestically, protection of intellectual property law has also been established by government legislation, administrative regulations, and decrees in the areas of trademark, copyright, and patent.

Intellectual rights to magic methods refers to the legal and ethical debate about the extent to which proprietary or exclusive rights may subsist in the methods or processes by which magic tricks or illusions are performed. It is a subject of some controversy.

<span class="mw-page-title-main">Utility model</span> Patent-like intellectual property right

A utility model is a patent-like intellectual property right to protect inventions. This type of right is available in many countries but, notably, not in the United States, United Kingdom or Canada. Although a utility model is similar to a patent, it is generally cheaper to obtain and maintain, has a shorter term, shorter grant lag, and less stringent patentability requirements. In some countries, it is only available for inventions in certain fields of technology and/or only for products. Utility models can be described as second-class patents.

<span class="mw-page-title-main">Uniform Trade Secrets Act</span> Uniform act in the United States

The Uniform Trade Secrets Act (UTSA), published by the Uniform Law Commission (ULC) in 1979 and amended in 1985, is a model law designed for adoption by U.S. states. It was developed to resolve inconsistencies in the treatment of trade secrets across different states.

Traditional knowledge (TK), indigenous knowledge (IK), folk knowledge, and local knowledge generally refers to knowledge systems embedded in the cultural traditions of regional, indigenous, or local communities.

<span class="mw-page-title-main">Information sensitivity</span> Classification of secrecy of information

Information sensitivity is the control of access to information or knowledge that might result in loss of an advantage or level of security if disclosed to others. Loss, misuse, modification, or unauthorized access to sensitive information can adversely affect the privacy or welfare of an individual, trade secrets of a business or even the security and international relations of a nation depending on the level of sensitivity and nature of the information.

<span class="mw-page-title-main">Outline of intellectual property</span> Overview of and topical guide to intellectual property

The following outline is provided as an overview and topical guide to intellectual property:

<span class="mw-page-title-main">Trademark</span> Trade identifier of products or services

A trademark is a form of intellectual property that consists of a word, phrase, symbol, design, or a combination that identifies a product or service from a particular source and distinguishes it from others. Trademarks can also extend to non-traditional marks like drawings, symbols, 3D shapes like product designs or packaging, sounds, scents, or specific colors used to create a unique identity. For example, Pepsi® is a registered trademark associated with soft drinks, and the distinctive shape of the Coca-Cola® bottle is a registered trademark protecting Coca-Cola's packaging design.

<span class="mw-page-title-main">TRIPS Agreement</span> International treaty on intellectual property protections

The Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) is an international legal agreement between all the member nations of the World Trade Organization (WTO). It establishes minimum standards for the regulation by national governments of different forms of intellectual property (IP) as applied to nationals of other WTO member nations. TRIPS was negotiated at the end of the Uruguay Round of the General Agreement on Tariffs and Trade (GATT) between 1989 and 1990 and is administered by the WTO.

Data General Corp. v. Digital Computer Controls, Inc. was a 1971 case in which the Delaware Court of Chancery determined that widespread, confidential disclosure of trade secrets does not necessarily compromise their secrecy. Data General Corporation distributed design documentation with its Nova 1200 minicomputer, notifying owners of the confidentiality of these design drawings through contractual agreements and explicit text on the drawings. After acquiring drawings with a Nova 1200 purchase, Digital Computer Controls designed its own nearly identical minicomputer. Digital Computer Controls maintained that its use of the documentation was proper because Data General Corporation inadequately maintained the secrecy of the design drawings by distributing them to many customers. The court found that Data General Corporation had sufficiently protected the secrecy of the drawings and that Digital Computer Controls was thus in violation of trade secret law for improperly using confidential information.

<i>Comprehensive Technologies International, Inc. v. Software Artisans, Inc.</i> U.S. federal court case

Comprehensive Technologies International, Inc. v. Software Artisans, Inc., 3 F.3d 730 was a case in which the U.S. Court of Appeals for the Fourth Circuit discussed legal tests for software copyright infringement, and ruled that trade secret misappropriation requires more than circumstantial evidence. The case also ruled on what terms may be reasonable and enforceable in non-compete agreements.

<span class="mw-page-title-main">Intellectual property in Iran</span>

Iran is a member of the WIPO since 2001 and has acceded to several WIPO intellectual property treaties. Iran joined the Convention for the Protection of Industrial Property in 1959. In December 2003 Iran became a party to the Madrid Agreement and the Madrid Protocol for the International Registration of Marks. In 2005 Iran joined the Lisbon Agreement for the Protection of Appellations of Origin and their International Registration, which ensures the protection of geographical names associated with products. As at February 2008 Iran had yet to accede to The Hague Agreement for the Protection of Industrial Designs.

In Canada, trade secrets are generally considered to include information set out, contained or embodied in, but not limited to, a formula, pattern, plan, compilation, computer program, method, technique, process, product, device or mechanism; it may be information of any sort; an idea of a scientific nature, or of a literary nature, as long as they grant an economical advantage to the business and improve its value. Additionally, there must be some element of secrecy. Matters of public knowledge or of general knowledge in an industry cannot be the subject-matter of a trade secret.

Republic Act No. 8293, otherwise known as The Intellectual Property Code of the Philippines lays down the rules and regulations that grant, and enforce patents in the Philippines. Patents may be granted to technical solutions such as an inventions, machines, devices, processes, or an improvement of any of the foregoing. The technical solution must be novel, innovative, and industrially useful. In order for a technical solution to be granted a patent, the inventor must file an application to the Bureau of Patents, which will examine, and in some cases, grant its approval. The law is designed as to foster domestic creativity, to attract foreign investors, and to motivate inventors to release their products for public access.

<span class="mw-page-title-main">Biopiracy</span> Harmful and/or unethical [[bioprospecting]] research

Biopiracy is the unauthorized appropriation of knowledge and genetic resources of farming and indigenous communities by individuals or institutions seeking exclusive monopoly control through patents or intellectual property. While bioprospecting is the act of exploring natural resources for undiscovered chemical compounds with medicinal or anti-microbial properties, commercial success from bioprospecting leads to the company's attempt at protecting their intellectual property rights on indigenous medicinal plants, seeds, genetic resources, and traditional medicines.

References

  1. "trade secret". LII / Legal Information Institute. Retrieved 2024-11-11. The UTSA defines a 'trade secret' as: 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.
  2. "Trade secrets in the EU: What is protected?". Your Europe. Retrieved 2024-11-11. If you possess valuable information on technology or on any other aspect of your business, you can protect it as a trade secret if the following conditions are met: the information is not known either by the public at large or by the experts of the sector in question[,] the information has commercial value[, and] you have taken steps to keep the information secret: for example, you keep it in safe storage and you have signed non-disclosure agreements with anyone that has access to it or with whom you have shared the information
  3. 1 2 3 4 5 6 "WIPO Guide to Trade Secrets and Innovation - Part III: Basics of trade secret protection". WIPO Guide to Trade Secrets and Innovation. Retrieved 2024-11-10. In general, trade secrets are confidential information, which is: not generally known among, or accessible to, the persons in the relevant business sector ("secrecy")[,] commercially valuable because it is secret, and subject to reasonable steps taken by the rightful holder of the information to keep it secret, such as the use of confidentiality agreements for business partners.
  4. 1 2 3 "Trade secrets / regulatory data protection". www.uspto.gov. Retrieved 2024-11-11. All three elements are required; if any element ceases to exist, then the trade secret will also cease to exist. Otherwise there is no limit on the amount of time a trade secret is protected.
  5. "WIPO Guide to Trade Secrets and Innovation - Part III: Basics of trade secret protection". WIPO Guide to Trade Secrets and Innovation. Retrieved 2024-11-11. In addition, since confidentiality agreements (or clauses) and non-disclosure agreements (NDAs) are usually effective measures to maintain trade secret information in secrecy, contract law is also relevant to trade secret protection.
  6. "Trade Secrets, Professional Perspective - Non-Disclosure Agreements and Trade Secrets Protection". www.bloomberglaw.com. Retrieved 2024-11-11.
  7. 1 2 "WIPO Guide to Trade Secrets and Innovation - Part III: Basics of trade secret protection". WIPO Guide to Trade Secrets and Innovation. Archived from the original on 2024-09-23. Retrieved 2024-12-13.
  8. 1 2 "WIPO Guide to Trade Secrets and Innovation - Part IV: Trade secret management". WIPO Guide to Trade Secrets and Innovation. Retrieved 2024-12-14. It is important to begin by clarifying terminology. Although "trade secrets" and "confidential information" are often used interchangeably in business, strictly speaking the former is a subset of the latter. In general, "confidential information" refers to information that is not publicly known and is kept confidential by its holder. Thus, it extends to information that is personal to an individual. Confidential information will qualify as a trade secret only if it meets the requirements under the applicable national law of each country (many of which may be based on Article 39 of the TRIPS Agreement). In general, a trade secret refers to any confidential information which provides an economic benefit to the trade secret holder because that information is generally unknown to competitors, and the holder made efforts to keep the information secret. Trade secrets can be found in the most unexpected of places in your business.
  9. "WTO | intellectual property (TRIPS) - agreement text - standards - Section 7: protection of undisclosed information". www.wto.org. Retrieved 2024-12-14.
  10. 1 2 Watson, Alan (1996). "Trade Secrets and Roman Law: The Myth Exploded". Tulane European and Civil Law Forum. 11: 19. Retrieved 11 November 2024.
  11. 1 2 3 Lemley, Mark A. (2011). "The Surprising Virtues of Treating Trade Secrets as IP Rights". The Law and Theory of Trade Secrecy. Edward Elgar Publishing. Retrieved 11 November 2024.
  12. Jager, Melvin F.; Lane, Brad. "§ 2:2. The early English common law". Trade Secrets Law. Vol. 1 (August 2024 Update ed.). Thomson Reuters. The early English cases paint a warped picture of nineteenth-century England. The pressing issue of the day in Britain, at least according to the early trade secret decisions, was the misappropriation of the secret recipes for 'patent' medicines. A secret formula for treating gout was the subject of a legal battle which resulted in what appears to be the first reported trade secret case in England: Newbery v. James.
  13. "Newbery v James and Others". vLex. Retrieved 2024-11-11.
  14. "The Artificial Distinction Between Trade Secrets and 'Confidential Information'". IPWatchdog.com | Patents & Intellectual Property Law. 2022-07-28. Retrieved 2024-11-11.
  15. Vickery v. Welch, 19Pick.523 , 523(Mass.1837).
  16. Jager, Melvin F.; Lane, Brad. "§ 2:2. The early English common law". Trade Secrets Law. Vol. 1 (August 2024 Update ed.). Thomson Reuters. The next English trade secret owner to litigate his claim was more successful. A now-typical employer/employee problem was presented for solution to the early English Chancellor in Yovatt v. Winyard. The defendant there had been a journeyman in plaintiff's office of veterinary medicine, and surreptitiously copied recipes and instructions for plaintiff's medicines. The court issued an injunction against the defendant's use or disclosure of the recipes because of his 'breach of trust and confidence.'
  17. Yovatt v. Winyard, (1820) 37 Eng. Rep. 425, 426 (Ch.)
  18. 1 2 Jager, Melvin F.; Lane, Brad. "§ 2:3. The early U.S. common law". Trade Secrets Law. Vol. 1 (August 2024 Update ed.). Thomson Reuters.
  19. "PEABODY vs. NORFOLK, 98 Mass. 452". masscases.com. Retrieved 2024-11-11.
  20. 1 2 3 Klitzke, Ramon A. (1980). "The Uniform Trade Secrets Act". Marquette Law Review. 64 (2): 277–307.
  21. "Uniform Trade Secrets Act (UTSA) | Practical Law". content.next.westlaw.com. Retrieved 2024-11-11.
  22. "trade secret". LII / Legal Information Institute. Retrieved 2024-11-12.
  23. 1 2 Congressional Research Service (January 27, 2023). An Introduction to Trade Secrets Law in the United States (PDF) (Report). Congressional Research Service. Retrieved November 12, 2024.
  24. 1 2 3 "Trade Secrets: the other IP right". www.wipo.int. Archived from the original on 2024-06-14. Retrieved 2024-11-12. Trade secret law, like other forms of IP, is governed by national legal systems. However, international standards for protecting secrets (called "undisclosed information") were established as part of the TRIPS Agreement in 1995. Article 39 of the agreement provides that member states shall protect "undisclosed information" against unauthorized use "in a manner contrary to honest commercial practices" (this includes breach of contract, breach of confidence and unfair competition). The information must not be generally known or readily accessible, must have value because it is secret, and must be the subject of "reasonable steps" to keep it secret.
  25. "WTO | intellectual property (TRIPS) - agreement text - standards". www.wto.org. Retrieved 2024-11-12.
  26. Robert P. Merges, Peter S. Menell, Mark A. Lemley (@006) Intellectual Property in the Technological Age, 3rd ed.; Aspen
  27. Baruch Lev (2001): Intangibles, Management, Measurement and Reporting, with comments by conference participants; Brookings Institution Press, 2001.
  28. Png, I. P. L. (2017-03-01). "Law and Innovation: Evidence from State Trade Secrets Laws". The Review of Economics and Statistics. 99 (1): 167–179. doi:10.1162/REST_a_00532. ISSN   0034-6535. S2CID   57569370.
  29. Png, I. P. L. (2017-09-01). "Secrecy and Patents: Theory and Evidence from the Uniform Trade Secrets Act". Strategy Science. 2 (3): 176–193. doi: 10.1287/stsc.2017.0035 . ISSN   2333-2050.
  30. 1 2 "Intellectual Property Toolkit - Trade Secrets" (PDF). United States Patent and Trademark Office (USPTO). Archived (PDF) from the original on 2024-11-22. Retrieved 24 November 2024.
  31. 1 2 Bagley & Dauchy (2018). The Entrepreneur's Guide to Law and Strategy. Boston, MA: Cengage Learning. pp. 501–502. ISBN   978-1-285-42849-9.
  32. "Customer Lists as Trade Secrets". The National Law Review. Dykema Gossett PLLC. 2009-12-30. Retrieved 2012-04-19.
  33. Stafford, Leon. "Coke hides its secret formula in plain sight in World of Coca-Cola move". The Atlanta Journal-Constitution. ISSN   1539-7459 . Retrieved 2023-11-11.
  34. For God, Country & Coca-Cola, by Mark Pendergrast, 2nd Ed., Basic Books 2000, p. 456
  35. Wang, Yanzhi (2023). "Trade Secrets Laws and Technology Spillovers" (PDF). Research Policy. 52 (7): 104794. doi:10.1016/j.respol.2023.104794.
  36. 1 2 "Trade Secret Infringement & Potential Legal Defenses". Justia. 2018-04-25. Archived from the original on 2024-12-12. Retrieved 2024-12-12. If a person or entity discloses or publishes a trade secret while knowing it was improperly obtained, or by inducing someone to improperly obtain it, misappropriation exists.
  37. "The existence and misappropriation of trade secrets". Reuters. 2022-06-07. Retrieved 2024-12-10. There are three main avenues for establishing misappropriation of a trade secret: unauthorized acquisition, unauthorized disclosure, or unauthorized use of the trade secret.
  38. "WIPO Guide to Trade Secrets and Innovation - Part V: Trade secrets in litigation". WIPO Guide to Trade Secrets and Innovation. Archived from the original on 2024-08-27. Retrieved 2024-12-11. When trade secret information is used without authorization of the trade secret holders, this is called 'misappropriation' and those who carry out the misappropriation are called 'misappropriators'... The basic idea of prohibiting others from securing unfair commercial advantage by acquiring, using or disclosing trade secrets of another person in a wrongful manner is expressed in national laws in different ways. However, in essence, when the acquisition, disclosure or use of the information covered by the trade secret protection occurs by unlawful, improper, dishonest or unfair means, it is generally deemed to be misappropriation.
  39. "WIPO Guide to Trade Secrets and Innovation - Part V: Trade secrets in litigation". WIPO Guide to Trade Secrets and Innovation. Retrieved 2024-12-13.
  40. "trade secret". LII / Legal Information Institute. Retrieved 2024-12-13.
  41. 1 2 "WIPO Guide to Trade Secrets and Innovation - Part V: Trade secrets in litigation". WIPO Guide to Trade Secrets and Innovation. Retrieved 2024-12-13.
  42. 1 2 "Trade Secret Infringement & Potential Legal Defenses". Justia. 2018-04-25. Retrieved 2024-12-14.
  43. "WIPO Guide to Trade Secrets and Innovation - Part III: Basics of trade secret protection" . Retrieved 2024-08-27. CC-BY icon.svg Text was copied from this source, which is available under a Creative Commons Attribution 4.0 International License |website=WIPO Guide to Trade Secrets and Innovation
  44. Radhakrishnan, Rajagopalan; Balasubramanian, Dr R. Radhakrishnan and Dr S. (2008). Intellectual Property Rights: Text and Cases. Excel Books India. ISBN   978-81-7446-609-9.
  45. Saltman Engineering Co Ltd v. Campbell Engineering Ltd, (1948) 65 P.R.C. 203
  46. Coco v. A.N. Clark (Engineers) Ltd, (1969) R.P.C. 41 at 47
  47. "Trade Secrets (Undisclosed Commercial Information)". Intellectual Property Department. The Government Of Hong Kong Special Administrative Region. Retrieved 7 September 2020.
  48. 1 2 3 "Trade secrets". European Commission. Retrieved 16 April 2018.
  49. "Trade Secret Policy". United States Patent and Trademark Office. Office of Policy and International Affairs. Retrieved December 1, 2019.
  50. Kewanee Oil Co. v. Bicron Corp., 416 U.S. 470, 94 S.Ct. 1879, 40 L.Ed.2d 315 (1974)
  51. Goldman, Eric (April 28, 2016). "The New 'Defend Trade Secrets Act' Is The Biggest IP Development In Years". Forbes .
  52. Toren, Peter J. (May 24, 2016). "Definition of a 'Trade Secret' Under the DTSA". IPWatchdog. Retrieved 8 September 2016.
  53. Kelton, Jeff (June 24, 2016). "Protections of the Newly Enacted Defend Trade Secrets Act". American Bar Association. Retrieved 8 September 2016.
  54. The "inevitable disclosure" doctrine allows an employee's new employment to be enjoined if the court determines that the nature of his new duties will inevitably lead to a disclosure or improper use of trade secrets of the prior employer. It has been accepted in a number of states (see, e.g., PepsiCo, Inc. v. Redmond, 54 F.3d 1262 (7th Cir. 1995)(applying Illinois law), and flatly rejected in others (see, e.g., Schlage Lock Co. v. Whyte, 101 Cal. App. 4th 1443 (2002) (applying California law).
  55. A Court may grant an injunction, provided the order does not "prevent a person from entering into an employment relationship, and that conditions placed on such employment shall be based on evidence of threatened misappropriation and not merely on the information that the person knows...." 18 U.S.C. §1836(b)(3)(A)(i)(I).
  56. "Intent to use (ITU) forms". www.uspto.gov. Retrieved 2019-10-20.
  57. 1 2 United States Patent and Trademark Office, General Questions
  58. Considerations Relevant to Best Mode MPEP 2165.01
  59. 1 2 Klinkert, Friedrich (April 2012). The Misappropriation of Trade Secrets in Germany and U.S. Discovery Aid. MIPLC Lecture Series. p. 6. Retrieved May 6, 2012.
  60. Klinkert, Friedrich (April 2012). The Misappropriation of Trade Secrets in Germany and U.S. Discovery Aid. MIPLC Lecture Series. p. 7. Retrieved May 6, 2012.
  61. Daval, C. Joseph Ross; Kesselheim, Aaron S. (2024-07-22). "The Origins of "Confidential Commercial Information" at the FDA". JAMA. 332 (7): 533–534. doi:10.1001/jama.2024.9639. ISSN   0098-7484. PMID   39037797.
  62. 1 2 Randall Fitzgerald (2006). The Hundred Year Lie . Dutton, 2006. p.  24. ISBN   0-525-94951-8.
  63. "Nos. 10-1103, 10-1275. - DU PONT DE NEMOURS AND COMPANY v. KOLON INDUSTRIES INCORPORATED - US 4th Circuit". Caselaw.findlaw.com. Retrieved 2012-01-02.
  64. "DuPont Wins Trade Secret Case Against Kolon Industries - WILMINGTON, Del., Sept. 14, 2011 /PRNewswire/" (Press release). Delaware: Prnewswire.com. Retrieved 2012-01-02.
  65. "USDOJ: Antitrust Division : E.I. du Pont de Nemours and Co. v. Kolon Indus., Inc". Justice.gov. 2010-05-04. Retrieved 2012-02-12.
  66. Archived April 15, 2014, at the Wayback Machine

Further reading