Trade secret as part of your IP Portfolio

Trade secrets are an important part of an Intellectual Property portfolio. They allow organizations to protect their secret formulas, know-how, and other valuable information. Trade secrets are not registered with any government administrative body, and there are no payments owed to the government to retain trade secret rights. The protection has no time limit and can be used indefinitely as long as it is kept secret.

What are trade secrets?

A trade secret is confidential information that gives your company a competitive advantage and is kept secret from the public. A trade secret is powerful Intellectual property protection. Well-known instances of trade secrets are the search algorithm of Google, recipe by Kentucky Fried Chicken, and Coca-Cola. 

A trade secret owner cannot prevent others from exploiting the same technical or commercial information if they independently acquired or produced it through their R&D, reverse engineering, marketing analysis, or other means. Trade secrets, unlike patents, are not made public and so do not give "defensive" protection as prior art. For example, if a trade secret protects a specific composition, someone else can obtain a patent on the same idea if the inventor came up with it independently.

What are the various types of information that can be protected from trade secrets?

1. Technical information such as manufacturing process, drawings, and design of computer program
2. Commercial information such as advertising strategies, client list
3. Financial information
4. Formulas
5. Source code
6. Recipes
7. Combination of elements

What are best practices to maintain trade secrets?

A trade secret is less expensive as compared to other forms of intellectual property rights. Taking extreme measures to ensure the security of your confidential information is one of the finest ways to protect trade secrets. That is, everything that is confidential should be marked as such. Not only physical papers, but also emails, brochures, and anything else that contains sensitive information that gives a business a competitive edge should be designated confidential and preserved in secure locations. Employees, vendors, and business partners should all understand the value of secrecy and be obligated by it.

Another way is by signing the non-disclosure agreement between the parties. A non-disclosure agreement is an agreement between the parties that permits the transfer of confidential information while prohibiting the recipient from exposing the information to others.

Another possibility is to sign a non-compete agreement with your current employment. As a result of their employment, employees have access to confidential information. When an employee quits a firm, a non-compete agreement essentially prohibits them from working for a competitor for a defined period of time.

What are the eligibility criteria for trade secret protection?

According to Article 39 of the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS Agreement), trade secrets must meet the following criteria: 

1. The total confidentiality of the information is required.
2. Because it is a trade secret, it must have commercial value.
3. A small number of people must be aware of it.
4. To maintain the secret, reasonable measures such as a non-disclosure agreement or a non-compete agreement must be taken.

Are trade secrets better than Patents?

Patents and trade secrets are considered as two sides of the same coin. They are alternative means of protecting inventions.

Benefits of trade secrets over patent:

1. In the case of acquiring a patent, the invention must meet patentability criteria, which means the invention must be novel, inventive, and have industrial applicability. If an innovation does not meet the patentability requirements, it may be protected as a trade secret.  
2. There is no time limit restriction on trade secret protection. It can go on indefinitely as long as the secret is kept hidden from the public while a patent is valid for 20 years.
3. There is no registration cost required in trade secrets protection.
4. The impact of a trade secret is immediate. 
5. There are no formalities or public disclosure requirements for trade secret protection.

How can we protect Trade Secrets in India?

According to Article 39, member countries shall ensure that natural and legal people have the "possibility" of preventing information under their control from being revealed, acquired, or used by others without their agreement in a manner that is not consistent with fair trade practices. It can be deduced that the "possibility" referred to here means that trade secrets should be protected inside the legal system.

Trade secrets cannot be deemed IP rights, according to the 1989 General Agreement on Tariffs and Trade discussion paper on India, because the essential basis of an IP right is its revelation, publishing, and registration, but trade secrets are based on secrecy and confidentiality. The document goes on to say that, rather than IP law, contractual responsibilities and applicable civil law rules should regulate the observance and enforcement of secrecy and confidentiality.

India enacted the National IP Rights Policy on May 12, 2016, which has seven goals. One of these goals is to ensure that an adequate legal and legislative framework for the protection of intellectual property rights is in place. Identification of relevant topics of study and research for future policy formulation is one of the measures to be taken toward accomplishing this goal; one such subject identified was the protection of trade secrets.

India's delegates emphasized that India safeguards trade secrets using a common law system and reiterated the country's commitment to strong trade secret protection in a discussion paper on IP rights at the subsequent US-India Trade Policy Forum held on October 20 2016 in New Delhi. It was agreed that a toolbox for industry, particularly small and medium-sized businesses, would be developed to highlight applicable laws and policies that might help businesses safeguard their trade secrets in India. 

In conclusion, a trade secret is confidential information that provides a competitive advantage to a corporation as long as it is kept secret. It can be a very cost-effective form of intellectual property, and given its ability to help you corner the market, it's often a better option than obtaining patent protection. But, the trade secret is no longer protected by law if someone comes up with an identical idea on their own. The possessor of a trade secret is not protected from reverse engineering by the general public or a competitor under trade secret law.