Trade secrets

 

A trade secret is a form of intellectual property that allows a business to obtain an economic advantage over its competitors using classified information.

A company typically invests money, time and energy into generating this information and it is often vital to the survival of the business. Generally, this is information that is not available to the public.

What is a trade secret?

Confidential information, regardless of the subject matter, can include all kinds of:

  • Technical
  • Commercial
  • Personal (private) information

However the key point is that the information must be secret and not accessible to the general public. If the information were to be so accessible, or ‘in the public domain’, the information cannot be regarded as confidential.

Confidential information must be of some importance as the courts will not tend to want to protect frivolous matters. Importantly, ideas can be protected as confidential information, whereas they would not be able to be protected under copyright law.

How does trade secret protection work?

Trade secret protection can, in principle, extend indefinitely, and in this may offer an advantage over patent protection, which lasts only for a specifically limited period of time.

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 in an illegal fashion.

Due to its unique nature, trade secrets are not subject to the same protection as most other types of intellectual property, particularly once it has been released into the public domain.

Therefore, trade secrets are normally protected through non-compete and non-disclosure contracts with employees in exchange for the opportunity to be employed by the holder of the secret.

Infringement of protection

Even if non-disclosure agreements were not in place, it may still be possible to prevent a third party making use of information that was clearly confidential. 

The legal test for breach of confidence is as follows:

  • The information must have the necessary quality of confidence
  • The information must have been imparted in circumstances importing a duty of confidence
  • There must have been an unauthorised use of the information to the detriment of the party communicating it

If the court decides the above requirements are met, it may be possible to obtain an injunction preventing the other side from using the information, and to seek damages for any loss the misuse of the information has caused.

Violation of the agreement generally carries the possibility of stiff financial penalties. Similar agreements are often signed by other companies with whom the trade secret holder is engaged.

Potential remedies for someone who has had their trade secrets stolen include an injunction or an account of profits or award of damages. It is always best to seek legal advice on the most effective remedy for your case, before irreversible business damage is done.

Do you have a dispute surrounding the release of a trade secret by an ex-employee? Are you looking to draw up a new employment contract, strengthening your non-compete clauses? Contact Law can put you in touch with an intellectual property solicitor to suit the requirements of your case. Please call us on 0800 1777 162 or complete the web-form above.

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