Trade secrets represent an important resource with which small and medium-sized enterprises (SMEs) can protect their competitive advantages.
Trade secrets can be useful, for example:
- when the innovation does not qualify or is not mature enough to be protected by means of a patent or another registered intellectual property right;
- when the patent system is inadequate (e.g. in case the invention should not be disclosed);
- to complete an intellectual property portfolio consisting of patents, designs, trademarks, plant varieties, etc.
The concept of trade secret is broad and it can include many types of information, for example:
- know-how and what not to do (the “negative know-how”);
- chemical formulae, manufacturing processes;
- technological innovations;
- the best mode of patented inventions;
- business methods;
- consulting tools;
- business information about customers or companies, marketing strategies, etc.
The protection granted by the trade secret can be considered broader compared to a patent, with the former potentially covering any information valuable to a company, even if it is not a technical invention or being used. In order to be protected, trade secrets cannot consist of “general knowledge” and must meet certain requirements:
- The information must be “secret” and difficult to access. Therefore, it is not possible to protect information that is generally used and/or known by operators in a given sector.
- The value of the information is to be found precisely in its secrecy and, for that very reason,
- all necessary measures must be taken to preserve the secrecy of such information.
In the case of unfair practices, and in order to ensure effective protection in court, it is advisable to adopt appropriate policies and measures to protect the confidentiality of the valuable information concerned (confidentiality contracts or NDAs, access controls, etc.).
It should be borne in mind, however, that trade secrets do not confer exclusivity: the legitimate owner of confidential information may not bring any action against third parties who discover the secret without having stolen it from him.
In theory, trade secret protection seems easier than obtaining registration of an industrial property right, since it would be enough to “be careful” and not to disclose confidential information. But in practice, keeping a trade secret can be a difficult challenge, especially in today’s environment, where stealing valuable information is becoming easier and easier thanks to the same innovations that in many other ways make our lives easier.
For example, with the practice known as spear-phishing, malicious individuals silently access a company’s computer networks to spy on it, collect valuable confidential information (passwords, documents, etc.) and provide it to “pirates” who exploit it by using or selling it.
Do you need advice on trade secret issues?
We are at your disposal to advise you, draft any legal documents you may need or defend you in trade secret-related disputes.