Trade Secrets

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Trade secret points towards a formula, pattern, any instrument, design which is kept confidential and through which any business or trade can edge over its rival and can enjoy economic gain. Trade secrets can be anything from a chemical compound, manufacturing process, design or preserving materials or even a list of consumers or clients. It is also known as "confidential information" or "classified information". To be safeguarded under trade secrets, the matter should be 'secret'. Though the definition of trade secret is variable as per the jurisdiction but there are following elements that are found to be same -

• is not known by the public.
• provides some financial sort of gain to its holder.
• involves reasonable efforts from the holder side for maintaining secrecy.
• importance of data or information to him or for his rivals.
• the ease by which information could be learned or duplicated by others.

Any enterprise or an organization can safeguard its confidential data or information by entering into non disclosure agreement with its employees. Such law of protecting confidential matters offers monopoly in respect of any secret data and information. Trade secrets offer protection for an indefinite time period. Unlike patent it does not expire.

Every company invests its time and resources into discovering information regarding refinement of its various activities and operations. If other company will be allowed to use the same knowledge then the chance of first company survival and dominance into the industrial arena would be vitiated. When trade secrets are recognized then the inventor of such knowledge is entitled to consider that as part of the intellectual property.

Unlike of patent, copyright, there is no particular international treaty(s) for trade secrets. Moreover there is no global law for standardizing definition of trade secrets. Trade secrets are gaining recognition year by year in throughout the world. It has been said that the major technologies in the world are protected under the head of trade secret instead of patent. The 'North American Free Trade Agreement' (NAFTA) and the agreement on 'Trade Related Aspects of Intellectual Property' (TRIPs) ratified during the Uruguay round of the 'General Agreement on Tariffs and Trade' (GATT) have there specific provisions which point towards increase in the protection granted to trade secrets. Furthermore there has been a rising trend particularly in Asian nations of using the domestic statues which direct towards trade secrets protection.

Trade Secrets Protection

Trade secrets are kept secret and thus not disclosed to the public at large. The owner or creator takes concurrent steps and prevent his knowledge from slipping out his hands to its rival side. In exchange of getting the chance to be appointed by the holder of trade secrets, a worker will ready to sign a contract not to disclose any material information and data of his employer. Any negligence or violation of the same will means an imposition of financial penalties. Other business associates or companies with whom the inventor is engaged are often signed a same contract and any negligence will lead to fine or penalties.

If any company by unlawful means try to find out trade secrets of other company then he will be held legally responsible under that country's act in which it has been happened. If trade secret has been obtained via industrial espionage, then it will be called illegal and the person or company involved in it shall be found guilty for legal liability.

Trade Secrets Infringement

Misappropriate use of trade secrets can be called an unfair practice. The Uniform Trade Secrets Act of the USA defines misappropriation as -

• Acquiring trade secrets related of other by a person who has strong belief or reason that it was acquired by wrongfully doings.


• Disclosing or using trade secrets of other person without any implied consent of its owner.

As per the Uniform Trade Secrets Act 'improper means' include "theft, bribery, misrepresentation, breach or inducement of a breach of duty to maintain secrecy, or espionage through electronic or other means."

Tips for safeguarding Trade Secrets

• Put a sign or any mark on various computer files and documents related to trade secrets which you are intended to keep confidential.


• Allow the accessibility of trade secrets only to those people who have authentic reason to know the information. The reason should be material and benefits you in business.


• Make it obligatory for everyone using trade secret to sign a non disclosure agreement. It should describe every minute detail about trade secret applicability like how the person will use trade secret, what will happen if he will pass over this agreement etc.


• All employees should consider trade secrets as confidential data or information even if he is unaware about the trade secret.


• Always keep your trade secret in a private and restricted zone.

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Posted in: TRADE SECRETS