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Everything You Need to Know about Trade Secrets 2022

Trade Secrets Introduction

Trade secrets can be used to safeguard any economically important knowledge. Trade secrets are not the same as other forms of intellectual property rights. In exchange for protection, there is no registration procedure and, by definition, no duty to divulge the information to the public. Rather, trade secret protection comes as a result of how the secret information is handled.

The Trade Secrets Regulations 2018, governs trade secret protection in the United Kingdom. According to the Regulations, a “trade secret” is “knowledge that is secret in the sense that it is not widely recognized among, or readily available to, persons who ordinarily deal with the type of information in question.”, as a body or in the precise configuration and assembly of its components. This information has economic value because it is confidential and has been subjected to reasonable efforts to keep it confidential under the circumstances by the person lawfully in charge of the information.

Despite the fact that these rules are based on an EU directive, they will continue to apply when the UK leaves the EU. The Regulations essentially indicate that acquiring, using, or disclosing a trade secret is illegal if the acquisition, use, or disclosure results in a breach of confidence in confidential information.

More information about trade secrets’ definition is available here:

Trade Secrets: Definition, Protection, Types, and Remarkable Examples

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Importance of Trade Secrets

Trade secrets may cover anything that you want to keep hidden. In contrast, there are legal limitations on what can be protected by patents, registered designs, and copyright. Artificial intelligence (AI) is one of the most highly contested topics at the time of writing in the intellectual property field. While the UK and European Patent Offices continue to debate how AI inventions should be patented, it may be worthwhile to investigate if your AI idea may be successfully secured by maintaining it as a trade secret. A trade secret can safeguard a statement or data concatenation that might be particularly beneficial in the field of artificial intelligence.

There is also the point that, at least in principle, it’s free. The only expenses connected with maintaining a trade secret are those incurred as a result of your attempts to keep the trade secret hidden. This might just be the expense of obtaining high-quality shredders and preparing non-disclosure agreements for workers, contractors, and suppliers for most businesses. For certain companies, such as Coca-Cola, this might be the expense of storing specific papers in a bank’s vault.

Another vital advantage of trade secrets is that, if you can keep your trade secret hidden, it will survive forever. Obviously, once the cat is out of the bag, it’s quite difficult to get it back in. However, if you can keep yourself and anybody else “in the know” from spilling the beans, you will have indefinite protection for your invention.

The majority of other forms of intellectual property rights include a term restriction. Copyright protection in the United Kingdom can last up to 70 years, depending on the sort of work being protected. A registered design in the United Kingdom can be protected for up to 25 years, whereas a patent grants protection for 20 years. For example, if Coca-Cola had chosen to patent its valuable recipe, the patent would have expired before World War II.

How do You Protect a Trade Secret?

Normally, there are various methods by which different kinds of intellectual property can be registered. However, the legal status of trade secrets as property is unclear; the more widely held belief is that trade secrets are not property. 

Trade secrets, on the other hand, can be protected by a breach of contract action, if a non-disclosure agreement exists or can be implied, another requirement of secrecy, a common-law action for breach of confidence, or a statutory trade secrets case. A common-law suit for breach of confidence is founded on the premise that a person cannot take undue advantage of information obtained in confidence or prejudice the person delivering the information. In both Scotland and England, this same idea holds true.

To comply, information must have the “required quality of confidence” and be “disclosed in circumstances imposing a duty of confidence” like being enforced by contract, inferred by the circumstances of disclosure, or implied by the parties’ relationship, such as employer/employee. However, there are limits to how far information may be preserved when the connection is terminated, particularly in employer/employee situations i.e., Information must be sufficiently sensitive, with extremely sensitive trade secrets potentially preserved permanently.

This is very important because we must not forget that confidential information and trade secrets can be among a company’s most valuable assets. A competitive advantage in the marketplace may rely on a company possessing information that its competitors do not. Imposing particular contractual responsibilities on intended targets is one method of keeping information confidential. Businesses must impose these duties before revealing sensitive information. Such duties should be explicit and relevant to the information in question, as well as address the reasons for releasing the information. Measures should be provided to enable for the monitoring of the recipient’s use of the information as well as the return of the information when the connection has terminated as well.

Confidentiality agreements are a vital instrument for securing a company’s information. They should not, however, be depended on alone. While such agreements should provide for a contractual right to an injunction as well as to claim damages in the event of erroneous use or dissemination of sensitive material, the compensation awarded may be too little too late if the knowledge underlying a competitive advantage has already been divulged to industry rivals.

As a result, firms should continue to limit access to sensitive information like trade secrets only to those who need to know, and should not disseminate such information publicly.

Case Study

Even though Coca-Cola is one of the most famous trade secrets in the world, we will be focusing on another huge trade secret which is not so popular; Angostura Bitters. Angostura Limited is one firm that has made a significant contribution to the Trinidad and Tobago economy by leveraging a strong intellectual property (IP) portfolio of trade secrets, trademarks, and domain names. Angostura Bitters, the company’s signature product, is created from Trinidad and Tobago-native ingredients.

Angostura has discovered that leveraging trade secrets to safeguard its product is the best approach to secure its major IP, which is approximately two hundred years old. To that end, the corporation keeps a secret that has been the foundation of its success under lock and key, guaranteeing that it does not get into the hands of competitors. For example, only five business directors are permitted to access the chamber where the ingredients for Angostura Bitters are blended. Taking such precautions has allowed the formula to remain a closely guarded secret since 1824, allowing the firm to stay competitive.

Even though the world has changed dramatically since Angostura Limited originally established their bitters’ formula, this recipe has remained unchanged for over two centuries. Angostura has been able to remain a strong competitor in an increasingly competitive market by closely guarding it as a trade secret and creating additional IP assets and strong brand identities. If the formula can be preserved in the future via the judicious use of intellectual property, it might help Angostura and the Trinidad and Tobago economy grow for years to come.

Conclusion

Businesses must have strong safeguards in place to preserve their trade secrets. There are no precise processes or safeguards that must be put in place for information to be protected as a trade secret. Trade Secrets must be subject to “reasonable precautions under the circumstances… to keep it secret,” according to the Regulations. Depending on the significance of the information, the necessary safeguards might range from labelling it as confidential to more strict safeguards. The example of Angostura is a shining case of how protecting trade secrets can lead to so much success, especially when the trade secret gives a powerful competitive edge to the company. 

In terms of mechanisms allowing the owner of trade secrets to obtain and/or maintain evidence of trade secret infringement, the Regulations indicate that the regular range of UK court measures are available in respect of Trade Secrets claims. Evidence preservation orders, computer imaging and inspection orders, search orders, and orders for document disclosure are all available means to preserve evidence.

With this much protection in place, it is hard not to think that trade secrets are one of the most important components of IP portfolios that can be very advantageous to businesses worldwide.

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