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A trade secret is a formula, practice, process, design, instrument, pattern, or compilation of information which is not generally known or reasonably ascertainable, by which a business can obtain an economic advantage over competitors or customers. Intellectual property ( IP) is a legal field that refers to creations of the mind such as musical literary and artistic works inventions and symbols names Copyright is a legal concept enacted by Governments, giving the creator of an original work of authorship Exclusive rights to control its distribution usually for A patent is a set of Exclusive rights granted by a State to an inventor or his assignee for a fixed period of time in exchange for a disclosure of an A trademark or trade mark, represented by the symbols ™ and ®, or mark is a distinctive sign or indicator used by an individual Industrial design rights are Intellectual property rights that protect the visual design of objects that are not purely utilitarian A utility model is an Intellectual property right to protect Inventions This right is available in a number of national Legislations such as Argentina A geographical indication (GI is a name or sign used on certain products which corresponds to a specific geographical location or origin (eg Related rights is a term in Copyright law used in opposition to the term " Authors' rights " A trade name, also known as a trading name or a business name, is the name which a Business trades under for commercial purposes although its registered In Computer networking, a domain name is a name given to a collection of network devices that belong to a domain which is an administrative space managed according Sui generis (English pronunciation ( IPA) /ˌsuːiˈdʒɛnərɪs/ roughly "SOO-ee JEN-a-ris" Latin pronunciation /ˌsuːiˈgeneris/ is a Neo-Latin In European Union law, a database right is a legal right introduced in 1996. A mask work is a two or three-dimensional layout or topography of an Integrated circuit (IC or "chip" i Plant breeders' rights (PBR also known as plant variety rights (PVR are Intellectual property rights granted to the breeder of a new variety In European Union member countries a supplementary protection certificate (SPC is a Sui generis, Patent -like Intellectual property Indigenous intellectual property is an umbrella legal term used in national and international forums to identify Indigenous peoples ' special rights to claim (from within Critics of the term " Intellectual property " argue that the increased use of this terminology coincided with a more general shift away from thinking about things like copyright In Mathematics and in the Sciences a formula (plural formulae, formulæ or formulas) is a concise way of expressing information Design is used both as a Noun and a Verb. The term is often tied to the various Applied arts and Engineering (See design disciplines Legal instrument is a legal Term of art that is used for any written legal document such as a Certificate, a Deed, a will A pattern, from the French patron, is a theme of recurring events or objects sometimes referred to as elements of a set Information as a concept has a diversity of meanings from everyday usage to technical settings A business (also called firm or an enterprise) is a legally recognized organizational entity designed to provide goods and/or services to In some jurisdictions, such secrets are referred to as "confidential information" or "classified information". In Law, jurisdiction (from the Latin ius iuris meaning "law" and dicere meaning "to speak" is the practical Authority
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Definition
The precise language by which a trade secret is defined varies by jurisdiction (as do the particular types of information that are subject to trade secret protection). However, there are three factors that (though subject to differing interpretations) are common to all such definitions: a trade secret is some sort of information that:
- is not generally known to the relevant portion of the public;
- confers some sort of economic benefit on its holder (where this benefit must derive specifically from its not being generally known, not just from the value of the information itself);
- is the subject of reasonable efforts to maintain its secrecy.
Protection
A company can protect its confidential information through non-compete non-disclosure contracts with its employees (within the constraints of employment law, including only restraint that is reasonable in geographic and time scope). The law of protection of confidential information effectively allows a perpetual monopoly in secret information - it does not expire as would a patent. A patent is a set of Exclusive rights granted by a State to an inventor or his assignee for a fixed period of time in exchange for a disclosure of an The lack of formal protection, however, means that a third party is not prevented from independently duplicating and using the secret information once it is discovered.
The sanctioned protection of such type of information from public disclosure is viewed as an important legal aspect by which a society protects its overall economic vitality. A company typically invests time and energy (work) into generating information regarding refinements of process and operation. If competitors had access to the same knowledge, the first company's ability to survive or maintain its market dominance would be impaired. Market dominance is a measure of the strength of a Brand, product, service, or firm, relative to competitive offerings Where trade secrets are recognized, the creator of knowledge regarded as a "trade secret" is entitled to regard such "special knowledge" as intellectual property. Intellectual property ( IP) is a legal field that refers to creations of the mind such as musical literary and artistic works inventions and symbols names
Trade secrets are not protected by law in the same manner as trademarks or patents. A trademark or trade mark, represented by the symbols ™ and ®, or mark is a distinctive sign or indicator used by an individual A patent is a set of Exclusive rights granted by a State to an inventor or his assignee for a fixed period of time in exchange for a disclosure of an Specifically, both trademarks and patents are protected under Federal statutes, the Lanham Act and Patent Act, respectively. Trade secrets arise out of state laws. Most states have adopted the Uniform Trade Secrets Act (UTSA). The Uniform Trade Secrets Act (UTSA is a Model law drafted by the National Conference of Commissioners on Uniform State Laws to better define rights and remedies Only Massachusetts, New York, New Jersey, North Carolina, and Texas have not adopted the UTSA. One of the most significant differences between patents and trademarks and trade secrets is that a trade secret is only protected when the secret is not disclosed.
Comparison with trademarks
To acquire rights in a trademark under U. S. law, one must simply use the mark "in commerce. "[1] It is possible to register a trademark in the U. S. , both at the federal and state levels. (Registration of trademarks confers some advantages, including stronger protection in certain respects, but it is not required in order to get protection. )[1] Registration may be required in order to file a lawsuit for trademark infringement, however. Other nations have different trademark policies and this information may not apply to them. Assuming the mark in question meets certain other standards of protectibility, it is protected from infringement on the grounds that other uses might confuse consumers as to the origin or nature of the goods once the mark has been associated with a particular supplier. (Similar considerations apply to service marks and trade dress. In some countries notably the United States, a Trademark used to identify a service rather than a product is called a service mark or servicemark Trade dress refers to characteristics of the visual appearance of a product or its packaging (or even the facade of a building such as a restaurant that may be registered and protected ) By definition, a trademark enjoys no protection (qua trademark) until and unless it is "disclosed" to consumers, for only then are consumers able to associate it with a supplier or source in the requisite manner. (That a company plans to use a certain trademark might itself be protectible as a trade secret, however, until the mark is actually made public. )
Comparison with patents
To acquire a patent, full information about the method or product has to be supplied to the patent bureau and upon publication or issuance, will then be available to all. After expiration of the patent, competitors can copy the method or product legally. The temporary monopoly on the subject matter of the patent is regarded as a quid pro quo for thus disclosing the information to the public. In Economics, a monopoly (from Greek monos, alone or single + polein, to sell exists when a specific individual or enterprise has sufficient Quid pro quo ( Latin for "something for something") indicates a more-or-less equal exchange or substitution of goods or services
Protecting trade secrets
Trade secrets are by definition not disclosed to the world at large. Instead, owners of trade secrets seek to keep their special knowledge out of the hands of competitors through a variety of civil and commercial means, not the least of which is the employment of non-disclosure agreements (NDA) and non-compete clauses. A non-disclosure agreement (NDA also known as a confidentiality agreement, confidential disclosure agreement (CDA proprietary information agreement A non-compete clause or covenant not to compete ( CNC) is a term used in Contract law under which one party (usually an employee agrees to not pursue In exchange for the opportunity to be employed by the holder of secrets, a worker will sign an agreement not to reveal his prospective employer's proprietary information. Often, he will also sign over rights to the ownership of his own intellectual production during the course (or as a condition) of his employment. Violation of the agreement generally carries stiff financial penalties, agreed to in writing by the worker and designed to operate as a disincentive to going back on his word. Similar agreements are often signed by representatives of other companies with whom the trade secret holder is engaged, e. g. in licensing talks or other business negotiations.
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, for example, twenty years in the U. S. Coca-Cola, the most famous trade secret example, has no patent for its formula and has been very effective in protecting it for many more years than a patent would have. Coca-Cola is a carbonated Soft drink sold in stores restaurants and Vending machines in more than 200 countries In fact, Coca-Cola refused to reveal its trade secret under at least two judges' orders. [2] However, the "down side" of such protection is that it is comparatively easy to lose (for example, to reverse engineering, which a patent will withstand but a trade secret will not) and comes equipped with no minimum guaranteed period of years. Reverse engineering (RE is the process of discovering the technological principles of a device object or system through analysis of its structure function and operation
Historically, trade secrets have existed since early times in the form of keeping advanced military technology from one's enemies, and in more recent times, in keeping Industrial Revolution-era technology secret. The Industrial Revolution was a period in the late 18th and early 19th centuries when major changes in agriculture manufacturing and transportation had a profound effect on the
Discovering trade secrets
Companies often try to discover one another's trade secrets through lawful methods of reverse engineering on one hand and less lawful methods of industrial espionage on the other. Reverse engineering (RE is the process of discovering the technological principles of a device object or system through analysis of its structure function and operation Industrial espionage or corporate espionage is Espionage conducted for commercial purposes instead of National security purposes Acts of industrial espionage are generally illegal in their own right under the relevant governing laws. The importance of that illegality to trade secret law is as follows: if a trade secret is acquired by improper means (a somewhat wider concept than "illegal means" but inclusive of such means), the secret is generally deemed to have been misappropriated. Thus if a trade secret has been acquired via industrial espionage, its acquirer will probably be subject to legal liability for acquiring it improperly. (The holder of the trade secret is nevertheless obliged to protect against such espionage to some degree in order to safeguard the secret. As noted above, under most trade secret regimes, a trade secret is not deemed to exist unless its purported holder takes reasonable steps to maintain its secrecy. )
Legal development to protecting trade secrets
A relatively recent development in the USA is the adoption of the UTSA, the Uniform Trade Secrets Act, which has been adopted by approximately 45 states as the basis for trade secret law. The Uniform Trade Secrets Act (UTSA is a Model law drafted by the National Conference of Commissioners on Uniform State Laws to better define rights and remedies It is believed that a measure of uniformity among different states' laws will strengthen business' claims on their trade secrets.
Another significant development in U. S. law is the Economic Espionage Act of 1996 (), which makes the theft or misappropriation of a trade secret a federal crime. The Economic Espionage Act of 1996 ( makes the theft or misappropriation of a Trade secret a Federal crime. Title 18 of the United States Code is the Criminal and Penal code of the Federal government of the United States. This law contains two provisions criminalizing two sorts of activity. The first, , criminalizes the theft of trade secrets to benefit foreign powers; the second, , criminalizes their theft for commercial or economic purposes. Title 18 of the United States Code is the Criminal and Penal code of the Federal government of the United States. Title 18 of the United States Code is the Criminal and Penal code of the Federal government of the United States. (The statutory penalties are different for the two offenses. )
In Commonwealth common law jurisdictions, confidentiality and trade secrets are regarded as an equitable right rather than a property right (with the exception of Hong Kong where a judgment of the High Court indicates that confidential information may be a property right). Common law refers to law and the corresponding legal system developed through decisions of courts and similar tribunals rather than through legislative statutes or executive Equity is the name given to the set of legal principles in jurisdictions following the English common law tradition which supplement strict rules of law where Property is any physical or virtual entity that is owned by an individual Hong Kong ( officially the Hong Kong Special Administrative Region, is a territory located on China 's south coast on the Pearl River Delta, and borders The Court of Appeal of England and Wales in the case of Saltman Engineering Co Ltd v. The Court of Appeal of England and Wales is the second most senior court in the English legal system, with only the Appellate Committee of the House of Lords above Campbell Engineering Ltd, (1948) 65 P. R. C. 203 held that the action for breach of confidence is based on a principle of preserving "good faith".
The test for a cause of action for breach of confidence in the common law world is set out in the case of Coco v. A. N. Clark (Engineers) Ltd, (1969) R. P. C. 41 at 47:
- the information itself must have the necessary quality of confidence about it;
- that information must have been imparted in circumstances imparting an obligation of confidence;
- there must be an unauthorized use of that information to the detriment of the party communicating it.
The "quality of confidence" highlights that trade secrets are a legal concept. With sufficient effort or through illegal acts (such as break and enter), competitors can usually obtain trade secrets. However, 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 illegally. It is for this reason that trade secret owners shred documents and do not simply recycle them.
A successful plaintiff is entitled to various forms of judicial relief, including:
- an injunction
- an account of profits or an award of damages
- a declaration
Notes
- ^ a b United States Patent and Trademark Office, General Questions
- ^ For God, Country & Coca-Cola, by Mark Pendergrast, 2nd Ed. A legal remedy (also judicial relief) is the means a Court of law, usually in the exercise of civil law jurisdiction enforces a Right, imposes An injunction is an Equitable remedy in the form of a Court order, whereby a party is required to do or interact with in certain ways all right or to refrain from An account of profits (sometimes referred to as an accounting for profits or simply an accounting) is a type of Equitable remedy most In Law, damages refers to the money paid or awarded to a Claimant (England Pursuer (Scotland or Plaintiff (US following a successful In law a declaration ordinarily refers to a Judgment of the court or an award of an arbitration tribunal is a binding adjudication of the rights or other legal relations , Basic Books 2000, p. 456
See also
External links
- Trade Secret Law by Eugene R. Quinn, Jr. (IPWatchdog).
- International Aspects of Trade Secrets Law by Karen A. Magri.
Dictionary
trade secret
-noun
- A formula, practice, process, design, instrument, pattern, or compilation of information used by a business to obtain an advantage over competitors within the same industry or profession
- A formula, practice, device, idea, process, design, instrument, pattern, or compilation of information which is not patented and which is used by the owner to obtain an advantage over competitor within the marketplace and is treated in a way that can reasonably be expected to prevent the public or competitors from learning about it except when there is improper access, eavesdropping, data acquisition or theft (where the countrys law recognises theft) of that trade secret and where the implementation of the trade secret does not allow reverse engineering.
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