Confidential Information and Trade Secrets

A Trade Secret is some information or ‘secret’ that is important to the business and is not known to the public. It is a term commonly used to cover information that has commercial value. The law on ‘trade secrets’ is really about the protection of Confidential Information.

The law protects this information as a secret from everyone except certain key people in the company. Therefore, legal action can be taken against someone who reveals this secret information to others, especially when he is aware that it is a secret.

There are no registration procedures, and there is no specified time limit within which the secret may be protected. When a trade secret is leaked out, this breach of confidence (that is, the breaking of the promise of keeping the secret) is an action that may be taken in court, as this leak of the secret is unfair to the company, and may have harmful consequences.

However, not all information can be considered a trade secret. To determine if there is a breach of confidence, the Court will consider whether:

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the information was confidential (secret) to the company;
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the information was let out in a situation in breach of a promise of confidence or secrecy; and/or
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the information was used in an improper way that has resulted in financial damage to the company.

Maintaining Confidentiality

The best way of protecting confidential information is to make sure that no one else knows the information. This can be done by including specific terms in private agreements and contracts between the owner of the information, the company, and anyone to whom the information is disclosed to ensure that they keep the information confidential.

Here are some ways of protecting the confidentiality of information:

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the information was confidential (secret) to the company;only allow certain people to access such confidential information;
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have employees sign contracts called non-disclosure agreements, which provide that they have to maintain confidential, specific information that is disclosed to them;
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have non-disclosure agreements signed by anyone else who comes in contact with the company, such as consultants or vendors, and who have the chance to learn about the confidential information; and/or
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keep a clear record of all business deals that may cover any confidential information.

These are some common (and non-exhaustive) practices in businesses today, which may be followed in order to protect confidential information.

Please seek professional advice on protecting your trade secrets and confidential information.

Patents & Confidential Information

Generally, it is not possible to maintain a patent and ensure non-disclosure of confidential information for the same invention. Under patent law, the owner of the invention obtains a twenty-year monopoly to exclude others from making, using or selling the invention without his consent. In return, the owner makes a full disclosure of the invention for the world to know. Thus details on/about a patented invention can never be kept confidential.

Copyright & Confidential Information

Confidential information with copyrightable material will be protected by both copyright and law regarding confidential information. One such example is a computer software program. With inherent copyright protection for the software program, the owner may commercialise the software product while maintaining confidentiality of the underlying architecture, algorithms and source code.

International Protection

Protection of confidential information varies from country to country. However it is a clear principle acknowledged under the WTO TRIPS (Trade-Related Aspects of Intellectual Property Rights) agreement (Art 39). In some countries, trade secrets are protected under separate laws governing information disclosure (certain US states have legislation defining and regulating use of trade secrets). There are also laws in the EU and US that govern data protection and privacy.