Trade secrets: Critical considerations for local & global protection

6 minute read
09 June 2020

To patent or not to patent? In the first instalment of our Life Cycle of a Smart Idea series, our global IP team examined that very question and outlined some of the alternative protections available for smart ideas.

In the second instalment, we took an in-depth look at one of those alternatives: trade secrets protection. While attractive for its seeming simplicity and efficiency, organizations should pursue this method of protection only with a full understanding of the risks involved – from sophisticated cyber security threats to complex regulatory hurdles.

Representing five key jurisdictions, our panel reviewed critical considerations for trade secrets from a global perspective, along with specific issues to consider at the local level. Below, our panellists offer their top tips on formulating a smart trade secrets strategy:

Gordon Harris, Partner, UK: Treat trade secrets just as you would treat any other intellectual property rights. There may not be a nice certificate to show what you own, but a trade secret is a piece of property to be catalogued, guarded and enforced just as much as any other right.

Jon Ball, Partner, UK: The first step is to create a trade secrets policy within your business. There are two key aspects to a trade secrets strategy:

  1. Procedures: Actions taken to secure data secrecy, such as encryption, restricted access, prohibition of private email, limitations on "bring your own" hardware and strict marking of secret documents
  2. Policies: Actions taken to preserve data secrecy, such as training, codes of conduct, employment contract provisions and non-disclosure agreements (NDAs)"

Anita Nador, Partner, Canada: A trade secrets policy should be at the heart of any organization's overall IP policy. Even if you plan to seek additional protection through a patent or design, privacy must be maintained first if novelty is to be established.

Trade secrets often need to be protected by an NDA – and getting this right is crucial. To be enforceable, a strong NDA must provide context as to why the information is secret and why it must remain so. An effective NDA should outline:

  • The information that is being treated as confidential and who owns it
  • That the information is being communicated in strict confidence
  • That any use of the information outside of the specifically defined purpose is misuse, which will be actionable

Chris Van Barr, Partner, Canada: Breach of an NDA will often be the critical cause of action against a departing employee who leaves with stolen secrets. In Canada and the US, the law may differ subtly across provinces and states – so getting good local advice is crucial.

Also, avoid sharing data in the cloud. If it is essential, use effective Secure File Transfer Protocols and share as little as possible. Disputes about trade secrets are fact-driven and can get emotional!

Yulia Yarnykh, Partner, Russia: When it comes to commercial exploitation, trade secrets may need to be shared for development and manufacturing purposes. In sharing, organizations should:

  • Release no more information than is absolutely necessary
  • Restrict physical access to the lowest number of key people
  • Set rules for the treatment of secret material in terms of reproduction, locked storage, the deletion or destruction of working papers, etc.
  • Pay close attention to IT rules, particularly when working with universities – which can be notoriously "leaky"

Ivy Liang, Director, China: In China, it is a criminal offence to acquire trade secrets by theft, threat or other improper means. Liability extends to the legal representatives of offending entities, so tread cautiously. The Chinese courts take a strong stance on trade secret enforcement, and novel remedies have been implemented in cases where secrets were stolen by individuals. For example, the courts have placed restrictions on the future employment of a person caught stealing a trade secret.

Céline Bey, Partner, France: The European Directive of June 2018 on trade secrets protection makes criminal sanctions in Europe possible. Overall, the provisions have tilted the balance in favour of trade secrets protection in Europe, with clearly defined terms and impacts on evidence seizures.

Be sure to check our Lifecycle of a Smart Idea" series for upcoming webinars. In the series, we're exploring the full range of IP rights while giving you the tips and perspectives you need to maximize opportunity and minimize risk when taking your smart idea to the global market. In our next two sessions, we'll look at patent strategies in the life sciences, technology and engineering sectors.

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