Trade secrets and Intellectual Property
What are the aspects about your enterprise that gives you the competitive edge? Can you identify confidential business information that would compromise your position in the market if everyone knew? If so, then you probably have trade secrets that encompass manufacturing or industrial and commercial secrets. What's more important is that their unauthorised use by anyone other than the holder is regarded as unfair practice and a violation of the trade secret.
According to the World Intellectual Property Organisation, "The subject matter of trade secrets is usually defined in broad terms and includes sales methods, distribution methods, consumer profiles, advertising strategies, lists of suppliers and clients, and manufacturing processes. While a final determination of what information constitutes a trade secret will depend on the circumstances of each individual case, clearly unfair practices in respect of secret information include industrial or commercial espionage, breach of contract and breach of confidence."
A recent directive on trade secrets by the European Commission focuses on the protection of undisclosed know-how and business information against their unlawful acquisition, use and disclosure. In a fascinating seminar recently this could, according to Jonathan Cornthwaite of Wedlake Bell, be a real boon to SMEs and a ground-breaking initiative. Why, because unlike most other types of intellectual property rights, breach of confidence (of trade secrets) is not subject of any specific legislation and so there is uncertainty. The benefits of the directive (in draft at the moment) will mean that existing laws will have legislative certainty and it should help to raise the importance of the protection of business confidences.
SME tips and guidelines on trade secrets
Assess whether your design is protected by formal IP rights. The most common are copyright, trademarks, design right and patents. If so, register or, in the case of copyright, which arises automatically, make sure this is signed and dated.
Ensure that there are provisions in your organisation that as few people as possible know about your trade secret and that all that do are aware that it's confidential information.
Have a look at your employment contracts and check whether there's a clause about maintaining confidentiality for a period of time, even after the employee has left your company. Know-how is hard to gain and easy to share if not protected by agreements. Never underestimate the strength of signing a confidentiality agreement with business partners whenever you are discussing or disclosing confidential information. Sadly, relationships do go wrong and, if they do, it's much easier to seek legal redress if you can rely on the small print.
Trade secret protection is not limited to time unlike other intellectual property rights and so a trade secret can continue indefinitely as long as it's not revealed to the public. Look at the recipe for Coca Cola, probably one of the best-kept secrets! Also, there are no registration costs involved and trade secrets have immediate effect. There are no formalities such as disclosure to any Government authority.
Make prevention of theft of trade secrets a priority. Once a trade secret is disclosed, whilst litigation is available, the damage has usually been done.
Do you have a protocol or guidelines on trade secrets within your company? Importance on what can and can't be disclosed is key. Always ensure that sensitive documents are stored securely or, if they are no longer required, disposed of by specialist companies.
Never underestimate the value of your sales lists and data and put in place measures that will safeguard their confidentiality.
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