Information considered a trade secret gives the company a competitive advantage over its competitors and is often a product of internal research and development. 

What qualifies as a trade secret?

Any trade secret must fulfil following conditions

• It should commercially valuable because it is secret or it's secrecy provides an economic benefit to their holder.
• It should only be known to a limited group of persons.
• Reasonable steps should be taken by the rightful holder of the information to keep it secret, including the use of confidentiality agreements for business partners and employees.

The unauthorized acquisition, use or disclosure of such secret information by others is regarded as an unfair practice and a violation of the trade secret protection.

What kind of information is protected by trade secrets?

Trade secrets encompass both technical information, such as information concerning manufacturing processes, pharmaceutical test data, designs and drawings of computer programs, pattern, design, formula, recipe, method, financial and commercial information, such as distribution methods, list of suppliers and clients, and advertising strategies.

A trade secret owner, however, cannot stop others from using the same technical or commercial information, if they acquired or developed such information independently by themselves through their own R&D, reverse engineering or marketing analysis, etc.

For example, if a specific process of producing Compound X has been protected by a trade secret, someone else can also obtain a patent or a utility model on the same invention, if the inventor arrived at that invention independently.

How can a trade secret be protected?

Companies should take preventive measures to protect trade secrets against theft or misappropriation through various measures such as

• Non-disclosure agreement (NDA): employees and business partners should sign a non-disclosure agreement that prevent them from disclosing a company’s confidential information.
• Non-compete agreement (NCA): employers should ask employees, contractors and consultants to sign a non-compete agreement to prevent them from entering in competition when their employment/service agreement ends.
• Robust IT security infrastructure
• Controlling the accessibility of important documents

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