You are on page 1of 3

1) CAN TRADE SECRETS BE REGISTERED WITH THE IPO?

Trade secrets also are most of the time considered as the fourth
type of intellectual property, in addition to patents, trademarks, and
copyrights. It can be registered with the IPO generally as a patent; except
those which are not patentable under the Intellectual Property Code of
the Philippines.

Trade secrets consist of information and can include a formula,


pattern, compilation, program, device, method, technique or process. To
meet the most common definition of a trade secret, it must be used in
business, and give an opportunity to obtain an economic advantage over
competitors who do not know or use it. There are, however, some
conditions for the information to be considered a trade secret.
Compliance with such conditions may turn out to be more difficult and
costly than it would appear at first glance. While these conditions vary
from country to country, some general standards exist which are referred
to in Art. 39 of the Agreement on Trade-Related Aspects of Intellectual
Property Rights (TRIPS Agreement):

 The information must be secret (i.e. it is not generally known


among, or readily accessible to, circles that normally deal
with the kind of information in question).
 It must have commercial value because it is a secret.
 It must have been subject to reasonable steps by the rightful
holder of the information to keep it secret (e.g., through
confidentiality agreements).1

Trade secret protection is a complement to patent protection.


Patents require the inventor to provide a detailed and enabling disclosure
about the invention in exchange for the right to exclude others from
practicing the invention for a limited period of time. Patents do expire,
and when that happens the information contained within is no longer
protected. However, unlike trade secrets, patents may protect against
independent discovery. Patent protection also eliminates the need to
maintain secrecy. While most anything can be kept secret, there are
limitations on what can be protected by a patent. If a given invention is
eligible for either patent or trade secret protection, then the decision on
how to protect that invention depends on business considerations and
weighing of the relative benefits of each type of intellectual property.

1World Intellectual Property Organization. How are Trade Secrets Protected. Retrieved from
http://www.wipo.int/sme/en/ip_business/trade_secrets/protection.htm.
Trade secrets are essentially of two kinds. On the one hand, trade
secrets may concern inventions or manufacturing processes that do not
meet the patentability criteria and therefore can only be protected as
trade secrets. This would be the case of customers lists or manufacturing
processes that are not sufficiently inventive to be granted a patent
(though they may qualify for protection as a utility model). On the other
hand, trade secrets may concern inventions that would fulfill the
patentability criteria and could therefore be protected by patents. If the
secret is embodied in an innovative product, others may be able to
inspect it, dissect it and analyze it (i.e. "reverse engineer" it) and discover
the secret and be thereafter entitled to use it. Trade secret protection of
an invention in fact does not provide the exclusive right to exclude third
parties from making commercial use of it. Only patents and utility
models can provide this type of protection. So there is a choice: to patent
the invention or to keep it as a trade secret.2

2) CAN THERE BE INFRINGEMENT OF TRADE SECRETS?

Broadly speaking, any confidential business information which


provides an enterprise a competitive edge may be considered a trade
secret. Trade secrets encompass manufacturing or industrial secrets and
commercial secrets. The unauthorized use of such information by
persons other than the holder is regarded as an unfair practice and a
violation of the trade secret. Depending on the legal system, the
protection of trade secrets forms part of the general concept of protection
against unfair competition or is based on specific provisions or case law
on the protection of confidential information.3

Courts can protect trade secrets by enjoining misappropriation,


ordering parties that have misappropriated a trade secret to take steps to
maintain its secrecy, as well as ordering payment of a royalty to the
owner. Courts can also award damages, court costs, and reasonable
attorneys' fees. This protection is very limited because a trade secret
holder is only protected from unauthorized disclosure and use which is
referred to as misappropriation.

A trade secret is protected even it is not patentable. It is covered by


the proprietary rights of the owner of the trade secret and the said owner

2World Intellectual Property Organization. Patents or Trade Secrets. Retrieved from


http://www.wipo.int/sme/en/ip_business/trade_secrets/patent_trade.htm.

3 Ibid.
cannot be compelled to disclose its trade secret. Courts cannot generally
issue an injunction to compel such disclosure. 4

If a trade secret holder fails to maintain secrecy or if the


information is independently discovered, becomes released or otherwise
becomes generally known, protection as a trade secret is lost. Trade
secrets do not expire so protection continues until discovery or loss.

3) CAN TRADE SECRETS BE SUBJECT TO VALUATION? HOW?

Trade secrets are an important, but invisible component of a


company's intellectual property (IP). Their contribution to a company's
value, measured as its market capitalization, can be major. Being
invisible, that contribution is hard to measure. Patents are a visible
contribution, but delayed, and unsuitable for internal innovations.

Trade secrets, aside from registration, may be protected through


confidential agreements. Industry partners may sign the Non-disclosure
and Confidentiality Agreement. Employees also may sign the Intellectual
Property Agreement for projects that require trade secrets.

4 Air Philippines Corporation vs, Pennswell Inc. G.R. No. 172835,December 13, 2007.