Trade Secrets

An Introduction
What are Trade Secrets?
A trade secret is any practice or process of a company that is generally not known outside of the
company. The trade secret gives the company an economic advantage over its competitors and is
often a product of internal research and development.

A company must make a reasonable effort in concealing the information from the public and the
secret must intrinsically have economic value and must some contain information. Trade secrets
are a part of a company's intellectual property. Unlike a patent, a trade secret is not publicly known.
Examples of Trade Secrets
1) The Google Search Algorithm
Google developed a search algorithm and continues to refine it. Some changes are announced but many are not.
Google continues to modify its top secret algorithm to keep businesses and people from gaming the system.

2) The KFC Secret Recipe

The secret ingredients for KFC's original recipe were originally kept in Colonel Sanders' head. He eventually wrote the
recipe down, and the original handwritten copy is in a safe in Kentucky. Only a few select employees know the recipe,
and they are bound by a confidentiality agreement.
How long does Trade Secret protection last?
● Trade Secret Protection lasts while the secret is kept confidential
● The protection also ends when the secret is disclosed to the public
Advantages of Trade Secret Protection
● Unlimited duration
● No application required
● No registration costs
● No public disclosure or registration with government agency
● Effective immediately
Disadvantages of Trade Secret Protection
● Often not an effective tool for product inventions
● Limited remedies are available
● They are not easily enforceable
● It can be patented by others
How Trade Secrets get stolen?
1. External threats

External threats include corporate spying with professional criminals targeting specific technology, initiating network hacks,
laptop computer thefts: - accessing source code, product designs, marketing plans, customer lists, approaching employees
to reveal company information etc.

Businesses strive to protect their trade secrets by enacting corporate security measures and confidentiality clauses in
employment, technology licensing, distributorship and joint venture agreement.

b. Internal Threats

Internal theft by disgruntled workers or former employees is also intentional. Some of these people allow themselves to be
exploited by competitive intelligence operatives, either for money or merely for spite.
How to establish violation of Trade Secrets?
To establish violation of trade secret rights, the owner of a trade secret must be able to show
the following:

(1) Infringement by or competitive advantage gained by the person/company which has

misappropriated the trade secret.

(2) The owner had taken all reasonable steps to maintain it as a secret.

(3) There is misuse as the information obtained has been used or disclosed in violation of
the honest commercial practices.
Remedies of infringement of Trade Secrets
(1) A court order restraining the person from further benefiting from or misusing the trade
secret.

(2) A court order for monetary compensation in the form of damages, based on the actual loss
caused as a result of the misuse of trade secret.

(3) Seizure order by the court, based on a civil action, which may include a search of the
defendant’s premises in order to obtain evidence to establish the theft of trade secrets at trial.

(4) Precautionary impoundment of articles that include misused trade secrets, orthe products
resulting from its use or misuse.
(5) A court may order the destruction of the products made by the infringingact, and/or destruction of the
equipment used to carry out the infringing act.

(6) Some countries permit the imposition of punitive damages for willful encouragement of trade secret
theft.