Trade secrets have been keeping law makers in the USA and Europe very busy recently.
President Obama signed the Defend Trade Secrets Act (DTSA) into law on 11 May 2016. The DTSA provides a federal private right of action for trade secret protection creating a uniform standard for trade secret misappropriation.
About two weeks after the DTSA became law in the US, the European Council approved the Trade Secrets Directive. Once the Directive is published , EU countries will have up to two years to implement it into their national legislation.
So, what’s a trade secret?
Under both the DTSA and the Directive, in broad terms, a trade secret is information that is being kept confidential and its owner derives economic value from it being kept confidential. The classic example of a trade secret is the recipe for Coca-Cola, although trade secrets can encompass a much broader range of information than just secret recipes. They could also include, for example, manufacturing processes, engineering specifications, source code, algorithms, databases and electronic data compilations.
While there is currently no trade secrets legislation in Australia, and the topic barely rated a mention in the Productivity Commission’s draft report on Intellectual Property Arrangements in Australia, there is an established cause of action for breach of confidence, which includes trade secrets. Also, the new US laws could potentially apply to conduct in Australia if the trade secret ‘thief’ is a US based entity.
Trade secrets often overlooked
Trade secrets are an important part of your intellectual property portfolio, but businesses often overlook the proper protection of trade secrets. This typically only becomes apparent when there is an immediate risk of a trade secret being misused by a competitor or ex-employee or contractor. Also, the enforceability of any rights in relation to a trade secret will almost always depend on how well it has been documented and protected.
Getting on the front foot
A documented inventory of trade secrets, along with standard protective measures which might include access control, confidentiality agreements and/or document labelling, will help prepare your business to enforce its rights if it becomes necessary. A systematic approach to these issues can also create a culture of careful management of sensitive information in your business, and hopefully prevent any future need for enforcement.
If you would like to discuss how your business can best protect its trade secrets, please get in touch.