Protection Of Trade Secret

Trade secrets are by far the most fascinating and mystifying forms of Intellectual Property (IP), with stories invoking in the imagination, cloak-and-dagger conspiracies, high-walled enclosures, with round-the-clock , “1984” level surveillance. There is a great benefit when a regime recognises the value of providing adequate protection to IP in this day and age, and one of the most important things that we can do is learn to respect and protect the value inherent within a secret.

According to Section 7, Article 39 , paragraph 2 of the Trade Related Aspects of Intellectual Property Rights (TRIPs) Agreement, information is capable of being protected as a trade secret, if firstly, the information was secret in the sense that it is not something that is ordinarily known among the circles that deal with normally deal with such information in that particular industry; secondly, the information possesses commercial value because it is secret ; and thirdly, that those in lawful possession of the information have taken steps to ensure its secrecy.

An important feature of trade secret protection is the absence of a specified time limit for which protection is afforded. That is why we have long-standing secrets such as the formula for WD-40 and Coca-Cola. The apparent problem however is that trade secret protection is not the safest means of protection and neither is it cheap.  The examples mentioned earlier, go through great lengths to ensure that their secrets are kept that way and ensure that they reap the benefits of such protection. In 1997, Coca-Cola refused to set up shop in India unless the then Indian Government lifted the prerequisite that they release their ingredients. It is said, that at any given time, only two employees ever really know about the secret recipe which was conceived in the late 1800's and that the recipe is locked up in a state-of-the-art vault in Atlanta. The makers of WD-40, a staple in every household and industrial establishment ensure that their formula is kept secret by assembling the formula separately in three cities around the world.

In Bangladesh, the legal protection of trade secrets exists but is scattered. The protection of trade secrets is afforded through the exercise of Section 49 of the Patent and Designs Act, 1911 which prevents disclosures of information about industrial designs and such in bad faith. In addition, the exercise of the Section 73 of the Contract Act, 1872 entitles a party to receive compensation for breaches of contractual obligations (Confidentiality Agreements and/Non-Disclosure Agreements are commonly used to protect confidential information). Further, the Preamble of the Competition Act, 2012 can be read to extend the ambit of anti-trust practices to mala fide disclosures of information. In addition, penal action may be brought under Section 405 of the Penal Code, 1860 for the offence of Criminal Breach of Trust, which under Section 406 is punishable with up to 3 years imprisonment and/or fine.

Clients who have trade secrets are generally informed to have systems in place that identify not only existing information that amount to information best kept secret, but also to identify any new pieces of information that could be classified as such.  Apart from labeling and water-marking documents containing confidential information, limited disclosure of privileged information has proved handy in not only ensuring that not everybody knows about what makes the business tick, but also in the event of a leak, it may be made a lot more easier to spot a culprit. If the trade secret is a recipe or composition, the assembly of this can be shared among a number of assembly points which know of the existence of the other and then finally brought together at another point. Along with these myriad measures, it may be found helpful to improve employee and management ethics training to ensure that they understand the value of confidential information.

Trade secret protection in Bangladesh can be significantly improved. Perhaps what we require is a more consolidated definition alongside stronger consequences in the event of breach of good faith. As Bangladesh continues to grow in terms of a hotbed for investment from both local and international ventures, those looking forward to take root in these fertile climes will want a greater assurance that their most valuable assets - ideas, information, and or intellectual input - are effectively protected against those who would venture to break invested trust for frivolous gain.

The writer is Associate, The Legal Circle.