Introduction
A trade secret is secret information (often called confidential information) that is of economic use to a trading entity but which is not protected by patent or design registration. It is currently settled law that a trade secret, as such, is not “intellectual property” in the presently accepted sense and that the only way trade secrets can be protected is by contractual obligation. The Kenyan courts will typically enforce a contract protecting such information and it is accepted that a delictual claim will lie against someone who embarks on industrial espionage or breaches a fudiciary duty whereby trade secrets are acquired or disclosed by underhand means. The question is whether this level of protection is sufficient or whether legislation is required.
The Advantages and Disadvantages of relying on Trade Secrets:
Many businesses rely on trade secrets rather than seeking formal protection under the patent or design systems. Examples are numerous but include the secret recipes of certain producers such as Coca Cola and Kentucky Fried Chicken and the advantages of relying on this sort of protection as opposed to patent protection can be summarised as follows:
Unlike copyrights, patents and trade marks there is no comprehensive international treaty or convention in force yet governing trade secrets. Instead only brief mention is made of the topics in article 1711 of the North American Free Trade Agreement (NAFTA), the GATT agreement and the TRIPS agreement.
The North American Free Trade Agreement:
This agreement defines a trade secret as having commercial value, as not being in the public domain and for which reasonable steps have been taken to maintain its secrecy.
The GATT Agreement:
This agreement states that undisclosed information must be protected against dishonest use by others without the consent of the owner.
There is also third-party liability for misappropriation if third parties knew or were grossly negligent in not knowing that such information had been dishonestly obtained.This provides all the remedies that are available under US trade secrets law.
The TRIPS Agreement:
This agreement requires member countries to provide effective remedies for trade secret misappropriation including injunctive relief, damages and provisional relief to prevent infringement and to preserve evidence. In my opinion, since the Aquilian action does lie for unlawful appropriation of trade secrets, South Africa complies with its obligations in terms of TRIPS.
The Advantages and Disadvantages of relying on Trade Secrets:
Many businesses rely on trade secrets rather than seeking formal protection under the patent or design systems. Examples are numerous but include the secret recipes of certain producers such as Coca Cola and Kentucky Fried Chicken and the advantages of relying on this sort of protection as opposed to patent protection can be summarised as follows:
- There are no statutory limitations on the time period as there are with patents.
- A trade secret can be maintained without the cost or effort involved in patents.
- Protection is afforded immediately whereas a patent application may take years.
- A trade secret can be established without naming any inventors, therefore there is no need to determine the proper inventor and the company need not require its inventor-employee to assign ownership of the trade secret to it, as is required with a patent application.
- Trade secrets can also be used if a product cannot be patented, if the length of time of the patent is insufficient, or if patent protection is too costly relative to the value of the invention.
- Trade secrets cannot be maintained when they can be subjected to reverse engineering by the public.
- Strict precautions must always be taken and continually enforced to maintain the confidentiality of the trade secret due to the fact that it a trade secret is discovered by legitimate means it will be lost.
- A trade secret can be patented by someone who discovers it by legitimate means. This person can then sue the holder of the trade secret for infringing his or her patent.
- There is a possibility that a trade secret could be patented successfully by a third party who discovers it by legitimate means. It has been suggested that it would then be possible for the patentee to sue the holder of the trade secret for infringing the patent although it does seem to me that proof of the existence of the trade secret prior to the patent date would be inadequate defence.
Unlike copyrights, patents and trade marks there is no comprehensive international treaty or convention in force yet governing trade secrets. Instead only brief mention is made of the topics in article 1711 of the North American Free Trade Agreement (NAFTA), the GATT agreement and the TRIPS agreement.
The North American Free Trade Agreement:
This agreement defines a trade secret as having commercial value, as not being in the public domain and for which reasonable steps have been taken to maintain its secrecy.
The GATT Agreement:
This agreement states that undisclosed information must be protected against dishonest use by others without the consent of the owner.
There is also third-party liability for misappropriation if third parties knew or were grossly negligent in not knowing that such information had been dishonestly obtained.This provides all the remedies that are available under US trade secrets law.
The TRIPS Agreement:
This agreement requires member countries to provide effective remedies for trade secret misappropriation including injunctive relief, damages and provisional relief to prevent infringement and to preserve evidence. In my opinion, since the Aquilian action does lie for unlawful appropriation of trade secrets, South Africa complies with its obligations in terms of TRIPS.
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