Trade secret
Unlike other forms of IP, trade secrets do not require formal registration and can be protected indefinitely, as long as they remain undisclosed.
[3] Even “negative” information, like failed experiments, can be valuable by helping companies avoid repeating costly mistakes.
[8] To qualify as a trade secret, confidential information must meet the specific requirements set by a country's national laws, which are often influenced by Article 39 of the TRIPS Agreement.
"If, as the writer believes [writes Schiller], various private cases of action were available in satisfying commercial needs, the state was acting in exactly the same fashion as it does at the present day.
It is bizarre to see any degree the Roman actio servi corrupti as the counterpart of modern law for the protection of trade secrets and other such commercial interests.
[12][11](p5)[13] In the United States, this concept was first recognized in the 1837 case Vickery v. Welch, involving the sale of a chocolate factory and the seller’s agreement to keep the secret recipe confidential.
[14][15] Newbery and Vickery only awarded compensation for losses (damages) and did not issue orders to prevent the misuse of secrets (injunctive relief).
[16][17] In the United States, the 1868 Massachusetts Supreme Court decision in Peabody v. Norfolk is one of the most well-known and well-reasoned early trade secret case, establishing foundational legal principles that continue to be central to common law.
[18][19] In this case, the court ruled that Peabody’s confidential manufacturing process was a protectable trade secret and issued an injunction preventing former employees from using or disclosing it after they shared it with a competitor.
[18] In 1939, the Restatement of Torts, published by the American Law Institute, offered, among other things, one of the earliest formal definitions of a trade secret.
[20](p278) As the first attempt to outline the accepted principles of trade secret law, the Restatement served as the primary authority adopted in virtually every reported case.
The UTSA defines the types of information eligible for trade secret protection, establishes a private cause of action for misappropriation, and outlines remedies such as injunctions, damages, and, in certain cases, attorneys' fees.
[21] It has since been adopted by 48 states, along with the District of Columbia, Puerto Rico, and the U.S. Virgin Islands, with New York and North Carolina as the exceptions.
[24] However, international standards for protecting secrets (called “undisclosed information”) were established as part of the TRIPS Agreement in 1995.
For the information to qualify, it must not be generally known or easily accessible, must hold value due to its secrecy, and must be safeguarded through “reasonable steps” to keep it secret.
Violating the agreement generally carries the possibility of heavy financial penalties, thus disincentivizing the revealing of trade secrets.
[32] A holder of a trade secret may also require similar agreements from other parties, such as vendors, licensees, and board members.
As a company can protect its confidential information through NDA, work-for-hire, and non-compete contracts with its stakeholders (within the constraints of employment law, including only restraint that is reasonable in geographic- and time-scope), these protective contractual measures effectively create a monopoly on secret information that does not expire as would a patent or copyright.
The lack of formal protection associated with registered intellectual property rights, however, means that a third party not bound by a signed agreement is not prevented from independently duplicating and using the secret information once it is discovered, such as through reverse engineering.
[35] Therefore, while trade secret laws strengthen R&D exclusivity and encourage firms to engage in innovative activities, broadly reducing knowledge spillovers can harm economic growth.
[36][37][38] Common scenarios include former employees taking proprietary data to a new employer in violation of non-disclosure agreements (NDAs), espionage, or unauthorized disclosure.
With sufficient effort or through illegal acts (such as breaking and entering), competitors can usually obtain trade secrets.
[citation needed] A successful plaintiff is entitled to various forms of judicial relief, including: Hong Kong does not follow the traditional commonwealth approach, instead recognizing trade secrets where a judgment of the High Court indicates that confidential information may be a property right.
[53] The statute followed state laws on liability in significant part, defining trade secrets in the same way as the Uniform Trade Secrets Act as, "all forms and types of financial, business, scientific, technical, economic, or engineering information, including patterns, plans, compilations, program devices, formulas, designs, prototypes, methods, techniques, processes, procedures, programs, or codes, whether tangible or intangible, and whether or how stored, compiled, or memorialized physically, electronically, graphically, photographically, or in writing if (A) the owner thereof has taken reasonable measures to keep such information secret; and (B) the information derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable through proper means by, another person who can obtain economic value from the disclosure or use of the information."
While the US Constitution explicitly authorizes the existence of and the federal jurisdiction over patents and copyrights, it is silent on trade secrets, trademarks, etc.
Most states have adopted the Uniform Trade Secrets Act (UTSA), except for Massachusetts, New York, and North Carolina.
(That a company plans to use a certain trademark might itself be protectable as a trade secret, however, until the mark is actually made public.
It has been argued that the public is being denied a clear picture of such products' safety, whereas competitors are well positioned to analyze its chemical composition.
