Trade Secrets: The other IP right

AuthorJames Pooley
PositionDeputy Director General, Innovation and Technology Sector, WIPO
Pages2-4
p. 2 2013 | 3
What kind of intellectual prop erty (IP) is most of ten relied on by business to protect
competitive advantage? Most peopl e would answer with one of the best known areas
of IP: patents, copyright, trademarks or desig ns. But they would be wrong. The most
common form of protection used by business is secrecy.
Why then do trade secrets recei ve less attention than the other areas of IP? There are
several reasons. First, secrec y does not involve a government registr ation process;
it is implemented as a matter of prac tice by each business. Sec ond, although the
general principle s of trade secret law – also referred to as the l aw of undisclosed, or
condential, information – are es tablished in similar ways in most countries, there a re
few common rules or regulati ons about enforcement. Third, se crecy disputes are
usually secret, so they do not beco me part of the public deb ate.
Recently, however, trade secrets have shot to the top of the news, with stories of
“cyber-espionage” attacks on companies throughout the world, with spies using fake
email messages to get ins ide corporate networks and trawl for useful infor mation. But
trade secret law is also getting a f resh look for more positive reasons, as a framework
that can enable collab orative innovation, often involving actors located in many diffe r-
ent countries. Whatever the cataly st, governments and industry are clearly intere sted.
Within the last year, major initiatives on secrecy have been launched by the European
Commission as well as the US g overnment.
JUST WHAT IS A TRADE S ECRET?
Most simply, a trade secret is information that you do not want th e competition to
know about. The law genera lly protects not just secret formulas a nd designs, but
even simple facts, such as the feature s that might be introduced in the nex t iPhone,
or which country a bus iness intends to go into next.
Secrecy has been a par t of trade for thousands of year s. For example, secrecy al-
lowed a region of China to prot for centurie s from clever harvesting of the silkwor m’s
thread, and it gave a family from Arme nia a 400-year lead in produ cing the best
orchestral cymbals.
Trade secrecy is a legal regime that protects relationsh ips of trust. Before the industrial
age, innovative craftsmen would kee p their “tricks of the trade” clos ely held through
small, family-owned shops. However, as industry m oved from the cottage to the fac-
tory, there was need for a legal system that would enforce a n employee’s promise of
condence about a sec ret process or piece of mach inery.
It is important to keep in mind that se crecy is a legitimate tool for busine sses of all
sizes. Enforcing business se crets has nothing to do with lack of transpare ncy in
government. Although it may see m paradoxical, trade secret laws ca n enable and
encourage technology transfer, because they provide a commercially reasonable
way to disseminate information. Although s ome aspects of secrecy laws, suc h as
data exclusivity for drug c ompanies (Art. 39.3 of the Agreem ent on Trade-Related
Aspects of Intellectual Prope rty Rights (TRIPS Agreeme nt)), can be controversial, there
is general agreeme nt that condential disclosu re is benecial in a moder n economy.
Indeed, keeping secrets – of ten information about customer s and their needs and
TR ADE SECRETS
the other IP right By James Pooley,
Deputy Dir ector General, Inn ovation
and Technology Se ctor, WIPO
Photo : istockphoto © laughingmango
Secrecy ha s been a part of trade for t housands
of years. Trade sec recy is a legal reg ime that
protects relationships of trust. Secrecy allowed
a region in Ch ina to prot for centur ies from
clever harv esting of the sil kworm’s thread .

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