Trade secrets: the hidden IP right

• Author: Prajwal Nirwan
• Position: Associate, Miller Sturt Kenyon, London, United Kingdom

Some of the world’s most famous trade secrets – including the Coca-Cola recipe and Google’s search algorithm – have immense value. These companies quickly recognized that the value of these particular intellectual assets lay in their secrecy, and by treating them as trade secrets they could maintain their competitive advantage.

What exactly are trade secrets?

Trade secrets are secrets that add value to a business. A generally less well-known form of intellectual property right, for many years trade secrets have been in the shadows, but today they are gaining traction as an effective way to protect certain intellectual assets. Any commercially valuable and sensitive information – a business strategy, a new product roadmap, or lists of suppliers and customers – can qualify as a trade secret. And unlike other IP rights, trade secrets can protect a much wider range of subject matter and are not limited to a set term of protection. Trade secrets are not exclusive rights like patents, and therefore cannot be enforced against anyone who independently discovers the secret. However, any unlawful acquisition or misuse of a trade secret either under breach of confidence or theft is actionable. And the proprietor of the trade secret can get compensation and an injunction in respect of such unlawful acts.

Trade secret laws around the world

Like other IP rights, trade secrets are subject to the national laws of the country in which they are protected. Unlike patents and trademarks, there are no formal requirements to register trade secrets with an official authority, but most countries have laws that deal with the misappropriation or unauthorized acquisition of trade secrets. For example, in the United Kingdom no formal definition of a trade secret exists and there is no restriction as to the type of information that can constitute a trade secret. The legislation around trade secrets is largely drawn from case law relating to breach of confidence, with effective remedies for instances in which trade secrets have been improperly acquired, disclosed or used.

In the United States, the policy on trade secrets states that they consist of information that may include a formula, pattern, compilation, program, device, method, technique or process. And to qualify as such, a trade secret must be used in business and give an opportunity to obtain an economic advantage over competitors who do not know or use it. The Defend Trade Secrets Act of 2016 strengthens trade...