Special Issue: International Protection Of Trade Secrets And Other Confidential Information

Some exciting deals are essentially based on confidential information, but they are less common than deals based on other intellectual property, and for good reason. The information is often referred to as “trade secrets,” “business secrets,” “know-how” or “show how.” The label should not matter provided that sufficient information is protectable and that the nomenclature does not affect the protection available. There will always be limitations to “trade” in confidential information, arising from the requirement to keep the information confidential in order to preserve it. Other constraints, arising from flaws in the legal protection available, have historically been a significant impediment in some jurisdictions.

Confidential Information is protectable in Australia. There are different forms of Confidential Information recognized and different bases for protection. Providing the information has the necessary quality of confidentiality, it will be protectable irrespective of whether it is technical or commercial in nature, providing certain criteria are satisfied. Confidential information of a trivial nature may be acknowledged as having the necessary quality of confidentiality, but it is unlikely that a Court would entertain any remedy for disclosure since the damage resulting from disclosure would be very small or non-existent.

A business secret is confidential knowledge or information that is capable of giving its holders a competitive advantage in the market. Protection of trade secrets in Brazil has historically not been associated with the notion of property since, technically speaking, unpatented information and know-how did not fit the statutory definition of property in Brazil. Protection of trade secrets flowed rather from two other categories of rights: the constitutional right to preserve the privacy of information, which is a personal right of any individual domiciled in Brazil (Brazilian Federal Constitution of 1988, Section 5, Subsection X); and the statutory right to require fair competition, which is also a personal right of any trader, industrialist, or supplier of services.

Trade secret protection applies to confidential information that is generally technical in nature and which has a valuable commercial or industrial application.1 There are six non-exhaustive factors commonly analyzed by Canadian courts to determine if information is protectable as a trade secret:2 (1) The extent to which the information is known outside the owner’s business; (2) The extent to which the information is known by employees and others involved in the owner’s business; (3) The extent of measures taken by the owner to guard the secrecy of the information; (4) The value of the information to the owner and its competitors; (5) The amount of money or effort expended by the owner in developing the information; (6) The ease or difficulty with which the information could be properly acquired or duplicated by others [ i.e., by their independent endeavours].

This report summarizes China’s legal regime for enforcing trade secret rights and the remedies provided for trade secret right holders to combat misappropriation through, e.g., judicial civil action, administrative action, and criminal prosecution, respectively before a people’s court, an office of Administration for Market Regulation, and a people’s procuratorate.

Indian courts by means of various case laws have allowed the protection of trade secrets/confidential information through the provision of appropriate remedies. To seek such remedies, one has to generally prove: • That the information itself has the necessary quality of confidence about it; • That the information was transferred in circumstances imparting an obligation of confidence; • That there was an unauthorized use (including threatened use) of that information to the detriment of the party communicating it.

In Japan, confidential information is protectable irrespective of whether the information is technical or commercial, subject to certain conditions. Specifically, the Unfair Competition Prevention Act (UCPA) protects “trade secret,” which is defined as technical or business information that is: 1) kept secret, 2) useful for business activities, such as manufacturing or marketing methods, and 3) not publicly known. (Art. 2(6) of the UCPA). Know-how may fall under this definition. Although any information not falling within the definition of “trade secret” cannot be protected under the UCPA, if the parties agree in a contract to protect such information as confidential, such information may still be contractually protected between the parties under the Civil Code or other contractual laws. (cf. “Management Guidelines for Trade Secrets” January 30, 2003 [Last update: January 23, 2019] Ministry of Economy, Trade and Industry).

Trade Secret law in Mexico has undergone the most significant change in the last 25 years as of November 5, 2020, when the new Law for the Protection of Industrial Property (FLPIP) was enacted to replace the former Industrial Property Law (1994) in the context of the entry into force of the also renewed United States—Mexico—Canada Agreement (USMCA). The contents below correspond to the new law, but the reader is advised that there are no precedents regarding the interpretation of the FLPIP and the new provisions of the law, including those related to trade secrets, are expected to evolve in the years to come.

As such, the relations with regard to information are governed by the Federal law of 27.07.2006 “On information, information technologies and information protection” (“the Information Law”). Section 7 Article 2 of the Information Law provides for a “confidentiality of information” regime. That means the mandatory compliance of the person, having access to the specific information, to not disclose such information to third parties without the consent of the owner of the information. In this regard, both technical and commercial information may be treated as confidential depending on the approach taken by the owner of the information. Achieving confidentiality may be achieved by complying with the Federal law of 29.07.2004 N 98-FZ “On commercial secret” (“Commercial Secret Law”).

The law of confidence is capable of encompassing all information that any party has an interest in keeping confidential. While confidential information generally comprises information of a commercial nature (e.g., a company’s internal guidelines and policies), it also includes information of a technical nature (e.g., manufacturing processes). While know-how is generally protectable, this would be subject to the requirement that the know-how itself possesses the requisite quality of confidence. Hence, in QB Net Co Ltd v Eearnson Management (S) Pte Ltd and others [2007] 1 SLR(R) 1, although the Court noted that the claimant’s technical know-how in relation to its operation may potentially be confidential, it was found that the claimant could not possibly claim confidentiality in relation to its concept for “ten-minute express haircut services,” as the said concept was information that was unmistakably in the public domain and was not rocket science.

A trade secret is protectable when it (1) relates to and is capable of application in trade or industry; (2) has the necessary quality of secrecy or confidence, is not in the public domain and is known only to a restricted number of persons;1 and (3) has economic value to the proprietor (e.g., potential/actual usefulness to a rival2 and skill and time to produce the information).3 Over the years South African courts have recognized various forms of information that can be categorized as “confidential,” including: information relating to products or processes still under development; optimized systems and processes that have been developed by the proprietor; technical information and specifications; manufacturing techniques and instruction manuals; designs (including circuit diagrams, blueprints and electronic artwork); source code for computer programs; unpublished trademarks; database information; samples; devices; demonstrations; product formulae; and information concerning materials, marketing and business information generally, including customer and supplier lists, customer or trade connections, credit records, price lists, tender prices and business discussions.

Switzerland is a Member State of the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS), which specifically protects undisclosed information (Article 39(2)). Confidential/undisclosed information are protected by a variety of provisions across the Swiss legal framework—both substantive and procedural—there is thus no specific act in Switzerland exclusively governing such protection. Relevant provisions (see Question 2) tend to distinguish between trade secrets in the sense of technical or industrial processes (secrets de fabrication/Fabrikationsgeheimnisse) and of commercial information (secrets d’affaires or secrets commerciaux/Geschäftsgeheimnisse).

What Is Protectable? The scope of protection in the United States is broad. Under the applicable federal statute, 35 U.S.C. § 1836, et seq. (DTSA) and the Uniform Trade Secrets Act (UTSA) on which most state statutes are based, any information may be protectable as a trade secret as long as that information (1) is secret in that it is not generally known or readily ascertainable by proper means (2) derives actual or potential economic value because it is secret and (3) is subject to reasonable efforts to preserve its secrecy. The protection extends to “all forms and types of financial, business, scientific, technical, economic, or engineering information” (35 U.S.C. § 1839). Given this breadth, know-how, including negative know-how, is certainly captured within the scope of protectable trade secret information in the United States.