What is a trade secret?
The term trade secret is understood as any type of information, whatever its nature that affects the life and management of a company, having value for it, and that the competitors of this company would like to know. For example, any information that affects the internal organization of the company, relations between company-suppliers and company-customers or sales techniques can be considered as trade secrets.
Definition and conditions of trade secrecy
A trade secret can be materialized through the possession of specific knowledge or information of special importance. For example, the production methods, the business plan of a company, the list of customers, the chemical formula, the industrial processes, special recipes, commercial practices, etc. They can constitute trade secrets, as long as they give an economic advantage to the company and improve its value.
As intellectual property gains increasing value in the modern knowledge and information economy, the entrepreneur needs to recognize the intellectual property and trade secrets that he possesses in his company. If, because of ignorance of its existence, the entrepreneur fails to adequately protect the intellectual property assets of his company, he omits an element of importance that can add much to the value of your company.
Protect the trade secrets of your business
Caring for a company’s intellectual property is as important as registering a brand. Know how to shield your information.
Some Advantages of Business Secrets
- The protection of trade secrets has the advantage of not being subject to time limits (patents have a term of up to 20 years). Accordingly, the protection of trade secrets continues indefinitely, provided that the secret is not disclosed to the public.
- Trade secrets do not entail registration costs (although they may involve high costs to keep information confidential)
- Trade secrets have an immediate effect, as they are not subject to the registration process and obey a factual situation.
- The protection of business secrets does not require compliance with requirements such as the disclosure of information to a government office.
Disadvantages of Trade Secrets
Protecting information through business secrecy may seem attractive, because trade secrets should not be registered and can be protected for a period of time that can be unlimited. However, the main disadvantages of protecting trade secrets are as follows:
- A single disclosure may cause the loss of the condition of trade secret
- Trade secrets do not protect against the independent discovery by another person of trade secrets. However, protect only against the misappropriation (or theft) of the information. Once the secret is disclosed, everyone can access it and use it as they please.
- If the trade secret is embodied in an innovative product, it can be inspected, dissected and analyzed (what is called “reverse engineering”) by third parties who can discover the secret and therefore use it. In fact, the protection by trade secret of an invention does not confer the exclusive right to prevent third parties from using it commercially. Only patents and utility models provide this kind of protection.
Protection of trade secrets is generally weak in most countries. To know what type of protection is most convenient, patent or business secret, for the purposes of its innovation will have to check the above considerations.
Period during which information can be kept secret
- If secret information consists of a patentable invention, the protection of trade secrecy will only be appropriate if the secret can be kept for more than 20 years (patent protection period) and if it does not seem likely that third parties can reach the same invention Legitimate way.
- Validity from the commercial point of view. If business secrecy is not considered valuable enough to be the subject of a patent, with the costs of the registration that entails, it is preferable to keep it as a patent, even though it meets the requirements of patentability.
- Nature of the object in which the secret lies. If the secret refers to a manufacturing process rather than to a product, since the products are more subject to reverse engineering.
It should be remembered, however, that trade secret protection is generally limited in most countries, as the conditions and scope of protection may vary significantly from country to country depending on existing legal standards, and that the courts may require considerable and costly efforts to preserve secrecy. Now experts are responding to Intellectual Property Crime too.