LLAW6132 Chap.6 Trade Secrets: Definition and TRIPS Article 39
Trade Secrets: Definition and TRIPS Article 39
What makes information a trade secret
WIPO describes trade secrets as IP rights on confidential information that may be sold or licensed, and the US Uniform Trade Secrets Act defines them as information, from a formula to a compilation, that derives independent economic value from not being generally known or readily ascertainable and is kept secret by reasonable efforts.
The right needs no registration, is flexible and broad, and lasts only as long as secrecy does. It does not stop reverse engineering or independent discovery, and it is lost the moment the information is disclosed.
Two legal traditions
Civil law systems protect trade secrets through unfair competition law and the Paris standard of honest practices. Common law systems use contract and property.
Breach of confidence needs confidential information, an obligation of confidence and use in breach; restrictive covenants are enforced only where reasonably necessary to protect trade secrets; and a 1992 Hong Kong decision treats confidential information as property, so that self-use of information obtained by wrongdoing is misuse.
The traditions part company most clearly on the innocent third party.
Article 39 of TRIPS
TRIPS takes the civil law approach.
Article 39.2 lets whoever lawfully controls information stop others disclosing, acquiring or using it without consent by means that offend honest commercial practice, and it sets three cumulative conditions: secrecy within the relevant circles, commercial value because of secrecy, and reasonable steps.
A third party is caught only if it knew or was grossly negligent in failing to know of the dishonest practice.
Regulatory data
Article 39.3 protects test data submitted for marketing approval of pharmaceutical and agricultural chemical products using new chemical entities, against unfair commercial use and against disclosure except where public protection requires it.
TRIPS sets no term; national terms run from five to ten years, and the lecture asks whether data exclusivity amounts to market exclusivity.
What this chapter covers
- 01
WIPO and Uniform Trade Secrets Act definitions
- 02
Features of a do-it-yourself right
- 03
Breach of confidence and restrictive covenants
- 04
Confidential information as property in Hong Kong
- 05
The three conditions in Article 39.2
- 06
Third parties under footnote 10
- 07
Regulatory test data under Article 39.3
Worked example · free
Is a leaked supplier price list protected?
- 2Apply the secrecy condition.
- 4Apply the commercial value and reasonable steps conditions.
- 3Assess the competitor's liability as a third party.
Key terms
- Breach of Confidence
- The common law action requiring confidential information, an obligation of confidence and use of the information in breach of that obligation.
- Reverse Engineering
- Working out how a lawfully obtained product is made, a proper means that trade secret law does not prevent.
- Reasonable Steps
- The measures a holder takes to keep information secret, one of the three cumulative conditions for protection under Article 39.2.
- Data Exclusivity
- Protection of regulatory test data against unfair commercial use, whose term TRIPS leaves to members.
- Restrictive Covenant
- An employment term limiting a former employee's work, enforced only where reasonably necessary to protect trade secrets.
- New Chemical Entity
- A product ingredient not previously approved, whose regulatory test data qualify for protection under Article 39.3.
Trade Secrets: Definition and TRIPS Article 39 FAQ
How long does trade secret protection last?
For as long as the information remains secret. There is no fixed term and no registration, which makes the right flexible, but protection ends the moment the information is disclosed, and it does not stop a competitor who reverse engineers a product or discovers the information independently.
Is an innocent recipient of a stolen secret liable?
Under TRIPS, following the civil law approach, a third party is caught only if it knew or was grossly negligent in failing to know that dishonest practices were involved. The lecture contrasts the common law property view, under which even an innocent person in possession of misappropriated information may be liable.
Does TRIPS require a period of data exclusivity for medicines?
Article 39.3 requires protection of qualifying test data against unfair commercial use and against disclosure, but it does not mandate a term. The lecture notes national terms of five to ten years and the criticism that data exclusivity can work as market exclusivity.
Exam move
Learn the three Article 39.2 conditions as a checklist and practise failing each one on invented facts. Knowing how information fails to qualify is more useful in a problem than knowing that it usually does.
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