Why Firms and Companies should take steps to protect their trade secrets | Kingsley Ugochukwu Ani

Article by Kingsley Ugochukwu Ani LP

Many lawyers and those practicing within the Intellectual Property sphere will argue that Trade Secrets are IP rights and so should be protected as such. But, to start, there is the need to provide a proper explanation of what constitutes a Trade Secret before any proper discourse on it can take place as to whether it is among the bundle protected under core Intellectual Property rights or not.

What is Trade Secret?

Trade Secret is any practice of trade or any work-related practice which is integral to the forward workings of a business, kept secret from the eyes of the public and competitors alike and over which reasonable steps has been taken to prevent its disclosure. The major ingredient of Trade Secret is that it is Secret: it is possible that employees working within a firm or organization may not understand certain technical aspects of the business or certain formulas that drive the business forward except for a few select individuals who may hold all or some of the technical information or secrets that is utilized to run the business in its day-to-day operations.

Case Study

Amba Breads is the name of a bakery in Lagos and specializes in creating fantastic-tasting sliced bread for customers. Mr. A, who owns the bakery is the only one that knows the exact ingredients that is mixed to the flour dough to get that unique taste and flavor that distinguishes Amba Breads from other bread brands in the already saturated Lagos family loaf market. Mr. A’s wife is the only person that goes to the market to purchase these special ingredients that form a core part of the recipe for the making of Amba Breads loaves. All the other factory hands have to do is to mix the dough and add the already prepared mixture, then bake. They do not know what exact ingredients that goes into the dough they’re sending into the baking tins and into the ovens. So, if Mr. A and his wife Mrs A dies, there is the clear possibility that the recipe for their Amba Bread would die with them if they did not reveal it to anyone to ensure continuity of the business during their lifetime.

Fact: That secret recipe which no one in the factory knows except Mr. A and his wife constitutes the trade secret of Amba Breads and they would surely do anything possible to protect such a secret. Furthermore, once such a secret is released or revealed to the world, it ceases to be a Trade Secret because it has been disclosed to the public.

What is the Distinguishing Factor that makes something a Trade Secret?

The main and major and only thing that makes a specific knowledge a Trade Secret is the fact that it is hidden from the knowledge of the general public and perhaps even those that work within the organization where such information is kept and hidden. Reasonable steps has been taken to ensure that it is kept out of the public knowledge.

It is this hidden information — workplace sheets, work-related data, operational processes, technical information, even client information captured in a Rolodex software or other related software — that serves as the advantage which the firm that has it has over their competitors and which perhaps gives it an economic benefit.

Trade Secret issues are deep and highly technical, depending on applicable industries, but there is one link that binds all together: Secrecy.

Is Trade Secret part of the Bundle of Rights protected under IP Laws?

In answer, it is well to note that Trade Secrets defy a specific requirement for IP protection: public knowledge. It is secret knowledge. For example: the Coca-Cola recipe is a trade secret that is well-documented all over the world, which is largely the reason the drink has not been adulterated and its adulterated counterpart filling up consumer markets and competing with the real deal.

Can Trade Secrets be accommodated under the different vehicles/mechanisms of Intellectual Property?

The answer is no. And the reasons will be enumerated below to illustrate this position vis-a-viz Patents, Copyright, Designs.

1. In order for a work to be copyrighted, such work must have been set down in a definite and permanent medium of expression. Please note that Trade Secrets in many occasions defy this requirement and are set down as knowledge inscribed into the minds and hearts of those that possess them, not set down anywhere. Ideas cannot be copyrighted; Trade Secrets can be ideas which are not written down anywhere but which gives the firm utilizing it competitive advantage over its competitors and brings economic benefits to the holder, plus over which reasonable steps had been taken to keep hidden.

2 In order for a piece of invention to be patented, the processes must have been disclosed in a manner sufficiently clear and complete to be put into effect by a person skilled in the field of knowledge. Note that Trade Secret does not even have to be something so technical, or to be an “Invention” in the strict sense of the word; furthermore, it is not revealed to the outer world. People working within a firm where a Trade Secret is in place may not even know what it is (and please refer to the case study of Amba Breads above for clearer understanding).

3. A Trade Secret is a body of knowledge hidden from the world by the holders of the information, not a combination of lines or colors (or both), or any three-dimensional form, so it cannot be an Industrial Design.

Because Trade Secrets are not revealed, neither are they registrable, they cannot be accommodated under any of the core mechanisms of IP. But that does not mean that they are not protected or cannot be protected. There are certain mechanisms that can be set in place to protect a business’s Trade Secrets from the outer world.

How can Nigerian Businesses protect their Trade Secrets?

Firm work documents, client lists, work process manuals and specific industry insight fact sheets utilized in the course of firm work, sensitive firm records, sensitive firm information which, if it falls into the hands of the competition or if an employee leaves the firm and takes them with him will be disastrous to the firm business, well-researched worksheets and other unnamed but equally vitally important firm information — becomes Trade Secrets since they are proprietary and the firms (must) have taken reasonable steps to protect them from disclosure to the outside world and so can be protected. So, firms can protect their Trade Secrets using the following ways:

1. Confidentiality Agreements with employees preventing them from disclosure of firm information;
2. Inclusion of confidentiality clauses in the employees’ contracts of employment precluding them from disclosure;
3. Centralizing firm information in the cloud and only releasing same strictly on a Need-to-Know basis to employees;
4. Making a confidentiality provision in the firm management operational handbook;
5. Passing such sensitive information by seniors via word-of-mouth to next-in-line associates within specific time frames;

The above is not exhaustive on ways to protect firm Trade Secrets; the means abound, cutting across specific industries and workplaces. But the major overriding principle is the fact that sufficient effort has been made to keep the information out of circulation from unauthorized view. So, it is advisable for firms to take steps to protect their secrets for continuity sake. And if they can’t devise means of doing so or setting up trade secret protection vehicles for sensitive information, seasoned professionals should be contacted for help in taking appropriate legal steps in protecting their secrets from theft.

The content of this article is intended as a general guide to the reader and does not constitute legal advice neither does it constitute the creation of client-attorney relationship between the author and the reader. Specialist advise should be sought for your specific circumstances.

© Kingsley Ugochukwu Ani. All Rights Reserved.

The contents of this article is not meant to create any lawyer-client relationship between the author and the reader, neither does it constitute legal advise. If you need specialist advise for your situation, you can reach the author on aniugochukwu@gmail.com