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Innovation & Thailand 4.0: Value Creation for Business using Trade Secrets
Thailand 4.0 stands for the new stage to transform the country currently relying on heavy industries (3.0 stage) into a creativity and innovation-driven economy. Trade secrets are definitively value-based and could help pursing Thailand 4.0.
On 14 March 2017, the Thai Department of Intellectual Property (DIP), the US Patent and Trademark Office (USPTO) and the Legal Committee of the American Chamber of Commerce in Thailand, joined by legal practitioners and business owners, gathered to discuss an all too often neglected intangible asset owned by almost any business: trade secrets.
Most of the owners of companies do not know that their competitive advantage, from a process to a software algorithm or formula, can be considered as a trade secret, and if adequately protected, can represent a considerable value for their businesses
1. What is a trade secret?
A trade secret is commonly defined as any business information that is not yet publicly known or not yet accessible by persons who are normally connected with the information, and for which appropriate measures have been taken to maintain the secrecy. A trade secret is valuable because it is secret. Once the general public is aware that the information exists, the legal protection is lost.
There are exceptions when the trade secret is obtained through improper means (breach of contract, infringement or inducement to infringe confidentiality, bribery, coercion, fraud, theft, receiving of stolen property or espionage through electronics or other means) or from a third party, knowing or having reasonable doubt that such person obtained the trade secret through improper means.
2. How to know if you have trade secrets?
Think of what you usually protect in contracts with your business partners. What makes your business unique? What do you have that none of your competitors have? What advantage would you be afraid of losing in your business?
Anything that gives an advantage over your competitors is highly valuable and worth protecting.
It does not have to be famous like the Coca-Cola formula to be a trade secret. It could be a client' list or suppliers' list, a formula or recipe that would be valuable to competitors so that they could sell, supply or produce directly from the right consumers, manufacturers and ingredients.
3. How to protect your trade secrets?
Besides the standard and physical measures that can be taken to ensure the confidentiality of your secret information (e.g.: bank vault, locker, security system, internal policies such as using passwords, placing confidentiality stamps on sensitive documents, employee badges etc.), identify who needs to know and to which extent. Limit disclosure to third parties. Not all your employees and business partners need to know. To minimize the risks, different elements of the confidential information could be divided between different parties. Request the signature of a Non-Competition Agreement and/or Confidentiality or Non-Disclosure Agreement when revealing any confidential information.
No registration with the DIP is required in order to gain protection. Likewise, there is no registration requirement for the licensing of trade secrets. The DIP used to have a trade secrets database system where the owners could record their trade secrets and obtain a certification of recordal to use as a proof in case of ownership dispute. However, this voluntary recordal is no longer available since 2013 (the purpose was limited since only the names of the owner and trade secret were indicated).
4. How to enforce your trade secrets?
Remedies provided under the Trade Secret Act for infringement of a trade secret (such as unauthorized use or disclosure of a trade secret) include actual damages, punitive damages, lost profits, injunctions, destruction or confiscation of materials, apparatus, tools or other equipment used in the infringement of trade secrets. Unauthorized disclosure may also be subject to imprisonment which may not exceed one year or a fine which may not exceed 200,000 Thai baht (approximately 5,500 USD), or both.
However, to date, there have been very few trade secret disputes in Thailand. Most of the infringement cases were dismissed because the Plaintiffs could not prove that the information qualified as a trade secret or that appropriate measures were taken to maintain its secrecy.
The mandatory disclosure of sensitive information before and during the proceedings (what the trade secret is, why it is a trade secret, how it was infringed etc.) and the high evidentiary requirements to obtain injunctive reliefs could explain why so few cases are litigated before the Thai Courts. It is very challenging to prove the existence of trade secret infringement in Thailand without having first obtained an Anton Piller order (a court order allowing searching premises and seizing evidence without prior warning), which itself is rarely granted.
In the meantime, we would recommend any business owner to take a proactive approach (do not wait until a dispute arises!) in protecting trade secrets by following these three steps:
1) Identify the valuable information that could be protected as a trade secret
2) Assess the risks (what could go wrong?)
3) Take measures to maintain the confidentiality of the trade secret
For more information or legal advice, please reach us at email@example.com
Ms. Noemie Sancelme, Coordinator/Manager of Overseas Department, Vidon & Partners