The legal protection of trade secrets in comparison to other intellectual property rights

The TRIPS Agreement provides for WTO member countries to secure the meeting of confidential information in relation to certain conditions, so as to enable them to “prevent the disclosure, obtainment or use of information which is not unlawfully within their control by others without their prior consent in a manner contrary to honest economic practices”[1]   Although different countries shield these classified information under general unfair competition laws, unique trade secret laws were adopted in 2016 in the European Union (Trade Secrets Directive) and in the United States (Defend Trade Secrets Act, DTSA) at the federal level. The latter amended the 1996 Economic Espionage Act (EEA) to create a private or individual right of action for misappropriation or misuse of trade secrets relating to domestic or foreign commerce, without displacing any State trade secret legislation.[2]

Trade secrets are usually secured, unlike licensed intellectual property rights, without any procedural formalities-such as patents, product models, trademarks and designs, which require procedural formality. Patent types of novelty, industrial applicability or utility, or innovative phase, are not required for information to be held in the public domain as a trade secret. And likewise, it is not necessary to satisfy the originality requirement applicable to copyright, and trade secrets that consist of components in the public domain which, if combined by a particular public in ways that are not known or readily ascertainable, may provide competitive advantages and make the information valuable, precious and proprietary in nature.

Although advertising is said to be obligatory or to be of great benefit to trademarks and patents or copyrights, public disclosure eventually leads to the loss of trade secret protection. We may claim that trade secrets can be protected for an unlimited period of time, while registered rights (except for trademarks which can be regularly and indefinitely renewed but are subject to legitimate usage requirements) and copyrighted works are covered for a limited period of time only as specified in intellectual property laws.

Trade secret protection is supposed to be favored as an alternative to products and processes that are difficult to reverse engineer or that are not patentable but also offer competitive advantages to companies, or where patent protection is hard to obtain or too costly — although many of the steps needed to secure a trade secret can also be very costly and time-consuming. Small and medium-sized companies typically appear to rely much more on trade confidentiality than patenting.

Trade secrets rights are not recognized as intellectual property in the European Union Directive[3]— this contributes to the non-applicability of the Enforcement Directive to trade secrets although certain Member States, such as Italy and Slovakia, have agreed otherwise in aggregate. The functional meaning of this difference is limited in that the Trade Secrets Directive provides for an enforcement framework which is very similar to that of the Directive. In the law of the United States, trade secret protection is established by misappropriation of notions of unfair competition, and it does not prohibit individual innovation and therefore “ownership” by others, a trade secret is considered a right of intellectual property that can be marketed, licensed and taxed in the public domain.

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[1] See TRIPS, Section 7, Art. 39.

[2]All States except Massachusetts and New York have adopted the Uniform Trade Secrets Act (UTSA, 1979) in substantive form.

[3]Directive 2004/48/EC of the European Parliament.