To Tell or Not to Tell?
To Tell Or Not To Tell?
Shhh...it's a trade secret!
*Ilisha Manerikar
LLB (Hons), LEC
Perhaps the most underrated yet widely used form of intellectual property protection is the use of a trade secret. A unicorn in the intellectual property world, trade secrets can protect confidential information without any registration, classification processes or fees and its protection can last forever!
A trade secret consists of three common elements:
1. It has the value of not generally being known;
2. It has economic and commercial value because it is secret; and
3. It has been subject to reasonable steps under the circumstances by the rightful holder in control of the information, to keep it secret.
Therefore, anything from recipes, manufacturing processes, lists of companies’ clients and suppliers, experimental research data, software algorithms to pricing schedules, chemical formulas and advertising strategies can be deemed as trade secret.[1]
These include the secret formula to the beloved recipe for the Original Sauce Doubles, Google’s coveted search engine algorithm, the list of ingredients in Angostura Bitters and Carib beer, top-secret niche manufacturing processes such as those used in Trinidad’s ammonia production and Jamaica’s bauxite production.
This is significant for Caribbean business owners, from family-owned businesses to the largest of conglomerates, as trade secrets are inextricably linked to a company’s financial health and competitiveness. Recent studies report that the United States of America loses anywhere between 1% to 3% of gross domestic product to trade secret theft every year.[2] Therefore, Caribbean companies must jealously guard their trade secrets as these assets not only enable their success in the commercial world but can lead to reputational and financial damage if disclosed.
For instance, Angostura Limited sources ingredients for its world-famous Angostura Bitters from Grenada, India and France, and because of the intellectual properties Angostura enjoys, it is allowed to import various botanicals under a strict code into Trinidad and Tobago which is not even known to Trinidad and Tobago’s customs authorities.[3]
Trade secrets offer, arguably the most flexible protection in intellectual property law as they have no classification requirement. For instance, trademarks must be distinct, whilst patents must be novel, inventive, useful, and not have prior use. Whilst trademarks have a protection life of 10 years while patents have 20 years, protection of trade secrets is indefinite if the secret remains undisclosed. Patents also require their owners to fully disclose what might otherwise be a trade secret. For example, if the intellectual property to be protected is the method of producing a commercial item, and can be deduced from examining the end product, then the method ought to be patented. However, if it cannot be determined through examination of the product, it can be protected as a trade secret. Thus, there is no exclusive right granted and formal registration process for trade secrets but, it is an automatic and implicit form of protection based on the private nature of the information and its commercial or business value.
However, countries such as the United Kingdom, United States of America and Trinidad and Tobago have concretized the need to protect trade secrets in their competition laws.[4] For instance, in Trinidad and Tobago, any disclosure, acquisition or use by others of secret information without the consent of rightful holder is an act of unfair competition and allows any person who is damaged by such disclosure to be entitled to the remedies under the civil law.[5]
Therefore, even if a country’s legislation does not specifically provide for acts of disclosure of trade secrets, the general law of breach of contract and confidence applies and damages are recoverable. The British Court of Appeal in the ruling of MVF 3 APS (formerly Vestergaard Frandsen A/S) v Bestnet Europe Ltd[6] is particularly instructive. The case concerned the manufacture and sale of mosquito nets alleged to be derived from the misuse of confidential information. The court held that where the misuse had been the basis for developing a derived product, damages were recoverable to the extent to which the claimant had been harmed by facing greater competition or having to face competition sooner than they would otherwise.
Nevertheless, trade secrets are not as bulletproof as they may sound. Some disadvantages surrounding trade secrets are that they are no longer protected if another individual gets the same idea independently or through reverse engineering. The law of trade secrets does not prohibit others from acquiring and using trade secrets but prohibits acquiring the secret by unlawful means.
This means that companies must take adequate steps to maintain secrecy, which can often be more expensive in the long run. These measures include not only contractual protections such as employees signing non-disclosure agreements (NDAs), but physical mechanisms as well, such as vaults, locked rooms containing the trade secrets with passcode and key card access for limited authorized personnel. In the present technological era, digital and network security is undoubtedly essential to prevent a data leak. Thus, firewalls, passwords, restricted network access and the strict use of company phones for employees are all measures that can curb any potential confidentiality breaches.
Nevertheless, humans are fickle, and someone always spills the beans…
In 2021, a Pfizer employee uploaded more than 12,000 files relating to the COVID 19 vaccine, including “confidential Pfizer documents,” to a personal Google Drive account and to personal devices and is now facing a lawsuit from Pfizer.[7] The employee now faces allegations of misappropriation of trade secrets, breach of contract and more. Meanwhile in the Caribbean, a contentious matter surrounding the true ownership of trade secrets is the recipe to the popular Trinidadian Japs Fried Chicken. Businessman Nicholas “Japs” Thomas is rebutting claims that Bhagwatee Maraj and her son, Darryl Mahabir, managing director of Japs Fried Chicken were the recipe’s true inventors. Although the matter has not yet been litigated, several pre-action protocol letters were issued regarding who invented and currently owns the key to the fried chicken franchise[8] and a lawsuit regarding the misuse of its trademark was filed by Thomas.[9]
In conclusion, companies must decide which mode of intellectual property protection is best for their industry and trade secrets are certainly in a league of their own.
However, one must remember, once the cat is out of the bag, it cannot be a secret again!
* Contact email: ilishamanerikar@gmail.com.
[1] World Intellectual Property Organization.
[4] Protection Against Unfair Competition Act Chap 82:36 (Trinidad and Tobago), Uniform Trade Secrets Act of 1985 (United States of America), Trade Secrets (Enforcement, etc.) Regulations 2018 No 597 (United Kingdom.
[5] Section 9 and Section 4 (2) of the Protection Against Unfair Competition Act Chap 82:36 (Trinidad and Tobago).
[6] [2016] EWCA Civ 541.
[7] Eric Sagonowsky, 'Pfizer says former employee stole trade secrets on mega blockbuster COVID-19 vaccine' (Fierce Pharma, 24 November 2021).
[8] Tremaine Warner, ‘Local demand grows for a taste of Japs’ Trinidad and Tobago Guardian (2013), available at <https://www.guardian.co.tt/article-6.2.401679.7eb9d05002> [Accessed 9 January 2022].
[9] Japs Fried Chicken Limited v Thomas and Maharaj CV (2016) CV2014-02595.
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