Trade secrets are a highly valuable and useful form of intellectual property right (IPR). According to the World Intellectual Property Organization (WIPO), any confidential business information (for example sales methods, distribution methods, consumer profiles, advertising strategies, lists of suppliers and clients, manufacturing processes, etc.) which can be of considerable commercial value to businesses and which provides an enterprise with a competitive edge, may be considered a trade secret. Trade secrets encompass manufacturing and industrial secrets as well as commercial secrets, and may include technical know-how, new products or business models, business operation manuals, recipes and formulae, customer and supplier information, or special techniques uniquely and confidentially employed by a business in the development of a product or service, all of which are closely guarded by the companies in question.
Typically three general standards for the information to be considered trade secret under Article 39 of the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS). Accordingly, a trade secret is usually defined as information that:
(a) is not generally known to the public (kept as confidential);
(b) confers some sort of economic benefit on its holder (where this benefit must derive specifically from the information not being generally known, not just from the value of the information itself – in other words: it must have commercial value because it is a secret);
(c) is the subject of reasonable efforts by the rightful holder of the information to maintain its secrecy (e.g., through confidentiality agreements).
Regarding Vietnam, under Intellectual Property Law 2005 amended 2009, trade secret means information obtained from activities of financial or intellectual investment, which has not yet been disclosed and which is able to be used in business.
A trade secret shall be eligible for protection when it satisfies the following conditions:
- It is neither common knowledge nor easily obtainable.
- When used in business activities, the trade secret will create for its holder advantages over those who do not hold or use it.
- The owner of the trade secret maintains its secrecy by necessary means so that the secret will not be disclosed nor be easily accessible.
As above, it can be observed that the conditions for the information to become a trade secret under Vietnamese laws are similar to that of TRIPS.
Usually, the following confidential information shall be ineligible for protection as trade secrets:
- Personal identification secrets.
- State management secrets.
- National defence and security secrets.
- Other confidential information is unrelated to business.
Owner of a trade secret means an organization or individual who has lawfully acquired such trade secret and kept it secret. A trade secret acquired by an employee or a performer of an assigned task during the performance of the hired job or assigned task shall be owned by the employer or the task assignor, unless otherwise agreed by the parties.
The holder of a trade secret may:
a) Apply the trade secret to the manufacture of products, provision of services or trade in goods
b) Sell, advertise for sale, stock for sale or import products manufactured with the application of the trade secret.
Under the Intellectual Property Law, the following acts shall be considered as an infringement of the rights to a trade secret:
(i) Accessing or acquiring information embodied in a trade secret by taking acts against security measures taken by the lawful controller of the trade secret;
(ii) Disclosing or using information embodied in a trade secret without permission of the holder the trade secret;
(iii) Breaching security contracts or deceiving, inducing, bribing, forcing, seducing or abusing the trust of persons in charge of security in order to access, acquire of disclosing a trade secret;
(iv) Accessing to or acquiring information embodied in a trade secret, that is submitted by another person under procedures for granting a license of business or marketing in respect of a product, by actions against security measures taken by competent agencies;
(v) Using or disclosing trade secret, while knowing or being obliged to know that it has been acquired by another person engaged in one of the acts referred to in items i, ii, iii and iv;
(vi) Failure to perform the obligation of security.
Nonetheless, the rights of the trade secret holder are not unlimited. Limitations of the rights of an owner of a trade secret include exemption from rights for:
(i) disclosure or use of a trade secret acquired without knowing or having reason to know that it has been illegally acquired by others;
(ii) disclosure of the trade secrets in order to protect the public;
(iii) use of secret data for non-commercial purposes;
(iv) disclosure or use of a trade secret created independently; and
(v) disclosure or use of trade secrets generated by analyzing or evaluating legally distributed products; unless otherwise agreed between the analyzers or evaluators and the owner of the trade secret or the sellers of the product.
How to protect your trade secrets
The higher the importance of the respective information for the company, the higher the demands on the confidentiality measures that are to be taken. It is therefore advisable to start by classifying existing trade secrets in a graduated manner in order to create a comprehensive protection concept in the next step.
Possible secrecy measures include, but are not limited to:
- Technical measures such as appropriate IT security systems, physical access barriers and encryption of communication between the co-knowns, confidentiality agreements in employment contracts with employees and in framework agreements with business partners.
- Develop a company culture that embraces trade secret protection at all levels of the organization, and across all company departments. Trade secret protection must be recognized as a compliance issue, with potentially serious reputational, financial, and legal implications.
- Standardize contractual terms regarding trade secrets to set a minimum, sufficient floor of protection, with added protections when the circumstances require.
- Know the law for the applicable jurisdictions. The law across jurisdictions is not uniform in terms of defining what constitutes a trade secret and the steps necessary to protect that information. Accordingly, it is important to understand clearly the legal constructs surrounding trade secret protection in the jurisdictions where the trade secrets may be maintained and disclosed.
- Conduct and refresh confidential information training to ensure that your employees are adequately notified of your categories of confidential information.
- Develop a good plan to respond in the event of a breach.
- Memorialize company trade secret policies and procedures.
- Take particular care to address personal devices, personal email accounts, and other file share programs/folders.
- Limit access to confidential information on a need-to-know basis.
If you have any questions or require any additional information, please contact Apolat Legal – An International Law Firm in Viet Nam.
This article is for general information only and is not a substitute for legal advice.