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ANNUAL REVIEW

Trade Secrets 2018

February 2018  |  INTELLECTUAL PROPERTY

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The dawning of the digital age has had a transformative affect on virtually all businesses. The growing importance of intangible assets, such as trade secrets, is defining the information era. Trade secrets, like other forms of intellectual property, have become the beating heart of many organisations, helping firms to not only differentiate themselves from the competition but also to generate value for shareholders. Though trade secrets have been an integral part of the fabric of business for centuries, they have risen to the forefront of companies’ considerations in recent years. But they have also become a priority for a host of malicious actors who, armed with an increasingly sophisticated arsenal of weaponry, have begun to focus their efforts on trade secret theft and misappropriation.

 

UNITED STATES

R. Mark Halligan

FisherBroyles, LLP

“Trade secrets are emerging as the most critical business assets in the 21st century. We are experiencing a transformation from the industrial revolution age to the information age – also known as the digital age. However, the importance placed on trade secrets is not a new phenomenon; the protection of confidential business information dates back to Roman law. The first reported US trade secret case is Vickery v. Welch, decided in 1837 by the Supreme Court of Massachusetts. Over the next 100 years, the common law of trade secrets developed in the US, culminating in the promulgation of Sections 757-759 by the American Law Institute in 1939.”

 

MEXICO

Rodrigo Méndez Solís

Hogan Lovells

“Protecting trade secrets should be a priority for every business. Most companies are aware that any misappropriation of their information could cause serious consequences such as loss of clients, reputational damage or the disclosure to competitors of their business models, databases, formulas, methods, processes and commercial plans. In the business world, information is a synonym of power, and companies should protect their trade secrets against any risk by adopting the means or systems to preserve confidentiality and restrict access thereto. In most cases, the immediate consequence when a misappropriation or unauthorised disclosure of information is detected is to initiate legal action against the parties responsible”

 

UNITED KINGDOM

James Froud

Bird & Bird

“Trade secrets are of vital importance. Studies suggest that intangible assets, which include confidential information and trade secrets, comprise more than 80 percent of corporate value in today’s business world. From conducting surveys we know there is an almost universal acceptance that some level of detriment will follow the misappropriation of trade secrets. Many companies believe that the impact of a misappropriation would be material or hugely significant; some even believe that it would threaten the very existence of their business. Nevertheless, the value and competitive advantage that protecting trade secrets can bring is often overlooked, and the fact remains that, even now, precious few companies take adequate steps to do so.”

 

SPAIN

Josep Montefusco

Clifford Chance, S.L.P.

“Research and development constitutes one of the key factors in today’s business world, driving the differentiation between one company and its competitors. This is equally true both in the case of companies aiming to compete in terms of low costs and in the case of companies focusing on products and services intended to add more value for their clients. In this context, preserving the confidentiality of the fruits of said research and development – know-how and other trade secrets – usually becomes crucial when it comes to obtaining and maintaining important competitive advantages.”

 

PORTUGAL

Ricardo Costa Macedo

Caiado Guerreiro

“In a highly competitive and fast-changing reality, the ability to innovate in the creation of products and solutions is key to a company’s success. Trade secrets are often a crucial part of this process, thus giving a competitive advantage to their holders in their market. Misappropriation can mean the loss of this advantage over competitors because the secret loses its core quality of not being widely known. If a trade secret of a technical nature is at stake, the loss may result in a process that was once exclusive becoming replicable by others.”

 

BELGIUM

Domien Op de Beeck

Bird & Bird

“Economists agree, and a 2013 European Commission issued study confirms, that trade secrets are valuable business assets and aid in the growth and innovative performance of EU Member States, industry sectors and innovating firms. In most, if not all EU industries, trade secrets play an important role in protecting innovation. Firms choose to rely on trade secrecy and trade secret protection rather than exclusively on IP rights, and small and medium-sized enterprises (SMEs) might even favour secrecy above any other type of protection. In today’s knowledge-based, intangible economy, consequences of a loss of trade secrets can be serious.”

 

GERMANY

Barbara Geck

Bird & Bird

“In many industry sectors, the combined knowledge of the employees may be the most important asset a company has. Lack of care protecting this asset can deprive a company of its competitive advantage. Indeed, a comfortable position as a market leader may easily be lost if the company fails to protect its trade secrets. Increasingly, companies will, in the course of their business, obtain trade secrets of customers and clients in order to establish interfaces or be able to provide just-in-time products. These secrets need to be treated with equal care – lack of such care can lead not only to damages claims, but also cause severe harm to a company’s reputation.”

 

ITALY

Elena Martini

Martini Manna Avvocati

“Trade secrets are crucial for many companies, in particular when they cannot or do not want to patent their know-how, either because it is not patentable, because the company cannot afford patent costs or because it does not want to disclose its know-how to any third party. If the company’s trade secrets were misappropriated by a third party, the company would lose the competitive advantage it used to have because of its trade secrets. In addition, those trade secrets would largely diminish in value, precisely because they are not secret anymore, and this would affect the company’s capability to monetise them if and when necessary.”

 

RUSSIAN FEDERATION

Vladimir Biriulin

Gorodissky & Partners

“Trade secrets are a key feature of successfully running a business. They allow companies to protect their unique way of making original products that are interesting for consumers. Misappropriation of a trade secret entails consequences such as a negative impact on the profits of the trade secret owner and the opportunity for other companies or individuals to use a trade secret in their own professional activities. One crucial consequence is that after a misappropriation of a trade secret, information that used to be a secret and protected by law and local documents of a company, loses its specific status and legal protection. This emphasises the importance of taking appropriate steps to safeguard sensitive information.”

 

CHINA & HONG KONG

Helen Cheng

Zhong Lun Law Firm

“In today’s knowledge-driven business world, intangible assets, especially trade secrets, are increasingly standing out as a company’s lifeblood. If a company’s technical secrets are misappropriated, the company could endure significant harm. The company’s technology and products will be vulnerable to being counterfeited. The company will be even more disadvantaged if its competitor manages to manufacture and launch the same products into the market in advance. Even worse, companies sometimes choose not to register patentable trade secrets because trade secrets can theoretically enjoy an infinite term of protection as long as they remain secret.”


CONTRIBUTORS

Bird & Bird

Caiado Guerreiro

Clifford Chance, S.L.P.

FisherBroyles, LLP

Gorodissky & Partners

Hogan Lovells

Martini Manna Avvocati

Zhong Lun Law Firm


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