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Trade Secrets: An Alternative Way to Protect Companies’ Intangible Assets | Tito Rendas, CCA's Head of Intellectual Property
There are several companies whose success depends on keeping information of high commercial value under lock and key. Perhaps the most famous and successful trade secret in history is the Coca-Cola formula - a secret that earns the American multinational large sums in consumer sales. As a tool for managing and promoting business competitiveness, trade secrets have also been very useful for companies in the technology sector. The paradigmatic example is that of Google, which keeps confidential part of how PageRank works - the algorithm used to determine the position of websites in the lists of results produced by its search engine.
Trade secrets, like any other secret, are information. And this is information that, to be protected by law, does not need to be part of any specific category. It does not have to be a “technical invention”, as required by patent law, nor a “literary or artistic work”, as required by copyright. Trade secret protection can therefore encompass intangible assets as diverse as lists of suppliers and clients, production methods, market research, business strategies, or product launch dates.
There are obvious advantages to protecting technological innovations with trade secrets. From the outset, the protection of secrets, unlike that conferred by patents, is not subject to any time limit. As long as the information remains confidential, legal protection can last indefinitely. And, from the point of view of companies such as start-ups, there is another not insignificant advantage: that secrecy allows instant and practically free access to protection, which does not depend on registration requests and the payment of the respective official fees.
It would not be surprising if the use of secrecy as a means of protecting technological innovations were to increase, on the one hand, due to the increased media attention given to disputes involving companies such as Uber, Huawei, or Apple, and, on the other hand, recent legislative changes in this area. Among these changes is the transposition into the Portuguese legal system of the EU Directive on Trade Secrets. One of the fundamental concerns of the Directive - and of the 2018 Industrial Property Code which transposed it - was the strengthening of the protection of trade secrets, with the consecration of a vast catalogue of preventive and reaction measures against their violation, in particular of precaution, injunction and compensation measures.
Companies interested in benefiting from these supervisory mechanisms must begin by collecting information likely to meet the three protection requirements provided for by law: (i) be secret, in the sense that it is not generally known by those in the circles who usually deal with the type of information in question or easily accessible to such persons; (ii) have commercial value resulting from secrecy; and (iii) have been subject to reasonable efforts to maintain secrecy.
In particular, companies should ensure that they have adopted adequate protective measures, such as entering into confidentiality agreements with employees and partners, installing video surveillance systems, putting in place keywords, segmenting access to business information, or organization of internal training actions on the subject. And they must also carry out periodic checks on these measures, ensuring that they remain up to date in the face of developments in case law and legislation.
Of course, the implementation of these protective measures does not mean that the secrecy is inviolable. Father António Vieira used to say that the only perfect secret is ignorance, "because the secret that is known can be told; what is ignored cannot be manifested". But what companies should not ignore is that secrecy is an effective and affordable alternative to protecting the results of their innovation efforts. A planned and informed use of this path of protection can make the difference between ascending, or not, to the corporate Olympia where Coca-Cola and Google sit.