Protect your trade secrets!

Recently, reports of leaked or stolen company data have been appearing regularly in the news. Think of break-ins by hackers, but especially also former employees who take company information with them to their new employer. Business information can include both technical and commercial information, such as a certain production process, recipes or formulas, but also customer files and supplier data. That it is important to properly protect such company information is, of course, not in dispute. But what options are available for this?

Protection by secrecy or intellectual property right

First and foremost, it is important to distinguish between the protection of business information through secrecy and protection through an intellectual property right, such as a patent. When a patent is applied for, the rightholder is granted an exclusive right to use a particular technique, for example, for up to 20 years. Others, including competitors, can then find this technique in the patent register. They may not use this technique, but can use the information obtained to make new developments. The idea behind this is to stimulate innovation.

Trade secret protection law

However, not all business information can be protected by an intellectual property right. In this case, protection through secrecy can be considered. Trade secrets are protected, among other things, by the Trade Secrets Protection Act (Wbb), which came into force on October 17, 2018. Among other things, the Wbb stipulates when exactly there is a trade secret. This is the case when business information meets the following conditions: (1) the information must be secret, and thus not generally known or easily accessible to others, (2) the information must have commercial value because it is secret, and (3) reasonable measures must have been taken to keep the information secret. If these conditions are met, protection can be derived from the Wbb.

Noncompete and confidentiality agreement

Logically, several employees within an organization have knowledge of trade secret information. Given this, proper agreements will need to be made with these employees, for example by means of a non-compete and confidentiality clause in an employment contract. In many cases, however, it is necessary that third parties also become aware of company-sensitive information, for example in the case of a collaboration. In that case, a confidentiality agreement will also have to be concluded with these third parties. In addition, it is obviously important to ensure proper security of company information, both physical and digital.

What measures to take?

Thus, business information can be protected by an intellectual property right or as a trade secret. Both measures have different advantages and disadvantages. For example, applying for a patent involves a fair amount of expense, while secrecy is a lot cheaper. Should a trade secret get out on the street, however, the damage can be enormous. Also, protection as a trade secret is not useful if third parties can easily find out how a particular product was made. Another difference is that the term of protection of a patent is limited, whereas the protection of a trade secret can, in principle, continue indefinitely. It is important to distinguish between the various protection measures and determine which measure is most appropriate in a given situation.

Want to know more? Also read Renier Pijls's article : What can you do in case of theft or leakage of trade secrets?