3.

3 Evaluate the benefits and drawbacks of protecting intellectual property as a trade

secret as opposed to other forms of intellectual property. Provide illustrations to
support your points.

A trade secret is an intellectual property right which holds confidential

information, and this information is of value to the owner. It can include recipes,
formulas, techniques, and research amongst others. Some examples of the best
kept trade secrets are Coca-Colas recipe, Mcdonald’s Big Mac recipe, and Krispy
Kreme. Some of the elements of a trade secret is that it is not known buy the
public, it proves financial gain to its holder, there have been reasonable efforts to
maintain secrecy, the importance of the data to the holder, and if it could be
learned or duplicated easily by other possible competitors. Trade secrets are
protected by contract law, the law of equity and the law of tort. Some may
choose to file for copyright or patents over having a trade secret. The traditional
role of trade secret protection is to complement other Intellectual Property
Rights having protection during the process of registering patent. The objective
of maintaining a trade secret is it aims to safeguard business integrity from the
misappropriation of valuable confidential information, rather than encourage
information holders to keep it secret.43 At the international level, trade secret
protection is established by Art. 39 of the TRIPS Agreement. This essay will
evaluate the benefits and drawbacks of protecting IP as a trade secret as
opposed to other forms of property.

Some ways that trade secrets can be protected is through contract law where an
employer can get an employee to sign two contracts when they are employed by
the company. This could be a contract of service and a non-disclosure agreement
with express terms regarding keeping the information confidential. Another way
is a confidentiality clause, where there could be a particular clause regarding a
contract of service and keeping the employers information confidential. The case
of Regent Decoractors v Michael Chee, it was explained that even if a contract is
silent on whether an employee has an onbligation of confidence it is usually an
implied term. The UK case of Thomas Marshall also held there was an impleied
term for an employee not to use any confidential information learned in the
course of the employment. This is one of the benefits of using a trade secret,
information can be protected under contract law to ensure that nobody will
disclose the holders confidential information. It is evident that many trade
secrets have been successfully kept such as Coca-Cola and KFC.

A case that outlines the benefits of using Trade secrets as opposed to another
form of Intellectual property is the application of equitable principles. This is best
outlined by the case of Prince Albert v Strange (1849) in which Prince Albert sold
the drawing he and Queen Victoria drew, to a printer for his own personal use.
However, one of the employees made additional copies and sold them to the
defendant, who intended to exhibit them to the public until Prince Albert was
granted an injunction. The court held that although there was no binding
contract between Prince Albert and the owner of the printer business, the
employee in question was aware that he was in fact obtaining and using these
drawings without the necessary authority. This highlights that breach of
confidence issues can be protected by the application of Equitable principles and
grants protection to whoever owns the information.

Another form of protection and potential benefit of Trade Secrets as opposed to

other forms of Intellectual property is the protection around breach of
confidence. This is highlighted by the case of Schmidt Scientific Sdn Bhd v Ong
Ham Suan (1997). The defendants in this case were former employees of the
plaintiff, the contract of employment between the parties included a
confidentiality clause which stated the defendant could not release confidential
information, which the plaintiff sued for breach of confidence. The court held that
it recognised that this form of conduct can be regulated by equity, contract and
breach of confidence, the court referred to the case of Seager v Copydex Ltd
(1967), that confidential information does not only depend on an implied term
from a contract but from the principles of equity that someone has taken unfair
advantage in using confidential information to the prejudice of the person to who
the information belongs. The court further highlighted another benefit of using
trade secrets as breach of confidence could also be enforced under the law of
tort, and this obligation extends beyond the employees employment.

While a well-kept trade secret could theoretically be kept indefinitely, it’s

important to recognize that it is perfectly legal to reverse engineer or copy a
trade secret. A patent may only last 20 years, but during that era, the protection
is stronger: independent invention is no defense in a patent suit.

For a matter-of-fact illustration, let's imagine a digital company (a technology

provider) and city authorities cooperating on a smart city project. The
technology provider is commissioned to implement a smart waste management
solution that harvests data of diverse typologies (e.g. bin load, bin location, and
so forth). To protect the data it stores, it will most likely adopt technical and
contractual measures. In the absence of a clear provision on the matter in their
agreement, the digital company can deny the city authorities access to these
datasets, claiming they are trade secrets.9 The city authorities will then have
little choice but to negotiate a new agreement. Otherwise, they will not be able
to access data that they might intend to reuse for (other) public purposes.
Likewise, competitors, unless they can replicate the data,10 would not be able to

access datasets that the provider collects, for example in order to repurpose th

data and enter a secondary market (e.g. manufacturing of rubbish bin gears)

Choosing the protection of trade secrets over patents is not risk-free, however.
While a patent will only remain in effect for 20 years or less, the protection it
provides is considerably stronger. Trade secret protection only applies to unlawful
breaches. It does not bar parties from legitimate duplication efforts such as
reverse engineering in order to arrive at the secret independently.

Designating a trade secret does not prevent another party from independently
developing its own version of the product, process, or formula. A rival company
could even file a patent for the process and claim exclusive right to it,
completely shutting out the original inventor.

Finally, a company must remain vigilant about protecting its trade secret at all
times. Unintentional disclosure of a trade secret could upend the process and
leave the company empty-handed. If company executives are lax about
non-disclosure agreements, someone with access to the secret could reveal it.
Once a secret is publicly known, it is no longer protected.

Designating information as trade secrets or filing for patents are alternative

strategies to protecting intellectual property; both offer advantages and
drawbacks. Patents, while they may be expensive and time-consuming to
secure, provide extremely effective protection for a limited period: a company
with exclusive use of a product or process will command the market for 20
years. It can build brand recognition and market leadership during that period in
order to remain a top industry player even after the patent expires.

In the early stages of any new invention it is important to decide how you will
protect your product. There are two main options available:

1) apply to register a patent (provided that it is patentable); or

2) maintain it as a trade secret.

The most suitable method will depend on the nature of both the product and the
inventor’s business

The traditional role of trade secret protection is to complement other

Intellectual Property Rights having protection during the process of registering
patent. The objective of maintaining a trade secret is it aims to safeguard business
integrity from the misappropriation of valuable confidential information, rather than
encourage information holders to keep it secret.43 At the international level, trade
secret protection is established by Art. 39 of the TRIPS Agreement.
For an example, due to the high rejection rate of patents involving works contributed
by AI, many participants have decided to just opt out of applying for a patent and just
keeping it as a trade secret. This is more so being the case, as industry participants
have outright admitted this when it comes to AI-generated inventions as just having
the element of AI in their patent would further increase the already high difficulty rate
of applying for a patent.Many industry players might feel discouraged to continue
pursuing or investing time and money into AI works.

Furthermore, choosing the protection of trade secrets over patents is not risk-free,
however. While a patent will only remain in effect for 20 years or less, the protection
it provides is considerably stronger. Trade secret protection only applies to unlawful
breaches. It does not bar parties from legitimate duplication efforts such as reverse
engineering in order to arrive at the secret independently.

Designating a trade secret does not prevent another party from independently
developing its own version of the product, process, or formula. A rival company could
even file a patent for the process and claim exclusive right to it, completely shutting
out the original inventor.

Finally, a company must remain vigilant about protecting its trade secret at all times.
Unintentional disclosure of a trade secret could upend the process and leave the
company empty-handed. If company executives are lax about non-disclosure
agreements, someone with access to the secret could reveal it. Once a secret is
publicly known, it is no longer protected.

Choosing the right approach

Designating information as trade secrets or filing for patents are alternative

strategies to protecting intellectual property; both offer advantages and drawbacks.

Patents, while they may be expensive and time-consuming to secure, provide

extremely effective protection for a limited period: a company with exclusive use of a
product or process will command the market for 20 years. It can build brand
recognition and market leadership during that period in order to remain a top industry
player even after the patent expires.

While a well-kept trade secret could theoretically be kept indefinitely, it’s important to
recognize that it is perfectly legal to reverse engineer or copy a trade secret. A
patent may only last 20 years, but during that era, the protection is stronger:
independent invention is no defense in a patent suit.