WHAT ARE THE BASIC ELEMENTS OF A TRADE SECRET?

A trade secret can be any information that confers uniqueness to a business or company usually weighed in monetary values whose access is highly restricted.

CHAMAN LAW FIRM

6/6/2022 4 min read

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WHAT ARE THE BASIC ELEMENTS OF A TRADE SECRET

A thing is nothing but the composition of what makes it up, its characteristics, and its perception. Concepts, Foods, and Houses must for the singular reason of human understanding succumb to a description in words, or any form of communication. Legal concepts are not immune, hence the aim of this write-up. The purpose of this piece is to break down to its least granular level what a trade secret is.

Definitions worth examining

In this post, we will be guided by the definition given by a reputable body on the subject matter. The World Intellectual property Organisation WIPO Article 39 Trade Related Aspect of Intellectual Property Rights defined it as "such information” that is secret in the sense that it is not, as a body or in the precise configuration and assembly of its components, generally known among or readily accessible to persons within the circles that normally deal with the kind of information in question; has commercial value because it is secret; and has been subject to reasonable steps under the circumstances, by the person lawfully in control of the information, to keep it secret." These three major characteristics can be summed up thus:

  • It is a secret

  • It is economically valuable because it is a secret

  • Overt steps have been taken to protect its secrecy.

It is a secret

A secret generally implies that very few people know about the object of secrecy. For example, very few people know the content of your bank account right now. Asides from your Banker’s authorised personnel, the exact balance of your bank account qualifies as a secret. Having examined a statutory definition, we will now look to the court’s interpretation of a secret. There’s the old case of Price Albert v Strange[2]. In this case, the husband of the sitting monarch in England, queen victoria, had made etchings for their pleasure, this was only made available to very few friends, but by some means, an artist, Mr strange laid his hands on it and would have made this etchings public had the Prince not obtained an injunction against him. In effect, therefore, any information in any format that is not easy and generally accessible to people qualifies as a secret, and a claim of misappropriation must fulfil this element to be successful.

It is economically valuable because it is a secret.

The details of your bank account are in and of themself not of any monetary value because it is a secret. In other words, you’d succeed at a claim for data breach compensation than a claim for misappropriation if by some means your details are made available to the wrong persons. Thus, what secrets are of monetary value because they are secrets? It will interest you to know that according to the American Commission on the Theft of Intellectual Property, Trade Secret theft costs the US an estimate of 300 billion US Dollars per year. The sale of some secrets might just fund the Nigerian fiscal budget for years! Topping the list of famous trade secrets is the ‘Merchandise 7x’ which is the name of coca cola’s recipe. Another trade secret example is the KFC recipe. Oh and this one’s a favourite: Lena Blackburne's Baseball Rubbing Mud. Yes, Mud. Grabbing a new baseball firmly could be hard for players and Blackburne eventually found a solution which was a certain kind of mud, and well where to find the mud is a secret that has one way or the other granted the company an edge over others. Thus where a claimant can prove that this particular secret has distinguished them from other competitors, a claim of misappropriation may well succeed in court.

Overt Steps have been taken to maintain its secrecy.

If a piece of information such as the client list of a company is something that can be accessed at the receptionist's table while signing the visitor's log, then it cannot be a trade secret. It is not enough that the claimant regards this information as a secret or that it accrues a certain competitive edge to the claimant, or that the information is inherent of great monetary value by its virtue of being secret, the claimant must prove that overt actions were taken to maintain the secrecy of the information such that a person would have to go great lengths to get it. Thus in the American case of Wilson Certified Foods Inc v Farbury Food Products, the court held that a general security measure accorded the facility where the information was kept did not satisfy that requirement. Contrarily, in the case of John Macville Corp v Guardian Industries Corp, it was proved that one of the developers of the trade secret who had not been in the employment of the claimant for a while had to obtain permission to so much as enter the premises of the site, the court held that this act was satisfactory of this requirement. Some other ways to fulfil this requirement are to restrict access to the information, codify the company’s policy on the dissemination of such information, the execution of non-disclosure agreements, and restrict access to the site of the information whether electronic or physical.

In conclusion, a trade secret can be any information that confers uniqueness to a business or company usually weighed in monetary values whose access is highly restricted.

NB: This article is not a legal advice, and under no circumstance should you take it as such. All information provided are for general purpose only. For information, please contact chamanlawfirm@gmail.com

WRITTEN BY CHAMAN LAW FIRM TEAM

EMAIL: chamanlawfirm@gmail.com

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