Vidon & Partners (Thailand) Co., Ltd. | View firm profile
Thailand 4.0 stands for the
new stage to transform the country currently relying on heavy industries (3.0
stage) into a creativity and innovation-driven economy. Trade secrets are definitively
value-based and could help pursing Thailand 4.0.
On 14 March 2017, the Thai
Department of Intellectual Property (DIP), the US Patent and Trademark
Office (USPTO) and the Legal Committee of the American
Chamber of Commerce in Thailand, joined by legal practitioners and business
owners, gathered to discuss an all too often neglected intangible asset owned
by almost any business: trade secrets.
Most of the owners of companies do not know that
their competitive advantage, from a process to a software
algorithm or formula, can be considered as a trade secret, and if
adequately protected, can represent a considerable value for their businesses
1. What is a trade secret?
A trade secret is commonly defined
as any business information that is not yet publicly known or not yet
accessible by persons who are normally connected with the information, and for
which appropriate measures have been taken to maintain the secrecy. A trade secret is valuable because it is
secret. Once the general public is aware that the information exists, the legal protection is lost.
There
are exceptions when the trade secret is obtained through improper means (breach of contract, infringement or
inducement to infringe confidentiality, bribery, coercion, fraud, theft, receiving
of stolen property or espionage through electronics or other means) or from a third party, knowing or having reasonable
doubt that such person obtained the trade secret through improper means.
2. How to know if you have
trade secrets?
Think of what you usually
protect in contracts with your business partners. What makes your business
unique? What do you have that none of your competitors have? What advantage would
you be afraid of losing in your business?
Anything that gives an advantage
over your competitors is highly valuable and worth protecting.
It does not have to be
famous like the Coca-Cola formula to be a trade secret. It could be a client'
list or suppliers' list, a formula or recipe that would be valuable to
competitors so that they could sell, supply or produce directly from the right consumers,
manufacturers and ingredients.
3. How to protect your
trade secrets?
Besides the standard and physical
measures that can be taken to ensure the confidentiality of your secret
information (e.g.: bank vault, locker, security system, internal policies such
as using passwords, placing confidentiality stamps on sensitive documents,
employee badges etc.), identify who needs to know and to which extent. Limit
disclosure to third parties. Not all
your employees and business partners need to know. To minimize the risks, different
elements of the confidential information could be divided between different parties.
Request the signature of a Non-Competition Agreement and/or Confidentiality or
Non-Disclosure Agreement when revealing any confidential information.
No registration with the DIP is required in order
to gain protection. Likewise, there is no registration requirement for the
licensing of trade secrets. The DIP used to have a trade secrets database
system where the owners could record their trade secrets and obtain a
certification of recordal to use as a proof in case of ownership dispute.
However, this voluntary recordal is no longer available since 2013 (the purpose
was limited since only the names of the owner and trade secret were indicated).
4. How to enforce your trade
secrets?
Remedies provided under the Trade Secret Act for
infringement of a trade secret (such as unauthorized use or disclosure of a
trade secret) include actual damages, punitive damages, lost profits, injunctions,
destruction or confiscation of
materials, apparatus, tools or other equipment used in the infringement of
trade secrets. Unauthorized disclosure may also be subject to imprisonment which may not exceed
one year or a fine which may not exceed 200,000 Thai baht (approximately 5,500
USD), or both.
However, to date, there have been
very few trade secret disputes in Thailand. Most of the infringement cases were
dismissed because the Plaintiffs could not prove that the information qualified
as a trade secret or that appropriate measures were taken to maintain its
secrecy.
The mandatory disclosure of
sensitive information before and during the proceedings (what the trade secret
is, why it is a trade secret, how it was infringed etc.) and the high
evidentiary requirements to obtain injunctive reliefs could explain why so few
cases are litigated before the Thai Courts. It is very challenging to prove the
existence of trade secret infringement in Thailand without having first
obtained an Anton Piller order (a court order allowing searching premises and seizing evidence without
prior warning), which itself is rarely granted.
For these reasons, it may sometimes be advisable to
combine, or rely on other forms of intellectual property protection such as copyright or patent which are easier to protect and
enforce.
In the
meantime, we would recommend any business owner to take a proactive approach (do
not wait until a dispute arises!) in protecting trade secrets by following
these three steps:
1) Identify
the valuable information that could be protected as a trade secret
2) Assess
the risks (what could go wrong?)
3) Take measures
to maintain the confidentiality of the trade secret
For more information or legal advice, please reach
us at [email protected]
Ms. Noemie
Sancelme, Coordinator/Manager of Overseas Department, Vidon & Partners