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