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April 18, 2014

Protecting Trade Secrets Essential to Stay Ahead

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Bangkok Post, Corporate Counsellor Column

Intellectual property rights (IPR) protection is a key part of success in today’s business environment. As manufacturing companies grow, it is inevitable for corporate management—regardless of the type of industry—to shift its focus from tangible products to the intangible assets of intellectual property.

While trademarks, copyrights, and patents are a central focus in discussions of IPR among business owners, there is another important intellectual property right that can improve a company’s competitive advantage and help it differentiate its business and/or products from those of its competitors: the “trade secret.”

Trade secrets are protected in Thailand under the Trade Secret Act (TSA) B.E. 2545 (2002). The principal rule of a trade secret is that it can be protected as long as it is undisclosed.

Section 3 of the TSA states: “Trade secrets mean trade information not yet publicly known or not yet accessible by persons who are normally connected with the information, the commercial values of which derive from its secrecy and that the controller of the trade secrets has taken appropriate measures to maintain the secrecy.”

“Trade information means any medium that conveys the meaning of a statement, facts, or other information irrespective of its method and forms. It shall also include formulas, patterns, compilations or assembled works, programs, methods, techniques, or processes.”

Trade secrets can be categorized into two types:

  • Industrial secrets, which consist of trade information related to technical matters such as a manufacturing process or a chemical formula.
  • Commercial secrets, which consist of trade information related to sales methods, contract forms, customer lists, advertisement techniques, etc.

Unlike patent protection, there is no expiration date for trade secret protection and no registration procedure is required to obtain trade secret protection. Instead, trade secrets shall be protected as long as they are deemed secret. As the length of time for trade secret protection can be short or long, depending on the ability of the company to maintain the secrecy of its valuable information, it is therefore very important for the company to understand how to maintain and manage its information.

In recognition of this need, the Trade Secret Act stipulates that the controller of a trade secret take “appropriate measures” to maintain the secret. “Appropriate measures” can vary, depending on the type of information. It is recommended, however, that the company should, at the very least, implement a “confidentiality policy” among its employees, especially for those whose work relates to technical information, production, research and development, as well as sales and marketing.

A “non-disclosure term” should be standard in the company’s employment agreements. Also, special steps should be taken to ensure that employees have proper authorization to access any of the company’s important information. These steps should include such measures as passwords, fingerprint scans, and iris scans, among any other method for identification.

Under the law, the trade secret owner has the right to disclose, take, or use his trade secret, and/or permit others to use his right along with any necessary condition to maintain its secrecy. Acts amounting to infringement of a trade secret right under the TSA include disclosure, deprivation, or use of a trade secret without the consent of the owner in a manner contrary to honest trade practices. In so doing, the infringer must be aware or has reasonable cause to be aware that such act is contrary to honest trade practices.

Where there is clear evidence that a trade secret infringement has been committed or is imminent, the affected controller is entitled to apply to the Intellectual Property and International Trade Court (IP&IT Court) for the following injunctions:

  • A preliminary injunction ordering the violator to temporarily stop or refrain from infringing the trade secret, whether before or after the filing of a suit with the Court; and
  • A permanent injunction prohibiting the violator from infringing the trade secret. In addition to damages for the actual damage suffered, in trade secret litigation the court may include in the damages for the plaintiff an accounting of profits accrued from or in connection with the infringement by the infringer.

The greatest advantage of trade secret protection is that a company can maintain secrecy and know-how. Also, there is no time limitation for protection as long as the secrets are deemed secret. Therefore, if a company decides to obtain protection for its know-how through the TSA, it must ensure that it can manage and protect its secret through company capital and/or human effort.

As to whether protection is obtained through a patent or trade secret, it is recommended that a company should weigh the value of the know-how against its ability and capital to manage and maintain the secret. If it is valuable, trade secret protection may be worthwhile for the company to maintain long-term protection.

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