UNIGE Panel Promotes Advantages Of Trade Secret Protection

Intellectual property professionals speaking at the University of Geneva last week discussed the challenges faced by companies and legislators in the domain of trade secrets. Topics addressed included the impact globalisation has on the protection of trade secrets, the need for an harmonised regime at the European level, and the need to rethink the place of trade secrets in the current international IP regime.

The discussions were held on 18 January at a conference jointly organised by the Law Department of the University of Geneva and the Association of Trade Mark and Design Law Practitioners (APRAM) – an international association whose stated mission includes representing the interests of IP practitioners and IP rights owners.

One IP official, speaking on background, presented on the economic value trade secrets represent for companies and elaborated on the risks that innovation has on their protection. He said that since 2000, there has been an enormous evolution in the geographical location of innovation and on the procedures leading to it.

He emphasised that while historically, research and development was carried out in the North by individual scientists or research teams, innovation now takes the form of an open innovation business model where R&D is outsourced and takes place on a global scale, with people working in networks.

For the official, this evolution bears negative consequences for the protection of trade secrets. He showed that according to a study by the Organization for Economic Cooperation and Development (OECD), 61 percent of 300 top executives estimated IP theft as the greatest risk of the global innovation network. More than 40 percent saw the loss of control over the innovation process as the second greatest risk.

Another speaker, Ansgar Ohly, chair in civil law and intellectual property law at the University of Munich, analysed the doctrinal difficulties impeding the European legislature from harmonising the trade secrets regime.

Ohly defined trade secret law as the “Cinderella” of IP rights in the sense that, “trade secrets are not only protected by IP law per se, but by a complex web of IP law, tort law, unfair competition law, contract law and criminal law.” He also highlighted the fragmented understanding of this notion in different legal cultures from France to Italy, Germany, Spain and the United Kingdom – each regime having a different model to deal with trade secrets.

Despite this fragmentation at the European level, he said that, “given the importance of cross-border dealings affecting secret information, there is a case for harmonisation.”

Ohly’s presentation also questioned the place of trade secrets in the IP regime itself. While the WTO Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) does refer to trade secrets in Article 39.1, this provision only targets unfair disclosure and aims at repressing unfair practices. On the contrary, Ohly insisted that “the information of a trade secret can be freely used by honest users.”

As highlighted by Ohly, from this international protection arises the question of ownership over trade secrets. The protection as expressed in the TRIPS Agreement is only against unfair disclosure and does not confer any property rights on the trade secret to the company knowing it. There, one may see a deep difference with other types of IP protections where an exclusive property right is given to the right holder for a defined period of time.

Panellists agreed that trade secrets protection is indefinite and perpetually lasts until someone discovers and exploits the secret. The secret may therefore never enter the public domain, which is, for many observers, against the social function and progress-oriented nature of IP rights.

Many panellists stressed the need to protect trade secrets for the economic development and prosperity of companies. However, it could be argued that the presentations overly focussed on the need for protection of trade secrets without focusing on the possible negative consequences that this protection has for development and knowledge-sharing.

For instance, an audience member shared his view on the negative social cost sometimes associated with trade secrets. He argued that trade secrets often lead to misallocations of time and resources because if innovation is indefinitely kept secret, competitors will duplicate resources like time and money to reach the same result.

Ohly highlighted the existing countervailing interests at stake in the trade secrets debate while stressing the public interest in disclosure and insisted on a needed balanced approach to trade secrets.

He highlighted the complementary nature of trade secrets and patents. Trade secrets should not undermine patent policies but they add to IP protection as “companies need a laboratory zone,” he said.

He relied on a US Supreme court decision to express the judges’ opinion on this question. In Kewanee Oil Co. v. Bicron Corp., 416 U.S. 470 (1974), the court acknowledged the legitimacy of trade secrets while stating that, “The federal patent policy of encouraging invention is not disturbed by the existence of another form of incentive to invention such as trade secret protection, and in this respect the two systems are not in conflict.”

Tiphaine Nunzia Caulier recently graduated with a Master in International Law from the Graduate Institute in Geneva and UCLA School of Law. Through her work experiences and academic interests she has specialized in international trade, intellectual property, and public health.