Protection of Trade Secrets
Author: Florina Firaru
Intellectual property laws confer exclusive rights for holders of patents, trademarks, design or model rights, and copyright. Along with the different types of intellectual property, trade secrets are important for businesses seeking to maintain a competitive edge, through the economic value of the information.
In Romania, trade secrets are primarily governed by Law No. 11/1991 on Combating Unfair Competition (the “Unfair Competition Law”). This law outlines what constitutes unfair practices, including the unauthorized use of trade secrets.
What is a Trade Secret?
A trade secret encompasses any information that meets the following cumulative conditions:
- Secrecy: is not generally known or readily accessible to people within the circles that normally deal with that kind of information;
- Commercial Value: has commercial value from its use or disclosure because it is secret;
- Reasonable Protection Measures: has been subject to reasonable steps by the person in control of the information to keep it secret.
The protection of trade secrets under the Unfair Competition Law continues indefinitely, as long as the above conditions are met. Notably, unlike other forms of intellectual property, trade secrets do not require registration or any formal procedure with an official authority.
Examples of Trade Secrets
Trade secrets can take various forms, including:
- lists of customers, suppliers and clients
- manufacturing processes or early-stage inventions
- company’s sources of supply, recipes and formulas
- marketing strategies and business plans
- source code for software
- any other technical and commercial information or combination of elements which, if kept secret, may provide a competitive advantage.
The Interplay Between Trade Secrets and Intellectual Property
Trade secrets are in a close relationship with other intellectual property rights. To illustrate:
- trade secrets can provide valuable protection for inventions. Businesses often combine trade secrets with patents and know-how to license technology and secure commercial advantages. While patents grant a limited-term monopoly over an invention or are subject to invalidation proceedings, trade secrets provide a potentially indefinite competitive edge by maintaining confidentiality. Furthermore, an invention that is not eligible for patent protection can be claimed as a trade secret.
- trade secrets are also crucial in software development. While copyright protects computer programs, companies should rely on trade secret protection to safeguard source code from misappropriation.
- recipes and manufacturing methods are also often kept as trade secrets.
As it results, some trade secrets – such as those earlier mentioned – might also qualify for protection under other forms of intellectual property, like copyright or patents, depending on their nature and fact dependent circumstances.
Key Elements of Trade Secrets
The confidentiality of the information and the legitimate owner’s diligent efforts to maintain its secrecy are essential components of a trade secret.
How information can be kept confidential
To ensure the secrecy of the information such must be subject to reasonable measures to maintain its confidentiality, such as but without limitation to:
- non-disclosure agreements (NDAs), physical (i.e., when personnel/ employees access the premises of the factory or the manufacturing place) and digital security measures, locking confidential documents and, in general, restricted access;
- confidentiality clauses in employment and commercial agreements and appropriate warnings/ notices on the confidential nature of the information and documents when sent to producers or services providers;
- internal policies of the legitimate owner to:
- implement strict internal policies and regulations to handle sensitive information, including periodical employees training to prevent unauthorized disclosures and understanding the risks of such disclosure;
- to control and limit employees’ access to the informatic system storing the secret information;
- to warn employees to limit the access of third parties to the place where secret procedures, techniques or methods are carried out; or when possible
- to refrain from revealing the information to public authorities.
Conclusion
In Romania, trade secrets are recognized and protected under both national and EU laws, offering owners legal tools to safeguard valuable business information. However, proactive actions, such as using NDAs, implementing security measures, and educating employees, are crucial for preventing unauthorized disclosures or theft of trade secrets. In all cases, trade secrets must not be disclosed to anyone owing no obligations of confidentiality to the trade secret owner.
