A trade secret is an integral part of any business, and it plays an important role in ensuring competitiveness and maintaining the enterprise’s uniqueness. In a dynamic market, where information about the latest technologies, developments, business processes, and clients can be of decisive importance, the protection of trade secrets becomes necessary.
What a trade secret is, what information it includes, and how it can be ensured reliable. In this article, we will consider in more detail the concept of a trade secret, its importance for business, legal aspects of protection, and practical recommendations for companies seeking to minimize the risks of leakage of confidential information.
What Information is Considered a Trade Secret
A trade secret is internal information about a company that has established a trade secret regime. A company can establish a trade secret regime about any information, for example:
- Technical.
- Production.
- About business processes.
- Financial.
- About production secrets (know-how).
In Belarus, there is no list of information that companies can classify as a trade secret. Each company decides for itself what kind of information it is.
The trade secret regime is the measures that a company takes to protect and ensure the non-disclosure of information classified as a trade secret.
Why Companies, their Employees and Business Partners Need to Know about the Specifics of the Trade Secret Regime
Knowledge of trade secrets is essential not only for companies but also for their employees and business partners for several main reasons:
1. Competitive Advantage
Protecting trade secrets helps a company maintain its competitive advantage. Information about strategies, products, technologies, and customer base is a precious resource, and its leakage can lead to a loss of market position.
2. Legal Protection
Understanding what constitutes a trade secret allows companies to establish legal measures to protect it, including developing appropriate contract terms with employees and partners. It helps to avoid litigation and subsequent financial losses.
3. Employee Responsibility
Employees must know what information they have the right to discuss and transmit and what they do not. Training on trade secrets helps create a culture of confidentiality within the company, reducing the risk of accidental information leakage.
4. Reliable Partnership
Understanding the importance of trade secrets helps business partners build trusting relationships with the company. Partners who comply with confidentiality rules can count on long-term cooperation and mutually beneficial conditions.
5. Innovation and Development
By protecting their trade secrets, companies can invest more in research and development, knowing their new ideas and achievements will be protected. It, in turn, stimulates innovation and business growth.
6. Reputation and Trust
Observing trade secrets demonstrates a high level of professionalism and responsibility in the company, which has a positive effect on its reputation and trust from customers and partners.
Considering the above, understanding and observing the rules of trade secrets becomes an important aspect of successful business, forming trusting relationships within the team and with partners, and protecting intellectual property.
What to Draw Attention to when Determining Information that is a Trade Secret
When a company develops a business process for establishing a trade secret regime, it must consider that some information must be reported to government agencies and contractors. Therefore, it must consider whether such information should be classified as a trade secret or determine the procedure for disclosing it. It should also be considered that some information cannot be classified as a trade secret.
What Information cannot be a Trade Secret
Belarus has defined a list of information that cannot be classified as a trade secret. For example, this information:
- That is included in the company’s constituent documents.
- From licenses, permits and other documents issued to the company that give the right to conduct economic activity.
- Сlassified as a secret and protected by state requirements, such as banking secrecy, medical confidentiality, and attorney-client confidentiality.
- About real estate from the state register of real estate.
- About the composition of the property of companies wholly or partially owned by the state.
- On the use of budget funds.
- About product safety, the environment, and other factors can negatively affect the safety of the population and production.
- About the amounts of taxes that need to be paid.
- About vacancies, working conditions, labour protection, and the number of employees.
- About the debt of companies on wage payments.
- About contravention of the legal requirements and liability for such violations.
How to Establish a Trade Secret Regime in a Company
To establish a trade secret regime, we recommend defining the procedure for all concerned of the company and following the sequence of steps related to measures to protect trade secrets.
Step 1. Determine What Information is a Trade Secret
The selected information must be checked for compliance with the following criteria:
1. The information is not generally known and freely available to third persons in the area where this information is usually used.
2. The information is valuable because it is unknown to third parties. By using such information, the company can earn money, reduce costs, and maintain its reputation and customers.
3. The information is not subject to exclusive rights to the results of intellectual activity.
4. The information is not state secrets.
A list is made from the selected information. Such a list will be a local document of the company after the list is approved by the manager or the general meeting.
Step 2. Establish the Procedure for Access to Trade Secrets
To restrict access to information classified as a trade secret, it is necessary to determine the procedure for using the trade secret carrier and monitoring its use. Such a procedure is described as a business process in a local company document.
A storage media is a document or digital medium that contains information classified as a trade secret. It is possible to determine whether the storage media is stored with a specific employee or in a safe and the procedure for accessing the facility where the trade secret storage media is stored. Documents classified as trade secrets can be stamped with the “Trade Secret” stamp. The stamp must indicate the name and address of the company that owns the information. Information on digital media can be password-protected or encrypted. Also, determine the employees who control the use of the trade secret storage media.
Step 3. Keep Track of Persons Who Have Access to the Trade Secret
Records are usually kept in an electronic file or a paper journal. For example, a log of employees and other persons with access to commercial secrets records persons who have access to trade secrets. This document can be useful for obtaining information that a particular person knew information that constitutes a commercial secret and could disseminate it.
Step 4. Take into Account Persons Who Have Access to Trade Secrets
After the documents on the company’s trade secrets have been developed, it is necessary to familiarize them with the employees’ access to the trade secrets. Such employees need to be familiarized with the following:
- The list of information that relates to the trade secret.
- With local documents that establish the procedure for using the storage media of the trade secret.
The company needs to create conditions for compliance with the trade secret regime. How to do this depends on the specifics of the company’s activities.
Non-Disclosure Obligations
For example, you can conclude agreements with employees: non-disclosure obligations. The company must sign an obligation with those employees who may theoretically know information that constitutes a trade secret. It should be noted that the company decides with whom to conclude such an agreement. An employee who refuses to sign such an agreement can be laid off.
An obligation is a civil law contract. It is concluded with employees and other persons who have received access to a trade secret. The contract specifies, in particular:
- Obligations of the parties related to compliance with the trade secret regime.
- Term of validity of commitments. The term is not set longer than the contract term concluded with the employee.
The company must inform employees about the cancellation or change of the trade secret regime. Employees must return the media of trade secrets to the employer upon dismissal.
Step 5. Interacting with Business Partners Who Gain Access to Trade Secrets
Sometimes, business partners need information that is considered a trade secret in the company to fulfil the contract with the company. In this case, it is necessary to preserve the trade secret regime. To do this, you can conclude a separate contract with the business partner: a confidentiality agreement or ensure the preservation of trade secrets in a written contract with the business partner.
The confidentiality agreement includes:
- A list of information that is considered a trade secret.
- The procedure for using information that is considered a trade secret.
- The period for which the business partner undertakes to maintain the trade secret regime, including in the case of contract termination or refusal to fulfil it.
- The condition of notifying the business partner of the cancellation or change of the trade secret regime.
If the contract with the business partner is recognized as invalid, the obligations to maintain trade secrets continue to apply.
Step 6. Determine the Responsibilities of the Employees Responsible for Maintaining the Trade Secret Regime
After the company has identified the employees responsible for maintaining the trade secret regime (usually, these are the heads of the company’s departments or the security service), their job descriptions are amended in the form of additional responsibilities. For example:
- Observe the procedure for recording persons who use the storage media of commercial secrets.
- Observe the rules for using the storage media of a commercial secret.
- Observe the procedure for storing the storage media of a commercial secret.
Step 7. Determine the Start of the Trade Secret Regime
The trade secret regime in the company comes into effect after a list of information related to the trade secret has been compiled and measures have been taken to protect it.
Company Consent for Access to Trade Secrets and When Consent is not Required
Access to information that constitutes a trade secret requires the consent of the company’s director. Without consent, by their powers, such information may be obtained by government agencies upon written requests, in particular:
- Courts.
- Prosecutors.
- Law enforcement agencies.
- Tax authorities and customs.
After receiving information that constitutes a commercial secret, employees of government agencies must not disclose it or allow third parties to access it.
Contact us
If you have any questions or disputes regarding trade secrets in Belarus, we will be happy to help! Our long-term experience will help you resolve any disputes in this area.
- +37529366-44-77 (WhatsApp, Viber, Telegram);
- info@ambylegal.by.
