A trade secret is a formula, pattern, physical device, idea, process, or compilation of information that provides economic value because it is not generally known and is protected through reasonable secrecy measures. Examples of trade secrets include recipes, manufacturing techniques, and computer algorithms. To protect a trade secret, companies restrict access to the information, limit who knows it, have employees sign non-disclosure agreements, and mark written material as proprietary. Trade secrets can potentially last indefinitely as long as the information remains secret, do not require registration, and provide worldwide protection without public disclosure. However, they can be lost through employee departure, independent discovery, or failure to maintain adequate secrecy.

1. Presented by
Dr. B.Rajalingam
Assistant Professor
Department of Computer Science & Engineering
Priyadarshini College of Engineering & Technology
Nellore
Introduction to Trade Secret
Intellectual Property Rights
Unit 4

2. Financial
information
Technical &
scientific
information
Commercial
information
Negative
information

3. A trade secret is a formula, pattern, physical
device, idea, process, or compilation of
information which is not generally known or
reasonably ascertainable, by which a
business can obtain an economic advantage
over competitors orcustomers.

4. A formula forasports drink
Surveymethods usedbyprofessional pollsters, and Recipes(food)
Anewinventionfor whichapatent applicationhasnot yetbeenfiled
Marketing strategies
Manufacturingtechniques
Computeralgorithms

5. Secrecy

6.  Restrict access to the information (lock it away in a secure
place, such as a bank vault)
 Limitthe numberof peoplewho know the information
 Havethe people who know the trade secret agreeinwriting not to
disclosethe information (sign non-disclosureagreements)
 Haveanyonethat comesincontactwith the trade secret, directly or
indirectly, signnon-disclosure agreements
 Markanywritten material pertainingto the trade secret as
proprietary

7.  Unlimited duration - trade secrets could potentially last
longer than patents (20 years) and copyrights
 Your protection is theoretically worldwide No
applicationrequired
 No registrationcosts
 No public disclosure or registration with government
agency
 Effective immediately

8. Formula forCoca-Cola
The Big Mac Special Sauce
KFC Chicken Recipe
WD-40 Formula

9. Secret Recipes
Kentucky fried chicken
 The secret recipe of “11 herbs and spices” lies in a bank vault.
Few people know it, and they are contractually obligated to
secrecy.
 The ingredients are mixed by two different companies in two
different locations and then combined elsewhere in a third,
separate location.
 To mix the final formula, a computer processing system is used
to blend the mixtures together and ensure that no one outside KFC
has the complete recipe

10. Secret !
Initially Later stage
Not patentable patentable
patent
TS
Strategic
business
decision
TS
•Part of the idea
TS
© ID

11. What is difference between TS and Patent
Trade Secrets Patents
No Registration
• Less costs(but costs keep in secret)
• Immediately avaliable
Registration
• Fees (Registration + Maintenance)
• Takes time to get patent
Can last Longer
• But limited to economic life
• Uncertain life span : leak out is irremediable
Limited in time
• Generally: Max 20 years
• But can be invalided
No public Disclosure
• But practical need to disclose
• If leak out: TS lost
Public Disclosure
• Publication 18 month after filing
• If Patent not allowed

12. 1. CourtOrderto stopthemisuse
2. Monetarydamages
• Actual damagescausedasaresult of the misuse(lost profits)
• Amount by which defendant unjustly benefited from the
misappropriation (unjustenrichment)
3. Seizureorder
• Can be obtained in civil actions to search the defendant's premises in order to
obtain the evidence to establishthe theft of TSat trial
4. Precautionaryimpoundment
• Of the articles that include misused TS,or theproducts that resulted ofmisusing
Remedies to Misappropriation

13. 1. Independent Creation- similar formula created with his own
knowledge.
2. Unclean hands –The owners behavior is morally wrong.
Laches - unreasonable delay in asserting a claim, which may result in
its dismissal.
3. Absence of secrecy protection measures- failed in protecting its
trade secret, sharing it through publication.
4. Privileges- sharing the information before media at court trail.

14. 1. Contract law
• When there is an agreement to protect the TS NDA/CA anti-reverse
engineering clause
• Where a confidential relationship exists
attorney, employee, independent contractors
2. Principle of tort / unfair competition
• Misappropriation by competitors who have no contractual
relationship
theft, espionage, subversion of employees
TS protection may be based on...

15. 3. Criminal laws
• e.g. for an employee to steal trade secrets from a company
• e.g. unauthorized access to computers
• theft, electronic espionage, invasion of privacy, etc.
• circumvention of technical protection systems
4. Specific trade secret laws
• US: Uniform Trade Secrets Act; Economic Espionage Act
TS protection may be based on...

16. Trade secret litigation comprises of two aspects.
1. violation of trade secret law takes place, when the
confidential information is obtained through
misappropriation.
2. Violation of nondisclosure agreement takes place when a
party in the contract breached the agreement.

17. The law of unfair competition is to safeguard the interest of
the customers from unfair or misleading trade practices.
Types of Unfair Competition:
1. Passing off
2. Misappropriation
3. Right of Publicity
4. False Advertising
5. Product Disparagement
6. Dilution

18. - Infringement of Trade Dress:- the unique and distinctive
feature of a product , service, or business which differentiates
it from others is known as “Trade Dress”.
- Trade Dress protection is needed to restrict others from
duplicating a product.

19. Dilution: Basically, Tarnishment and Blurring are the two important
aspects which are responsible for dilution of a product.
- The unauthorized use of a mark on a dissimilar product which damages
the distinctiveness of the that mark is known as ‘Blurring’.
‘Tarnishment’ refers to the unauthorized use of mark for a poor quality
product which effects the products of mark owner.

20. Product Disparagement: when a false statement is made
with an intention to harm a company or itsproducts or its
services, then it is known as “product disparagement”.
It is also known as ‘Trade Libel’ or “Commercial
Disparagement”.
Right of Publicity: Allows individuals to protect their identities
from being used for commercial purpose by other parties.
Many companies misuse the celebrities name in fake to sell
their products

21. -Passing off occurs when one party sells his goods and
services by affixing another company’s trade mark on
them.
-Passing off is confined to registered and unregistered
trademarks , symbols , signs and devices etc.,
-Passing off is an offence which is done by
misrepresenting the goods and services for creating
confusion in customers mind which effects the image or
good will of the original manufacturer.

22. - Misappropriation exists when one party uses the property
of other party without informing them.
- Misappropriation means unauthorized use of person's name
or likeness for advertising purpose, which effects the image
of other persons.
- The plaintiff does not possess any copy right for it and he
cannot claim any damages; ex- stock market rumors , new
paper report etc.

23. The Clean Room:- The clean room refers to a room in which
a team of engineers, designers, researchers or scientists work
together for a specific purpose. Each and every activity is
documented .
The clean room act as an evidence to prove that the
information which is identical to some other’s
trade secret has derived through team efforts.
It also ensures that the information was not copied , theft
or gained through any other improper means

24. Reverse Engineering: Any information which is obtained
through reverse engineering of a product, will also be
unprotectable under TS.
Ex:- A Gel Pen company has a secret formula for making
Gel used in pens. If a person purchases the pen and
analyze the Gel chemically and come to knew about the
secret formula, then it is called “Reverse Engineering”

25. HOW ARE TRADE SECRETS LOST OR
STOLEN ?

26. – departing or disgruntled employees
– intentional (malicious)
– inevitable (knowledge acquired)
– by ignorance
80% of trade secret loss
< employees, contractors, trusted insiders!
A Growing Problem.
Why Does It Occur?

27. A Growing Problem.
Why Does It Occur?
– TheWaywe dobusinesstoday(increased useof contractors,
temporary workers,out-sourcing)
– Decliningemployeeloyalty: more jobchanges
– Organizedcrime:discovered the money tobe madein stealing
high tech IP
– Storagefacilities(DVD,externalmemories, keys)
– Expandinguseof wirelesstechnology

28. Tradesecretsmaybelegallydiscoveredbythe following propermeans:
Independentinvention
Reverse engineering:- that is, starting with the known product and
working backward to find the method by which it was developed
(assuming the reverse engineeringis not prohibited by contract)
Observingthe iteminpublicuseor onpublicdisplay
Obtainingthe tradesecretfrom published literature
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29. Thank You