Trade Secret can be a formula, pattern, physical device, idea, process, technological information or compilation of information which can be used for producing any goods or providing any services. Trade Secret is generally not known to the public and relevant business circles. Trade Secrets confers some economic benefits to the owner as they are unknown to the world. Although Trade Secret appears to fall under the ambit of IPR, but there is no law on the subject matter. Trade Secret may also include –
(i) Sales Methods
(ii) Distribution Methods
(iii) Consumer Profiles
(iv) Advertising Strategies
(v) Manufacturing Process
(vi) List of Suppliers and Clients.
Food Recipes can also be a Trade Secret. Trade Secret may protect information that may make any business truly unique. Trade Secrets cannot be registered by the owner like patents, trademarks, copyright, and other intellectual property rights. Therefore, no procedural formalities are required for the protection of trade secrets. There is no duration for the expiry of a trade secret as it continues for as long as the information is mysterious to the public.
A trade secret can only be protected by entering into Non-Disclosure Agreements also known by the name of Confidentiality Agreements. This agreement is generally between the owner and the employees under which employees are liable not to reveal the information which is kept as a secret. Breach of confidentiality agreements may result in hefty compensation. The Non-Compete clause is another legal way to protect a trade secret. In any contract, it is a clause in which a party agrees not to start a similar profession as of the other party and the party cannot make use of the information identified as a trade secret.
Disclosure of Trade Secret results in the decrease of profitability and such an act is considered illegal. Reverse Engineering is the only legal way to disclose any trade secret. In reverse-engineering, the product is deconstructed to have an exhaustive assessment of its whole composition. Examples of Trade Secret are – Formula of Coca Cola and Procedure of KFC chicken recipe.
Something about Trade Secret of Coca-Cola –
Coca-Cola is a company involved in the production of non-alcoholic sweet beverages. Coca-Cola was incorporated in the year 1892 headquartered in Atlanta, Georgia, United States. The company is serving worldwide for more than 130 Years and yet the formula of Coca Cola is not revealed to the public. Trade Secret of Coca-Cola makes it unique in the world. The formula of Coca-Cola is known to only two people in the world who fly on separate planes to escape any accident. The formula of Coca-Cola is safeguarded in a vault operated by the two owners only. Employees and workers at Coca-Cola are passed through rigorous security checks. The secrecy of the formula is the lifeblood of Coca-Cola.
In 2006, two employees of Coca-Cola were convicted for conspiring to steal and sell the trade secret of Coca-Cola to an executive of Pepsi. Later it was discovered that the person receiving the documents of Coca-Cola was not the one working for Pepsi. The whole matter was investigated by the Federal Bureau of Investigation (FBI).
Currently there are no Indian legislation to address the issues of disclosure of Trade Secret formed for Trade Secrets but they have equal significance as of Patents, Copyrights, Trademarks, etc. Trade Secrets are considered as an integral part of Intellectual Property Rights. It is only through Judicial precedents the lapses of Trade Secrets are highlighted and it is the need of the hour to form a statute in our growing economy. A trade secret is what makes a business extraordinary and distinctive.