Conditions for protecting trade secrets for new businesses

Protecting trade secrets helps new businesses protect their intellectual property and competitive advantage. Trade secrets will be automatically protected or registered under patents, but must meet the conditions to be protected. The term of protection lasts as long as the secret is kept. The following article will analyze in detail the conditions for protecting trade secrets that new businesses need to pay attention to.

What is a trade secrets?

Based on the content of Clause 23, Article 4 of the Law on Intellectual Property 2005 (amended and supplemented in 2009), trade secrets are information obtained from financial and intellectual investment activities that have not been disclosed and can be used in business.

Trade secrets are information that has commercial value. It is not yet widely known. Businesses apply security measures to keep this information.

Trade secrets can include formulas, manufacturing processes, computer programs, and business data. It also includes a customer list, business plan and marketing strategy. This information brings competitive advantages to businesses. This is considered a form of intangible asset of great value to businesses. The brand and value of the business is largely built on this foundation. Therefore, businesses need to protect business secrets. This helps maintain the new business’s competitive position in the market.

The importance of protecting trade secrets for new businesses

Protecting trade secrets is a key factor and plays an important role for new businesses, specifically as follows:

• Protecting trade secrets helps maintain competitive advantage and exploit commercial value
• Trade secrets create special value for businesses. It could be proprietary technology, efficient manufacturing processes, or groundbreaking business strategies. Protecting this information helps businesses maintain a leading position.
• Contribute to encouraging employee creativity; promote sustainable development of businesses.
• Increasing the value of the business, investors appreciate businesses with well-protected intellectual property. This helps businesses easily mobilize capital and expand their business.

New businesses need to build a business secret protection strategy right from the beginning, to create a solid foundation for the long-term development of the business.

Conditions for protecting trade secrets

Industrial property rights to trade secrets are established on the basis of legally obtaining the business secret and keeping that business secret confidential. Pursuant to the content of Point c, Clause 3, Article 6, Article 84, Article 85 of the Law on Intellectual Property 2005, it stipulates general conditions for protecting trade secrets, including:

• First condition: A trade secret, when used in business, will give the holder of the business secret an advantage over someone who does not hold or use that business secret.
• Second condition: The protected business secret is not common knowledge and is not easily obtained.
• Third condition: The owner applies reasonable security measures so that the business secret is not disclosed and is not easily accessible

Besides, trade secrets can be protected as patents. Pursuant to the provisions of Article 58 of the Law on Intellectual Property 2005, the general conditions for specifically protected inventions are as follows:

An invention is protected in the form of a patent if it meets the following conditions:

• New;
• Have a creative level;
• Capable of industrial application.

An invention is protected in the form of a utility solution patent if it is not common knowledge and meets the following conditions:

• New;
• Capable of industrial application.

In addition, the following subjects will not be protected as trade secrets:

• Secrets of identity;
• Secrets of state management;
• Secrets about national defense and security;
• Other confidential information not related to business

Enterprises need to meet the above three conditions simultaneously. This helps trade secrets be protected by law. Enterprises have the right to prevent others from accessing, using or disclosing unauthorized information.

Effective protecting trade secrets strategy for new businesses

Develop internal business secret management process

Enterprises need to build internal business secret management processes. This process helps control access and use of information. It also creates a sense of security among employees. The trade secret management process includes many steps

• First, businesses need to identify and classify information that needs to be kept confidential.
• Next, build a decentralized information access system.
• Finally, establish a process for handling security breaches.

Businesses need to train employees on security procedures. Employees need to clearly understand their responsibility to protect information. They also need to know what to do when they discover a security breach.

The business secret management process needs to be updated regularly. Businesses should periodically review and evaluate process effectiveness. This helps detect and fix weaknesses in the security system.

Building a culture of security in the enterprise is an important factor. Employees need to be aware of the importance of protecting information. Businesses can organize training sessions and seminars on information security.

Apply technical measures to protect information

Enterprises need to apply technical measures to protect information to protect trade secrets. This measure helps prevent unauthorized access. It also helps detect and handle security breaches. Information protection techniques that can be used are as follows:

• Data encryption is an important technical measure. Businesses should encrypt sensitive information when storing and transmitting. This helps protect information even if it is stolen.
• These tools help prevent cyberattacks and malware. Businesses need to update regularly to ensure effective protection.
• Physical access control is also important. Businesses need to limit access to areas where important information is stored. Security cameras and access control systems need to be installed.
• Businesses should perform regular security checks. This helps detect vulnerabilities in security systems. Businesses can hire security experts to conduct an independent assessment.

Use confidentiality contracts with employees and partners

Confidentiality contracts are legal tools that protect trade secrets. Enterprises should sign this contract with employees and partners. The contract stipulates confidentiality obligations and legal consequences for violation.

Confidentiality contracts with employees should clearly stipulate the scope of confidential information. It also outlines post-employment confidentiality obligations. The contract needs to stipulate sanctions for handling security violations.

For business partners, confidentiality contracts need to be more detailed. It specifically stipulates the purpose of using confidential information. The contract also clearly states the confidentiality period and liability for compensation and contract penalties in case of violation.

Businesses need to regularly review and update security contracts. This ensures the contract is consistent with business realities. It also helps comprehensively protect the business’s trade secrets.

Register for protecting trade secrets

Trade secrets are essentially automatically protectable. However, in case of a dispute, the owner of the trade secret will be forced to prove his ownership of the trade secret.

Therefore, to best protect trade secrets and avoid intellectual property rights infringements on business secrets, businesses should register for business secret protection according to the law.

When registering for protection of a business secret in the form of an invention, the owner will be exclusively protected in terms of idea content throughout the protection period (20 years from the filing date according to Article 93 of the Law on Intellectual Property 2005, revised and supplemented 2009, 2019, 2022). This gives the owner the exclusive right to use the invention, protecting against infringements.

At the same time, the owner will not need to prove his right to the trade secret when there is a dispute. Determination of ownership will be based on a protection certificate issued by a competent state agency.

Professional protecting trade secrets consulting services

Implementing business secret protection registration helps businesses best protect their intellectual property from infringements. At Long Phan, we provide business secret protection consulting services, helping to build a comprehensive protection strategy; Support businesses in complying with legal regulations. Service scope includes:

• Identify and classify information and data that are considered trade secrets of the company.
• Evaluate the current state of business secret protection of the enterprise.
• Drafting internal policies and regulations on protecting trade secrets.
• Consulting on developing management measures such as periodic inspection, risk assessment, and handling of violations.
• Consulting on building business secret management processes.
• Support drafting security contracts and internal regulations on information protection
• Consulting on procedures and conditions to register for business secret protection according to law.
• Support businesses in the process of preparing documents and registering for business secret protection.
• Consulting on dispute resolution when trade secrets are violated

Protecting trade secrets is a key factor for new businesses to protect their competitive advantage and develop sustainably. Hopefully this article has provided important information about effective value protection strategies that businesses can apply. If you are looking for professional consulting services to support your business in protecting trade secrets, please contact Long Phan via hotline: 0906.735.368 for support today.