INTERNATIONAL TRADE SECRET PROTECTION: HARMONIZATION AND ENFORCEMENT CHALLENGES

ABSTRACT

This paper examined the aspect of conducting international trade between nations across borders. Through the application of secondary sources of data collection techniques, it analyses the significance of maintaining the secrecy or confinement of international trade secrets. With reference to the commercial benefits of any business or organisation. Being an indispensable intellectual right, till date many international treaties and agreements have been enacted amongst nations in order to protect this information from misappropriation. Apart from these, the judiciary and the legislation of the nation’s formulate different sets of rules in the form of laws to protect this commercially valuable information from being disclosed without the permission of the legitimate authority. The paper also mentions certain factors that tend to pose a challenge on the protection of international trade secrets which may in turn cause financial loss to the legitimate authority of the same due to their competitors in the market.

Keywords

international trade, trade secrets, intellectual rights, treaties and agreements, commercial benefits, legitimate authority, competitors.

INTRODUCTION

As no country in the world is self-sufficient enough in producing all the goods or fulfilling all the requirements of the people due to the lack of availability of resources. Therefore, there is a strapping need for carrying out several transactions between the countries for the purpose of fulfilling the goods or services that are not produced in that particular country or that can be purchased at a lower price from somewhere else than manufacturing on its own. Thus, the term ‘International Trade’ refers to the exchange or transactions of goods, commodities, services, thoughts, ideas or resources, etc. among nations across their territorial boundaries. This created a rigid sense of interdependency among the nations amounting to their overall collective development. The international trade provides various benefits to the countries as a whole such as the exchange of commodities as per requirement, more options to consumers, economic growth, generation of employment opportunities and many more.

^[1]For the purpose of administering these international trade and commercial transactions, every country has formulated their own trade laws and policies. The main intention behind the formulation of these policies is to accelerate economic growth. In India, the trade policies are regulated and governed by the Ministry of Commerce and Industry. The policies are formulated for a period of 5 years with certain specific objectives.

PURPOSE OF THE ANALYSIS

This paper tends to study the significance of international trade secrets and the international treaties or agreements enacted for their protection. The protection of this confidential information is essential for the economic stability of a business or organisation with regards to the encroachment by any other illegal unauthorised agency to limit the number of people who have the information and to convince the people having the information to enter into a legal agreement promising not to disclose the secrets to any third party.

MEANING OF TRADE SECRET

Trade secret is a form of intellectual property that is extremely confidential information which serves commercial asset for the purpose of ensuring various sources of advantages relating to competition in the marketplace. Trade secrets can be in the form of chemical formulae, method of production, recipe of dishes or products, strategic price pointing, market tactics, customer management, or any kind of such other valuable information. It is extremely essential to protect the trade secrets from being disclosed or lost to any competitor that would result in huge financial loss to the owner. As for any business to become successful it requires a lot of effort, resources and time due to repeated experimentation and failure thus losing the secret of their profit to any fellow competitor without any permission or legal backing would result in injustice with them. Therefore, these trade secrets must be kept confidential in the long run by the legitimate owner or the licence holder of the same for the maintenance of their commercial profit. For this purpose, various trade secret protection legislation and policies have been developed for preventing the economic exploitation of the business due to its illegal imitation or stealing of valuable information by its competitors. The protection of trade secrets in India is governed mainly under the Indian Contract Act, 1872 for the maintenance of exclusivity of the business.

Some of the most fundamental ways to protect the trade secrets of any business or organisation from exposure is to restrict the access to confidential information, to limit the number of people who have the information and to convince the people having the information to enter into a legal agreement promising not to disclose the secrets to any third party.

RELATION BETWEEN TRADE POLICY AND TRADE SECRET

There is an ineluctable relationship between international trade policy and trade secrets which are essential for nurturing the economic environment along with the protection of Intellectual Property Rights and trade agreements. Many organizations or businesses have their own trade secrets that are beneficial for the economic profit or earning and curb its competition.

PROTECTION OF INTERNATIONAL TRADE SECRET

The international trade secrets can be disclosed due to the violation of trade secret laws that take place when confidential information is illegally obtained by any other business or organization other than the legitimate owner or due to the violation of non-disclosure agreement that arises on the breach of the agreement.

INTERNATIONAL AGREEMENT ON PROTECTION OF TRADE SECRET

There have been a number of international agreements and treaties which are entered into by the countries for the protection of the intellectual property rights of various businesses or organizations. Almost each of them are based on the same idea of protection of these intellectual rights in the form of protecting trade secrets with regards to the increasing competition of the market. Some of the international treaties that are worth mentioning with context to the protection of trade secrets are-

1)Paris Convention for Protection of Industrial Property

One of the very initial international treaties for the protection of intellectual rights is the Paris Convention for Protection of Industrial Property signed in Paris on March 20,1883. Article 10 of the Convention restricts unfair trade practices among the member states that also provides trade secrets protection along with international support. Also, Article 1 of the Convention provides the scope for defining intellectual property rights in its broadest sense. This Convention provides protection against unfair commercial competition that includes the right to protect the trade secrets.

2)TRIPS Agreement

Agreement on Trade-Related Aspects of Intellectual Property Rights also known as TRIPS Agreement provides protection against the disclosure of essential commercial information under Article 7 that can be referred to as trade secrets of any business. ^[2]Through the provisions of Article 39, the Convention ensures to all its members the legal protection against the disclosure of any trade secret without any permission from the actual authority. Thus, it ensures the protection of the trade secrets and the framework of legal remedy in case of its encroachment through any means.

3)North American Free Trade Agreement (NAFTA)

Under NAFTA, a trade secret is defined as the information that is commercially valuable and is protected by the owner from public disclosure.^[3] The agreement provides certain legal means for the enforcement of protection of trade secrets from being illegally utilised by its competitors that would in turn cause financial loss to the company or business. It ensures the legal remedies in the form of monetary compensation, injunctions, etc. to the aggrieved party. Though this Agreement was superseded in the year 2020, through the enactment of United States-Mexico-Canada Agreement (USMCA)

Apart from the aforementioned treaties or agreements, there are a number of other international conventions that has been enacted from time to time for the protection of disclosure of trade secrets without proper authorization and the protection of intellectual property rights as a whole along with the enforcement means in case of any encroachment

World Intellectual Property Organization (WIPO)

WIPO is a specialized agency of the United Nations that deals with intellectual property matters such as trademarks, copyrights, trade secrets, etc. This agency facilitates the administration of various international treaties and agreements concerning Intellectual property rights effectively. In the broader aspect, it also guided the member states to formulate legislations governing intellectual property rights and in particular the protection of trade secrets and their enforcement effectively.

CHALLENGES IN ENFORCEMENT OF PROTECTING THESE RIGHTS

With the advancement in the field of science and technologies, there has been ease in the accessibility of information of any kind. Thus, in regards to the commercial transactions, various new challenges have been emerging for the protection and management of these intellectual property rights inclusive of protecting the trade secrets. Some of the challenges faced for the protection of these rights are mentioned below-

1)Identification or Recognition of trade secrets

It is very difficult to determine the aspect of constituting trade secrets by the judiciary as there is no universally accepted criteria. Also, the criteria for categorizing trade secrets is not effectively defined. Thus, it is very challenging to define whether any valuable information of a business or organization can be considered as a trade secret.

2)Maintaining the secrecy of the information

At times, it becomes challenging for maintaining the confidentiality of the information having commercial importance amongst a limited group of people. In many instances, the agreement of non-disclosure between the company or business and the individuals are breached which may result in their financial loss. However, sometimes the information may be disclosed unintentionally due to lack of security confinement.

3)Development of Technology

Due to the rapid development in the field of technology, it has become easy to access any information which in turn pose a great challenge in protecting the secret valuable information from being disclosed among the masses. However, a lot of legislative as well as judicial measures have been developed in order to restrict technological development from encroaching on confidential information that is commercially valuable.

4) Burden of Proof

It becomes challenging to prove the misappropriation of commercial significant information without the permission of the actual authority in the Court of law. To prove the illegal acquisition of the information, the trials are subjected to various reasonable efforts for providing sufficient evidence for justification.

In addition to the above-mentioned difficulties, there are many other factors that imposes a challenge for the protection of trade secrets in the form of commercially valuable information.

CONCLUSION

There may be certain valuable information owned by a company or business that provides commercial benefits to them. Thus, for the protection of this information, various intellectual property laws are being formulated in order to secure them from any unauthorized misappropriation of these secrets that may result in their financial loss. Unlike parents that are granted for a period of 20 years, trade secrets can be kept confidential for an unlimited period as it solely depends on the people having the information. This information can be kept confidential without any requirements for registration till the time the business or company is able to maintain exclusivity. In case the commercially valuable information became accessible to their competitors in the marketplace without their permission or illegal acquisition the business or company suffer grievous financial loss

REFERENCES

1) Fitzpatrick, M.W., and DiLullo, A.S,. International trade secrets protection: Global issues and responses., Competition Forum 11(2), no.21(2013).

2)Santiago, F., Trade secret protection on globalisation era., (2017).

3)Lang, J., The protection of commercial trade secrets., European Intellectual Property Review 25, no.10(2003):462-471.

4) Jackson, M., Keeping secrets: International developments to protect undisclosed business information and trade secrets., Information Communication & Society 1, no.4 (1998): 467-487.

^[1]^{William, M.F., International trade secrets protection: Global issues and responses., Competition Forum 11(2),no.21,(2013)}

^[2]^{Dessemontet, F., Protection of trade secrets and confidential information., Intellectual Property and International Trade: The TRIPS Agreement, (1998)}

^[3]^{Council on Foreign Relations., NAFTA and the USMCA:Weighing the Impact of North American Trade,} https://www.cfr.org/backgrounder/nafta%20s-economic-impact