Trade Secret Protection - Essay Example

?What Happens When Trade Secret Protection Succeeds and When It Fails? The Consequences for Marketers As Peter Drucker postulated, " because itspurpose is to create a customer, business has two and only two functions: marketing and innovation. Marketing and innovation produce results, all the rest are costs" (Kalanje). From marketer’s point of view, marketing and innovation of business has to be in the ambit of legal protection. The marketing and innovation become interrelated as both of them support one another. Marketing creates value of innovation and the innovation, in turn, provides subject matter for marketing and dissemination of the created product. At times, however, the innovation might be jeopardized because of marketing. For instance, the most popular brand name Coca-Cola was subject to serious criticism from public and competitors when it was found to have traces of coca leaves that are dangerous to health. The Coca-Cola Company’s lawyers contested the claim and argued that cola is a special herb that improves health and the concentration of coca leaves in the beverage is not harmful for health. At this point, the competitors argued that the brand name Coca-Cola is deceptive in its nature as it does not really include anything that its name suggests (Solar Navigator). The marketers have to be aware of the importance of trademark laws to ensure that they do not violate any of these laws. Likewise, the Coca-Cola formula is a secretive recipe that is unknown to the world though it exists almost 100 years. The recipe is protected under Trade Secrets law. For marketers, it is important to understand the intellectual property rights associated with the innovation of a company. The intellectual property rights comprise of trademarks, copyrights, patents, trade secrets, etc. These rights are categorized according to their scope, subject matter that is protected, disclosure conditions for the grant of protection and duration of applicability of these rights. For instance, a patent is granted for innovations that are novel, involves an inventive step and has industrial application. Such a patent is to be valid for a period of 20 years and is granted upon the mandatory condition according to which the inventor completely discloses the invention to the public. Likewise, the copyright is granted for literary, artistic, cinematographic and record works for 100 years minimum. The trademark protects a mark, brand name, company name, logo, smell and sound that distinguish one product from the other. Its duration does not exceed 10 years and is renewable for 5 years if the business is interested in protecting the mark. The trade secrets is a protection for the subject matters that are not covered by any of the intellectual property rights, require unlimited protection or are of such a nature that a disclosure to the public might result in substantial loss for the owner. The trade secrets are a special protection that is recognized by the World Trade Organization’s Trade Related Intellectual Property Rights (TRIPS) Agreement. It has not been defined in a definite manner. The trade secrets are those secrets which attach considerable value to its owner, are of benefit to the competitors and can literally tarnish the image of the owner. They have a lifetime of protection unless not disclosed to public or stolen. The trade secret that is once leaked loses its secrecy. However, the owner of the trade secret can take action against such disclosure or theft if it is possible to prove that the trade secret was carefully locked in a secretive place, substantial measures were taken to keep the trade secret, the employees were not aware of the secret information, the top level employees, financial advisors, consultants, and any third parties, who were directly or indirectly involved with the trade secret, signed the Non-Disclosure Agreements (NDA). The court upon sufficient proof of the measures and value attached to the trade secret can order injunction that bars the thieves or the violators of NDAs from further disclosure of the trade secret. The courts take action against the theft of trade secret when there has been an industrial espionage, any of the employee or third party who had signed the NDA violated the agreement, the employees who had not signed the NDA but worked for the employer disclosed the trade secret to any third person which caused a loss to the employer, or when there was a disclosure by secret owners of the trade secret under the NDA. In some cases, the court may order punitive measures to compensate the loss to the owners of the trade secrets. Similarly, in serious cases where the trade secret theft or disclosure was intentional, the court may order criminal penalties on the wrongdoer (Wilson). The trade secrets protect any matter ranging from biological inventions that are unpatented, unpatented chemical inventions, machines, internal parts of machines, mechanical inventions, computer hardware and software (Bloch), magical tricks and techniques, customer lists, medical devices, product formulas, cosmetics, fabric, food inventions, test data (Correa), unpatented electronic inventions, chemical, food and cosmetic formulae, manufacturing processes, script and treatment of movies, odors, project designs, unwritten movie plots, photographic processes and musical compositions (Elias). The trade secret protection is regulated by international laws, local legislation and statutes. In Australia, the Commonwealth provides protection to trade secret theft, unfair disclosure of trade information, passing off trademark and breach of the NDAs (Intellectual Property Australia). Therefore, the trade secret protection provides marketers the benefit of choosing internationalization or globalization strategy to enter into new geographical areas. The primary interest of the marketer is to ensure that the area in which they are planning to enter has sufficient trade secret protection. For instance, Coca-Cola Company refused to expand its operations to India as the Indian trade secret law required that the secret should be disclosed to attain trade secret protection (Mittelstaedt & Mittelstaedt). This law was totally different from the trade secret law in the United States, Australia and other countries. Thus, the marketers had to change their strategy to some extent to avoid disclosure of their secreted coke formula. The trade secret protection does fail when the secret that has been protected as a trade secret has also been thought of by others and has become a common knowledge (Intellectual Property Australia). This happens as the trade secret, unlike trademarks, copyrights and patents, does not grant an exclusive right to the owner of the trade secret. There is no way to stop others from thinking, creating, developing, disseminating, using or leveraging the same knowledge which someone has kept as a trade secret. The employer cannot bar its employees from originally thinking the same thing which the employer has kept as a trade secret. The court cannot provide injunction to the owner of the trade secret based on the aforementioned ground. Likewise, the trade secret protection is difficult to maintain and has a short life in most of the cases (Ibid.). Unlike the case of Coca-Cola recipe that has survived 100 years of protection. In normal circumstances trade secrets are difficult and very expensive to protect. Particularly, this happens when many people are privy of the confidential information. Upon leaving the jobs or termination of contracts with suppliers and contractors, there is need for written undertaking not to disclose the trade secrets of the company (Ibid.). In case there is no written agreement which does not permit the company’s employees to disclose the secrets of the company upon leaving the job within the company, the chances are high that the secret will be disclosed and the owner will have no means to take any action against the wrongdoers. Importantly, the NDAs and undertakings are difficult to be proved in a court of law. Particularly in Australia, it is challenging for the lawyers to prove that the NDA or undertaking was violated intentionally or unintentionally to incur a substantial loss to the owner (PR Newswire). Considering this, the marketers have to keep in mind all the issues related to the Trade Secrets laws and protection afforded to them in a particular country (Hudson). The direct consequence of trade secrets protection failure on the marketers is that they have to change their marketing strategy by 360 degrees. This adversely affects their efficiency, resources and costs management. The lack of Trade Secret legislation discourages the marketers from developing an innovative and bold strategy. Furthermore, it highlights the importance of seeking other types of intellectual property rights to protect the confidential information (Freehling). In this regard, more time is required, as well as costs, to acquire the rights in every country separately. In conclusion, it has to be noted that marketers can develop their marketing strategies prior to ensuring that the trade secrets protection succeeds in the country of their interest. Otherwise the marketers have to encounter substantial losses of costs and resources. The marketers also have to ensure that they are not violating any Trade Secret laws of a country in any respect or any other intellectual property right laws before launching their new products or marketing strategies. References Australia Direct Marketing Association. n.d. “Online Advertising.” ADMA. http://www.adma.com.au/regulatory/compliance-tools/online-advertising/ Bloch, Marla R. 1985. “Expansion of the Berne Convention and the Universal Copyright Convention to Protect Computer Software and Future Intellectual Property.” Journal of International Law 283. http://heinonline.org/HOL/LandingPage?collection=journals&handle=hein.journals/bjil11&div=17&id=&page= Correa, Carlos Maria. 2005. “Protection of Data Submitted for the Registration of Pharmaceuticals: Implementing the Standards of the TRIPS Agreement.” University of Buenos Aires. http://www.acma.gov.au/webwr/telcomm/industry_codes/codes/australian%20emarketing%20code%20of%20practice.pdf Elias, Stepher. 1998. “Trade Secret Law: Overview.” Nolo Press. http://www.marketingtoday.com/legal/tradesec.htm Freehling, Paul. 2012. “April Fool Day’s Prank Leads to Trade Secret Litigation.” Trade Secrets. http://www.tradesecretslaw.com/tags/trade-secret/ Hudson, Roger. 1999. “Internet Advertising and the Law.” Web Usability. http://www.usability.com.au/resources/advertising.cfm Intellectual Property Australia. 2011. “Trade Secrets.” IPAustralia. http://www.ipaustralia.gov.au/get-the-right-ip/other-types-of-IP/confidentiality-trade-secrets/ Kalanje, Christopher M. n.d. “Role of Intellectual Property in Innovation and New Product Development.” WIPO. http://www.wipo.int/sme/en/documents/ip_innovation_development.htm Mittelstaedt, John D. & Mittelstaedt, Robert A. 1997. “The Protection of Intellectual Property: Issues of Origination and Ownership.” Journal of Public Policy and Marketing 16, Article 1. http://www.jstor.org/discover/10.2307/30000418?uid=2129&uid=2&uid=70&uid=4&sid=56237037403 PR Newswire. 2012. “When Is a Trade Secret not a Trade Secret? When It Is Revealed at a European Parliamentary Exhibition.” PR Newswire. http://www.prnewswire.com/news-releases/when-is-a-trade-secret-not-a-trade-secret-when-it-is-revealed-at-a-european-parliament-exhibition-137947198.html Solar Navigator. n.d. “Cola Marketing History.” SolarNavigator. http://www.solarnavigator.net/sponsorship/coca_cola.htm Wilson, Todd R. “Trade Secrets: Protection Best Practices.” 2005. Weintraub Genshlea Chediak Tobin & Tobin. http://www.theiplawblog.com/archives/-trade-secrets-trade-secrets-protection-best-practices.html Read More