A trade secret combines valuable business know-how with confidentiality. Every company seeks to protect the secrets that give it a competitive edge. These trade secrets hold substantial commercial value and are often supported by intellectual property rights like trademarks, patents, and copyrights. In the business world, a secret typically holds economic value, stemming from the investment made to keep it confidential. In today’s age, where data is as valuable as oil, companies heavily rely on confidential knowledge to stay ahead. Protecting and managing this sensitive information is crucial; without proper safeguards, its value can vanish.
Article 39 of the TRIPS Agreement defines a trade secret as information that isn’t just a specific combination of parts or their arrangement. It’s typically known only to those in related fields. To qualify as a trade secret, this information must hold commercial value due to its confidentiality, and the owner must take appropriate measures to keep it secret. Thus, a trade secret can be understood as a form of technical knowledge that carries significant commercial importance. It arises from activities conducted within an organization and is not publicly accessible, nor does it meet the novelty criteria required for patent protection.
Trade secrets are generally classified into two categories: technical and business secrets. Technical secrets pertain to the production and manufacturing of goods and services, including processes, craft secrets, design drawings, and recipes. The most prominent example of a technical secret is the formula for Coca-Cola.
Business secrets are secrets generated by companies through their activities. These include customer data, price and sales statistics, marketing distribution channels, promotional strategies and expansion plans. Business secrets are vital components for companies to gain competitive and comparative advantages over their rivals.
Protecting trade secrets is crucial for a company’s competitive advantage, often relying on contractual obligations. Employees typically disclose these secrets during their employment, making such disclosures potential breaches of contract. To safeguard and investigate trade secrets developed within an organization, it’s essential to implement robust office management practices that prevent leaks.
Investing in employee training is vital; providing adequate knowledge on handling confidential information empowers employees to recognize the importance of safeguarding trade secrets. Moreover, addressing concerns related to office utilities, computers, and literature can further enhance security.
The investments made to protect trade secrets reflect their true commercial value. While Non-Disclosure Agreements (NDAs) and other contractual protections bind employees, breaches can pose significant risks, potentially threatening the integrity of the entire organization. Therefore, companies must be vigilant and proactive in their efforts to secure their intellectual property, as the consequences of leakage can be far-reaching.
Sensitive Information and office management
Office management encompasses actions conducted by the employees in day-to-day business activities. Employees came across various forms of data containing sensitive information. Furthermore, they interact with several hardware utilities in making, duplicating, or destroying data containing sensitive information. Hence, office management shall take adequate measures to stop the dissemination of information.
The use of Xerox machines in the office premises is very common. Employees use the Xerox machines very frequently to make multiple copies, which shall be scrutinized and regulated closely. It is very common for employees to make multiple copies while forgetting the original or one of the copies unattended for the next one to find. Employees shall be trained not to dispose of poor copies containing sensitive information.
Companies shall take adequate measures while engaged in advertisements and publications. Such publications often contain information that might constitute potentially sensitive information. Employees shall scrutinize the information while sharing it with third parties for publications, brochure-making, etc. Training shall be provided to the employees regarding disposing of the leftovers, i.e. loose information and extra copies. Sensitive information often leaks out from improper disposal of documents. A laying in the corner ‘waste bin’ could have paper records. Lastly, the re-selling of printouts as scrap shall be avoided and use of better disposal system shall be utilized, e.g. Shredding.
When conducting a trade secret audit, consider the following critical aspects of information security and employee training:
- Training and Access Control: Are staff members participating in regular training to stay updated on technical and legal issues, and is physical access to sensitive information restricted?
- Data Protection and Encryption: Are confidential files stored securely, and is encryption used to protect sensitive information transmitted over the Internet?
- Password and Virus Protection: Are all employees adhering to strict password and virus protection protocols, and are passwords frequently changed using secure methods?
- Former Employee Access and Background Checks: Are there procedures in place to prevent former employees from accessing sensitive information? Are employment background checks conducted for individuals with access to confidential information?
- Information Sharing and Terminal Security: When providing copies of information, do employees ensure that nonessential details are removed, and are terminals never left unattended with confidential information visible?
- Records Retention and Disposal: Does the business have a records retention and disposal schedule for all forms of media, and is data securely erased or physically destroyed when disposing of electronic media?
- Secure Communication: Are fax machines used exclusively for non-confidential materials, and are precautions taken when sending confidential materials, including notification of recipients and verification of transmission?
- Remote Work and Transport Security: Are there policies for safeguarding confidential information transported outside the office, and are remote employees trained on responsible information handling practices?
- Compliance and Responsibility: Is there a designated individual responsible for maintaining information security and staying updated on relevant laws and regulations?
- Risk Assessment and Testing: Are regular systems penetration tests conducted to assess vulnerability to hacking, and are When additional precautions implemented to safeguard against industrial espionage if necessary?
Guidelines for information in hardcopy or electronic form
Organizations must have clear and distinguishable guidelines for all the sensitive information available in hardcopies and digital formats. They may consider marking relevant information as proprietary information in the format they desire. Such marking methods include logos or labels affixed over the document.
The digital transformation of knowledge or information is on the rise and poses greater risks as compared to hard copies. Organizations shall take adequate measures in dealing with electronic media. For instance, practising and ignoring domain password sharing may lead to malicious or unauthorised spilling of information. Distribution information within and outside the organization shall always be scrutinized. Here, particular emphasis shall be given to IT departments. Organizations can consider labelling information as per their sensitivity, and provide access to such information accordingly, e.g., the least sensitive information could be shared within the organization among all the employees, but cannot be sent to external mail. On the other hand, the highest sensitive information shall only be shared by senior officials among themselves. Such practice would ensure tracing back to the source, once the information is out.
Information risk analysis
Organizations should keep the information security system in healthy condition and should take reasonable measures including financial investments in developing and restoring the system. This helps them in averting possible loss of information and the adverse consequences. Information risk analysis may be developed by two methods.
- Quantitative risk analysis – involves assessing potential risks by evaluating their impact and likelihood using descriptive measures rather than numerical ones. It deals with –
- Identifying the value of the information;
- Evaluating the actual threats to information risks and consequences, if occur;
- Insight into how often such threats have emerged and their likeliness of repetition (using experience);
- Effectiveness of various measures taken in reducing vulnerabilities;
- Cost-benefit analysis to determine the economic worthiness of the investments made for such measures. It helps management in formulating decision-making strategies.
- Qualitative risk analysis – such analysis is more subjective, where the participants, i.e. members of a group, give an authentic valuation of multiple areas where information leakage might occur. They also delve into the estimates of loss or damages within the defining terms.
Technical and Administrative Controls
These controls are majorly associated with the use of information technologies within the organization. Technical controls include the use of logical access controls, encryption technologies, security devices/ cameras, and identification and authentication technologies. As the business grows from small to medium or large, the use of firewall systems, and virus and intrusion detection software shall be considered.
Administrative controls include the development of appropriate policy standards and procedural guidelines. It includes regular screening of employee personnel, awareness creation, and periodic training for building capacity infrastructure to prevent information leakage.
Tips for reasonable restrictions
To ensure the protection of sensitive information, employees should follow specific reasonable restrictions. Always wear and openly display company-issued identification badges to maintain secure workplace access. Employees must take personal responsibility for safeguarding company information, ensuring it is not lost, misused, or disclosed to unauthorized personnel. Proper training in classifying information assets is essential to reflect their value accurately. Confidential information should be protected throughout its entire life cycle, from creation to disposal, maintaining its confidentiality, integrity, and availability. Employees should use confidential information solely for business benefits and keep third-party information in line with existing nondisclosure agreements (NDAs).
In cases where confidential information is shared externally, proper authorization and need-to-know verification must be ensured. Cooperation is also crucial in protecting information during exit processes, which may involve signing trade secret acknowledgements or disclosing non-confidential future employment details. Finally, only authorized personnel should disclose company information to the public, ensuring all such information is vetted for trade secret protection before release.
Conclusion
Protecting trade secrets and sensitive information is vital for any organization aiming to maintain its competitive edge in today’s data-driven economy. A combination of technical and administrative controls, along with comprehensive training, plays a critical role in safeguarding these assets.
By implementing reasonable restrictions and fostering a culture of responsibility among employees, businesses can minimize the risk of information leakage. Ultimately, proactive measures and diligent oversight will not only preserve the value of trade secrets but also enhance the overall integrity of the business, safeguarding its future success.
