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Trade Secret Protection

Written by Muhammad Irsyad on 13/08/2024
The author’s views are entirely their own and may not always reflect the views of Putranto Alliance.

Introduction

Implementing a trade secret protection system in Indonesia is essential for keeping your business’s confidential information safe, but it can be challenging due to gaps in legal protection. Our service helps you navigate these challenges, making sure your trade secrets are well protected from potential misuse. One way to do this is by creating strong legal agreements that can serve as solid proof if any disputes arise. Whether you’re worried about possible breaches or want to strengthen your legal safeguards, our expertise ensures that your trade secrets are secure, and your business is well-protected.

Definition

Trade Secret
A trade secret refers to confidential information in technology and business that holds economic value and is intentionally kept undisclosed to the public. This confidential data spans various categories such as production methods, processing techniques, sales strategies, and other information in the technology and/or business that has economic value and is not known by the public. Unlike other forms of Intellectual Property Rights (IPR), trade secrets don’t require formal registration for protection. The safeguarding duration depends on the owner’s perception of economic value and commitment to maintaining confidentiality. Trade secrets are eligible for protection under specific conditions:

The information is confidential, possesses economic value, and is actively kept confidential.
Confidentiality is established when the information is exclusive or not widely known.
Economic value is attributed to the information if its confidentiality can be leveraged for commercial activities or economic gains.
The information is considered confidential if reasonable and appropriate measures have been taken by the owner or controlling parties.

Confidentiality Agreement
A confidentiality agreement is a special trade secret agreement that protects business actors as trade secret owners. Its purpose is to prevent violations of trade secrets by setting clear expectations and responsibilities. These agreements are not explicitly regulated in Indonesia, so they rely on the principle of freedom of contract. In practice, these agreements can stand alone or be part of an employment contract. They can be signed when the owner of the trade secret and the party who will know the trade secret first reach an agreement. The validity of the agreement does not necessarily end when the employment or business agreement ends; it remains in effect until the specified time in the agreement.

The Best Time to Implement Trade Secret Protection

Implementing legal safeguards at the right time is crucial for ensuring the protection of trade secrets. Here are the optimal times to introduce these agreements:

At the Onset of Employment: Agreements should be introduced at the beginning of an employment relationship. This ensures that employees are aware of their obligations regarding trade secret protection from the outset. Including confidentiality clauses in employment contracts sets clear expectations and responsibilities.
During Business Partnerships or Collaborations: When entering into partnerships or collaborations with other businesses, it is crucial to establish legal safeguards. This protects sensitive information shared during joint ventures, research projects, or other collaborative efforts. Ensuring that all parties understand and agree to the terms helps safeguard trade secrets.
Before Disclosing Sensitive Information: Prior to disclosing any sensitive information to third parties, such as contractors, consultants, or potential investors, an agreement should be in place. This preemptive measure ensures that the information remains protected and that the receiving party is legally bound to maintain confidentiality.
When Updating or Revising Policies: Periodically reviewing and updating agreements is essential, especially when there are changes in business operations, technology, or legal requirements. Ensuring that agreements remain current and relevant helps maintain robust protection for trade secrets.

Benefits of Protecting Trade Secret

Implementing these legal protections offers several significant advantages for businesses. These measures not only protect sensitive information but also foster trust and provide a legal framework for addressing violations. Here are the key benefits:

Binding Workers to Protect Trade Secret Rights: The agreement establishes obligations for employees during their tenure and extends its binding effect even after they depart from the company, ensuring continuous commitment to preserving the secrecy of sensitive information.
Increased Trust in Business Relationships: Implementing these legal safeguards fosters trust in business relationships by demonstrating a commitment to protecting sensitive information, thereby strengthening relationships and collaborations.
Legal Force for Addressing Violations: In the event of a breach, the agreement provides a structured and enforceable framework, empowering the injured party to seek legal remedies for any losses incurred due to the violation of trade secrets.

How to Implement Trade Secret Protection

Creating and implementing these legal safeguards involves several critical steps to protect trade secrets. Here is a structured process to follow:

Identify Sensitive Information: Determine which information qualifies as a trade secret and needs protection. This includes production methods, processing techniques, sales strategies, and other confidential business information.
Draft the Legal Agreement: Create a comprehensive document that outlines the terms and conditions of confidentiality. Ensure it includes definitions, obligations, responsibilities, and the duration of the agreement.
Include Specific Clauses: Incorporate specific clauses that address the scope of confidentiality, permitted disclosures, and consequences of breaches. This ensures clarity and enforceability.
Review Legal Requirements: Ensure the agreement complies with local laws and regulations. In Indonesia, such agreements are based on the principle of freedom of contract, so it is essential to ensure all legal aspects are covered.
Negotiate Terms: Discuss and negotiate the terms with the other party. Ensure both parties understand and agree to the terms before signing.
Sign the Agreement: Once both parties agree to the terms, sign the document. This formalizes the commitment to protect trade secrets.
Implement Security Measures: Alongside the agreement, implement robust security measures to protect trade secrets. This includes physical security, digital security, and employee training.
Monitor Compliance: Regularly monitor compliance with the terms. Ensure that all parties adhere to the agreement and take immediate action in case of any breaches.
Update Agreements as Needed: Periodically review and update the documents to reflect any changes in business operations, technology, or legal requirements.

How We Can Help

At Putranto Alliance, we understand that protecting trade secrets is crucial for maintaining a competitive edge and ensuring long-term business success. We offer comprehensive assistance to clients who need help safeguarding their valuable intellectual property.

Expert Guidance on Trade Secret Protection: Putranto Alliance offers comprehensive assistance in matters related to trade secrets. Our seasoned professionals provide expert guidance on creating these legal agreements, ensuring that your sensitive information is adequately protected.
Drafting and Reviewing Agreements: We assist in drafting and reviewing documents tailored to your specific needs. Our legal experts ensure that the agreements are robust, enforceable, and compliant with local laws and regulations.
Resolving Trade Secret Disputes: In case of trade secret violations, Putranto Alliance provides legal support to resolve disputes. We offer both litigation and non-litigation solutions, including arbitration and alternative dispute resolution processes.
Ongoing Legal Support: Our team offers ongoing legal support to help you navigate the complexities of trade secret protection. We stay updated with the latest legal developments to provide you with the most current and effective solutions.
Customized Solutions: Understanding that each business is unique, we offer customized solutions that align with your specific business needs and objectives. Our goal is to deliver an unforgettable service experience that ensures the protection of your valuable assets.

FAQs

What legal remedies can be taken for trade secret violations?

Legal remedies can be pursued through litigation or non-litigation means. Litigation options encompass criminal and civil remedies, while non-litigation resolutions may involve arbitration or alternative dispute resolution processes.

How do you protect a trade secret?

One of the efforts that can be made is to make a confidentiality agreement. A confidentiality agreement is a specialized type of trade secret agreement employed by businesses to protect sensitive information.

Are trade secrets transferable or assignable?

Trade Secret Rights can be transferred or assigned by inheritance, grants, wills, written agreements, and other causes justified by laws and regulations. The transfer of Trade Secret Rights must be accompanied by a document on the transfer of rights.

What are the rights of a trade secret owner?

The owner of a Trade Secret has the right to:

Use the Trade Secret owned by him/her.
Grant a license to or prohibit others from using the Trade Secret or disclose the Trade Secret to third parties for commercial purposes.

What are the types of trade secret violations?

There are three types of trade secret violations:

Intentional Disclosure: Unauthorized disclosure of trade secrets to the public or competitors, compromising the confidential nature of the information.

Breach of Confidentiality Agreement: Violation of the terms of a confidentiality agreement, such as leaking information outside of the agreed terms.

Illegally Obtaining or Controlling Trade Secrets: Unlawful acts like theft, espionage, or other illicit methods to obtain confidential information without proper authorization.

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