Trade secret laws and regulations in Singapore

Explore reliable legal information about trade secrets in Singapore

  1. General
    1. 1. Has the Directive (EU) 2016/943 of the European Parliament and of the Council of 8 June 2016 on the protection of undisclosed know-how and business information (trade secrets) against their unlawful acquisition, use and disclosure (“Trade Secrets Directive”) been implemented?
    2. 2. Are there any other applicable sources of law related to trade secrets?
    3. 3. How are trade secrets defined? 
    4. 4. Do specific measures or protections need to be put in place for information to benefit from protection as a trade secret?
  2. Dealings in and ownership of Trade Secrets
    1. 1. Are trade secrets transferable and/or licensable?
    2. 2. Are there specific consequences arising from transfer or licensing of trade secrets by a party other than the trade secrets owner?
    3. 3. Is co-ownership of trade secrets permitted?
  3. Enforcement of Trade Secrets
    1. 1. What actions constitute infringement of trade secrets?
    2. 2. Are there any measures allowing the trade secrets' owner to gather and/or preserve evidence of infringement of trade secrets?
    3. 3. What specific interim and final measures and remedies are available in the event of infringement of trade secrets?
    4. 4. Is there a specific period after obtaining interim measures by which the applicant must bring proceedings for a substantive decision on the merits of the claim?
    5. 5. Are there circumstances in which damages or other financial compensation may be available in place of an injunction and other measures?
    6. 6. Are any interim or final measures and remedies available through ex parte hearings?
    7. 7. How is financial compensation to the trade secrets holder calculated?
    8. 8. What is the limitation period for claims relating to misappropriation of trade secrets?
    9. 9. When does the limitation period begin to run?
    10. 10. Are there any circumstances that interrupt or suspend the limitation period?
    11. 11. Are mechanisms available to preserve confidentiality of trade secrets in the course of legal proceedings?
    12. 12. Are there any particular legitimate interests which may be invoked as an exception to the measures, procedures and remedies for trade secrets protection?
    13. 13. Are any measures available where proceedings concerning trade secrets are manifestly unfounded and / or found to have been initiated abusively or in bad faith?
    14. 14. Are separate legal proceedings required for such measures?
  4. Employee / employer liability
    1. 1. In addition to any statutory protection of trade secrets, what protections can employers put in place to avoid misuse of trade secrets by its workforce? 
    2. 2. Are there implied rights of protection for employers regarding misuse of trade secrets by its workforce?  
    3. 3. What other means can employers use to protect misuse of trade secrets by the workforce, particularly when staff leave? 
    4. 4. Are there any protections for “whistleblowers” or similar rights for employees in relation to infringement of trade secrets?  
    5. 5. Can an employer be liable for their employee’s infringement of a third party’s trade secrets?  
  5. Commercial contracts aspects
    1. 1. What kind of protection/provisions are to be included in supply or similar contracts with respect to trade secrets?
    2. 2. What are typical pitfalls in contracts regarding protecting trade secrets?
    3. 3. Are there any important aspects regarding protecting trade secrets cross border?
    4. 4. Are there any penalty clauses in contracts with regards to trade secrets?

General

1. Has the Directive (EU) 2016/943 of the European Parliament and of the Council of 8 June 2016 on the protection of undisclosed know-how and business information (trade secrets) against their unlawful acquisition, use and disclosure (“Trade Secrets Directive”) been implemented?

Not applicable.

The law on trade secrets is not codified in Singapore and trade secrets are protected under common law, in particular the law of confidence. Trade secrets may also be protected by contractual obligations between the disclosing party and the recipient.

3. How are trade secrets defined? 

There is no codified definition of what constitutes a trade secret. However, trade secrets are generally regarded at common law as a form of confidential information that has a higher degree of confidentiality than “mere confidential information” (see, for example, Clearlab SG Pte Ltd v Ting Chong Chai [2014] SGHC 221 at [68]).
For information to be protectable as confidential information or a trade secret, it must not already be available to the public at large and it must be clearly and specifically identified (Nanofilm Technologies International Pte Ltd v Semivac International Pte Ltd and others [2018] SGHC 167). 
Information is more likely to be considered confidential where:

  • The release of the information would injure the owner of the information or benefit others;
  • The owner believes the information to be secret and not already in the public domain and the owner’s belief is reasonable; and
  • The information is considered confidential when judged in the light of usage and practices of the particular trade or industry concerned.

(Thomas Marshall (Exports) Ltd v Guinle [1979] Ch 227)
In determining whether or not something constitutes a trade secret in the employment context, the Singapore courts will also consider the following factors:

  • The nature of employment;
  • The nature of the information;
  • Whether the employer impressed on the employee the confidentiality of the information; and
  • Whether the relevant information can be easily isolated from other information, which the employee is free to disclose. 

(Man Financial (S) Pte Ltd v Wong Bark Chuan David [2007] SGCA 53 at [83] affirming Faccenda Chicken Ltd v Fowler [1987] Ch 117 at 137–138)

4. Do specific measures or protections need to be put in place for information to benefit from protection as a trade secret?

For information to benefit from protection as a confidential information or trade secret, reasonable steps should be taken by its owner to keep it secret or prevent it from being easily accessible to the public.
Some examples of measures that can be taken to protect confidential information or trade secrets include:

  • Limiting access by controlling and ensuring that only certain categories of staff members (e.g. management) have physical and/or digital access to trade secrets;
  • Keeping clear records of all business transactions, which may contain any confidential information or trade secrets and, if necessary, marking the information as “CONFIDENTIAL”; and 
  • Employing the use of non-disclosure agreements or confidentiality agreements to ensure that any person (e.g. employees, consultants and vendors) who has access to the confidential information or trade secrets is contractually required to keep the information confidential.

Dealings in and ownership of Trade Secrets

1. Are trade secrets transferable and/or licensable?

Yes. 
(See for example, Clearlab SG Pte Ltd v Ting Chong Chai [2014] SGHC 221)

2. Are there specific consequences arising from transfer or licensing of trade secrets by a party other than the trade secrets owner?

No specific consequences have been set out in Singapore case law.

3. Is co-ownership of trade secrets permitted?

There is currently no case law in Singapore relating to the co-ownership of trade secrets. However, it is likely that there can be a shared right to take action for breach of confidence.

Enforcement of Trade Secrets

1. What actions constitute infringement of trade secrets?

In an action for breach of confidence, the Singapore courts will likely consider the unauthorised use and/or disclosure of trade secrets as an infringement of trade secrets. (Obegi Melissa and Others v Vestwin Trading Pte Ltd and Another [2008] 2 SLR(R) 540)
The Singapore courts have also determined that it will take the following approach in considering whether the evidence of infringement has been established. 
 First it will consider:

  1. Whether the information in question possesses the necessary quality of confidentiality; and
  2. Whether the information was imparted in circumstances importing an obligation of confidence (by contract or by implication of law) or whether confidential information has been accessed or acquired without a plaintiff’s knowledge or consent.

Upon satisfaction of these prerequisites, an action for breach of confidence is presumed. The burden then shifts to the defendant to “prove that its conscience was unaffected”. Some examples provided where the presumption might be rebutted include where the defendant came across the information by accident, was unaware of its confidential nature, or believed there to be a strong public interest in disclosure.
(I-Admin (Singapore) Pte Ltd v Hong Ying Ting and others [2020] SGCA 32)

2. Are there any measures allowing the trade secrets' owner to gather and/or preserve evidence of infringement of trade secrets?

It is advisable for owners of trade secrets to keep clear records of all business transactions that may contain any trade secrets as well as of the individuals who have physical and/or digital access to trade secrets.
In the context of legal proceedings, an owner of trade secrets can apply for an Anton Piller order (i.e. a search order), which is a court order requiring a party to permit another to search the former’s premises or property for the preservation or seizure of property or evidence relevant to the dispute. 
The Singapore Court of Appeal recognises the practical difficulties faced by owners of confidential information in bringing a claim for breach of confidence, and has shifted the burden of proof to defendants to show that they have not acted inconsistently with their obligations of confidentiality (I-Admin (Singapore) Pte Ltd v Hong Ying Ting and others [2020] SGCA 32).

3. What specific interim and final measures and remedies are available in the event of infringement of trade secrets?

The owner of the trade secrets can apply to the courts for an interim and/or final injunction, either damages or an account of profits, and an order for delivery up and/or disposal of materials containing the trade secret.

4. Is there a specific period after obtaining interim measures by which the applicant must bring proceedings for a substantive decision on the merits of the claim?

No.

5. Are there circumstances in which damages or other financial compensation may be available in place of an injunction and other measures?

The Singapore courts may consider damages or other financial compensation to be a more appropriate remedy than an injunction or a delivery order where there is little or no risk of continued wrongdoing and if an injunction or delivery order would not set right the loss already suffered by virtue of the defendant’s unconscionable conduct. (See, for example, I-Admin (Singapore) Pte Ltd v Hong Ying Ting and others [2020] SGCA 32 where the Singapore Court of Appeal found that the defendant has acquired their own intellectual property and there is no indication that the respondents are still relying on the appellant’s materials in the course of business.) 

6. Are any interim or final measures and remedies available through ex parte hearings?

It is possible to obtain interim injunctions through ex parte hearings in Singapore.
In addition, where the defendant fails to enter an appearance or fails to file his defence within the stipulated time to do so, the plaintiff can apply for default judgment and such applications can be heard ex parte. If the plaintiff succeeds in the application for default judgment, the court will generally grant the relief sought by the plaintiff.

7. How is financial compensation to the trade secrets holder calculated?

If there is actual use of the trade secrets, an account of profits may be awarded. This would require the defendant to disgorge his net monetary gains resulting from the breach of confidence.
The courts could also award equitable compensation to the plaintiff, which requires the plaintiff to be restored to the same position they would have been in if the breach had not been effected.
Another alternative would be an award of equitable damages for what damages have been and may be suffered by reason of the breach of confidence. In determining the appropriate award, some factors that the courts may take into consideration include the additional cost that would have been incurred by the defendant to create its work without any reference to the plaintiff’s materials, and the reduction in time taken to set up the defendant’s business, allowing it to commence profit-making earlier. (See, for example I-Admin (Singapore) Pte Ltd v Hong Ying Ting and others [2020] SGCA 32)

8. What is the limitation period for claims relating to misappropriation of trade secrets?

Under the Limitation Act of Singapore, the limitation period for an action founded on a contract or on tort and for claims for an injunction or for other equitable relief is generally six years from the date on which the cause of action accrued. 

9. When does the limitation period begin to run?

The limitation period for an action for damages for a breach of duty of confidence is as follows:
(a)    six years from the date the cause of action accrued; or

10. Are there any circumstances that interrupt or suspend the limitation period?

(b)    three years from the earliest date the plaintiff first had both the knowledge required for bringing an action for damages in respect of the relevant damage and a right to bring such an action, if that period expires later than the period mentioned in (a) above.

Some mechanisms that could assist with preserving the confidentiality of trade secrets in the course of legal proceedings include:

  • Entering into a non-disclosure or confidentiality agreement to restrict the disclosure of information obtained during discovery;
  • Appling for an interim injunction and/or a delivery up order to prevent the other party from using or disclosing the information;
  • Invoking legal professional privilege which allows a party to withhold the disclosure of information that would otherwise be compulsory for it to disclose; 
  • Apply to expunge evidence from the court’s records by objecting to the admissibility of evidence (i.e. by disputing the relevance to the matters in issue); and
  • The Riddick principle is applicable in Singapore, whereby a document that is disclosed during discovery is subject to an implied undertaking from the parties to the action not to exploit the disclosed document for a collateral purpose (Riddick v Thames Board Mills Ltd [1977] QB 881). The Singapore Court of Appeal clarified in its decision for Foo Jong Long Dennis v Ang Yee Lim [2015] SGHC 23 that the Riddick principle no longer applied once a document had been used in open court and the disclosing party must apply to the court at the time the document is used in court for the implied undertaking to continue.

12. Are there any particular legitimate interests which may be invoked as an exception to the measures, procedures and remedies for trade secrets protection?

The disclosure of trade secrets without the owner’s consent may be permissible where there is a strong public interest in the disclosure (X Pte Ltd and another v CDE [1992] SGHC 229 at [40] and [42]; I-Admin (Singapore) Pte Ltd v Hong Ying Ting and others [2020] SGCA 32 at [61]).
Further, the law recognises that in a post-employment situation, the scope of protection of confidential information/trade secrets should not unreasonably encroach upon the ex-employee’s ability to utilise his skill and knowledge to compete with the ex-employer or to seek alternative employment in the same field (Clearlab SG Pte Ltd v Ting Chong Chai [2014] SGHC 221 at [67]).

13. Are any measures available where proceedings concerning trade secrets are manifestly unfounded and / or found to have been initiated abusively or in bad faith?

There are no such specific measures. However, there may be adverse cost consequences for the plaintiff during the taxation process. 

See answer to question 13 above.

Employee / employer liability

1. In addition to any statutory protection of trade secrets, what protections can employers put in place to avoid misuse of trade secrets by its workforce? 

Employers may adopt the following measures to safeguard trade secrets:

Clear company policy and staff onboarding: Have a clear company policy and rigorous internal processes on confidentiality obligations, flexible work policy, document retention, etc. and inform or train employees on these issues to create greater awareness. This also leads to greater integration of trade secret protection into company culture.

Limit access to trade secrets: Ensure that only certain categories of personnel (e.g. management, or the department in-charge of a project) have access to such information. The limitation of access can either be physical or technological, and ideally both (if applicable). 

Keep clear records: Ensure all business transactions, which may contain any confidential information including trade secrets, are clearly recorded. The information should be marked “CONFIDENTIAL” as a reminder to employees not to be careless with the information.

Use non-disclosure agreements (NDAs) / confidentiality clauses/agreements: NDAs and confidentiality agreements can be used to ensure that a person is contractually required to keep the trade secrets confidential. To protect trade secrets, employers should have employees, consultants and vendors who have access to trade secrets sign NDAs / confidentiality agreements. 

Give staff incentives to encourage reporting of employee leaks: The employer can put in place a programme to encourage and incentivise employees to report leaks.

Cybersecurity software: Companies can install computer safeguarding and software to allow detection of trade-secret misappropriation.

Engage trade secret-related services: Employers may also consider engaging trade secret-related services such as a repository software, time stamping, external intellectual property advisory or management services and insurance in light of the elevated risk of cybertheft of trade secrets in light of rapid digitisation, the increased use of cloud services for safeguarding and managing confidential information and continued remote working.

2. Are there implied rights of protection for employers regarding misuse of trade secrets by its workforce?  

Employees are subject to an implied contractual obligation during their employment to protect the employer’s confidential information and trade secrets.

Employers’ interests are also protected by the law of confidence, where the obligation to respect confidence is not limited to cases where the parties are in a contractual relationship. There exists an implied duty of confidentiality that “binds the conscience” of the employee. If the employee uses confidential information directly or indirectly obtained from an employer, without their express or implied consent, it will be considered an infringement of the employer’s rights.

Once employment has ended, an implied duty arising from the employment contract still extends to protect the employer’s trade secrets (though not the broader category of confidential information). 

3. What other means can employers use to protect misuse of trade secrets by the workforce, particularly when staff leave? 

Employers may use post-termination restrictive covenants to protect misuse of trade secrets and limit the activities of staff when they leave, provided that the restriction protects a legitimate proprietary interest and is reasonable by reference to the interests of the parties and the public. Usually, the protection of trade secrets satisfies this criterion (as opposed to information that is part of the former employee’s general skill or knowledge).

4. Are there any protections for “whistleblowers” or similar rights for employees in relation to infringement of trade secrets?  

There is no specific protection available for "whistleblowers" in Singapore in relation to the infringement of trade secrets. However, employers can create safeguards in HR polices to protect whistleblowers.

5. Can an employer be liable for their employee’s infringement of a third party’s trade secrets?  

An employer may be liable for its employee’s unauthorised disclosure or use of a third party’s trade secrets if there is sufficient connection between the employee’s field of activities and the wrongful conduct.

Commercial contracts aspects

1. What kind of protection/provisions are to be included in supply or similar contracts with respect to trade secrets?

Contracts should contain provisions protecting confidential information and requiring the receiving party to hold all confidential information only for the purposes of the contract, to limit disclosure within the organisation, not to reproduce the confidential information, provide for non-disclosure to third parties with specified exemptions, and to provide for the return or destruction of the confidential information on termination or expiry of the contract. In addition, clauses should provide for injunctive relief and notice to the disclosing party before disclosure to third-party regulators or a court order is made to enable the disclosing party to challenge the order or request.

2. What are typical pitfalls in contracts regarding protecting trade secrets?

Failure to identify the trade secret – Parties may not be clear about the nature of the trade secrets they are seeking to protect under the contract, which may make enforcement a problem.

Obtaining a commercially useful remedy – Where a party is notified of a breach of confidentiality, it will be necessary to secure the evidence to obtain an injunction to stop further breaches or disclosure. This may be difficult since the evidence is often wholly within the control of the other party. Furthermore, an injunction would not be effective where the disclosure has already occurred, and the trade secret is in the public domain. Damages may also be a difficult remedy for breach of contract given that the calculation of the loss suffered is not a simple exercise, but would likely involve speculative assessments. Parties could consider fixing a sum for liquidated damages, but this will be subject to the court’s assessment of whether it is a penalty. 

3. Are there any important aspects regarding protecting trade secrets cross border?

To protect trade secrets across borders, it is important to determine whether the particular jurisdiction in question offers sufficient protection for trade secrets from a substantive and procedural law perspective. Where the jurisdiction does not offer adequate protection for trade secrets, it would be advisable for parties to draft a clear provision that sets out the scope of such protection, so that parties are aware of their obligations regarding the agreement.

4. Are there any penalty clauses in contracts with regards to trade secrets?

Penalty clauses are unenforceable in Singapore. Parties may, however, draft a liquidated damages clause, which is enforceable if it is a genuine pre-estimate of loss.  

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