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Trade secrets and their protection

Need for action: Protection of trade secrets

Software, algorithms, business strategies, recipes or customer lists are essential company assets and sensitive information that often cannot be protected as intellectual property rights (trademarks, designs, patents, etc.). Therefore, it is important to protect them from unauthorised access by third parties. Otherwise, there is a risk of appropriation by third parties or unauthorised use by former employees without any possible sanctions.

Three out of four corporate executives believe that there is a need to invest more in protecting trade secrets – this is one of the key findings from a recent analysis conducted by CMS in cooperation with "The Economist Intelligence Unit". Only half of the companies surveyed have taken active steps to restrict access to confidential information and reduce the risk of a trade secret misappropriation.

Dutch Trade Secrets Protection Act

The Dutch Trade Secrets Protection Act ("Wet bescherming bedrijfsgeheimen") provides protection for trade secrets but also establishes the prerequisite that "reasonable steps" are taken to keep the information secret.

For every piece of information which should be protected, the requirement of "reasonable secrecy measures" means that a bundle of protective measures must be taken at three levels:

  1. At the legal level (i.e. confidentiality documents, NDA's)
  2. At the organisational level (i.e. employee trainings)
  3. At the technical level (i.e. IT-security measures)

The concrete protective measures depend on the importance, type and risk of misappropriation of the individual piece of information. There is no standard solution. Trade secrets must be categorised individually for each company and a suitable concept of protection must be developed and implemented.

Free online risk analysis from CMS

Our online risk analysis tool helps you assess the level of know-how protection in your organisation. It enables you to gain an initial overview of the vulnerabilities in your organisation with regard to trade secrets and sensitive data.

It only takes five minutes to find out whether your company needs to take action to protect its know-how.

Start here

The solution: CMS PROTECT

In order to assist companies in protecting their trade secrets CMS offers the product CMS PROTECT.

With three modules of CMS PROTECT, we develop and implement a protection concept with and for your company to ensure the protection of secrets.

If you would like to receive further information about CMS PROTECT or if you have any questions, please contact our team of experts.

More information about CMS PROTECT can be found on this page.

13/09/2022
Open secrets? Guard­ing value in the in­tan­gible eco­nomy
Some leaks can’t be fixed “Con­fid­en­tial in­form­a­tion is like an ice cube... give it to the party who has no re­fri­ger­at­or or will not agree to keep it in one, and by the time of the tri­al you have just a pool of wa­ter.” This, from the so-called Spycatch­er case (1987), ap­plies well to cor­por­ate as­sets: fail to store them cor­rectly and all you might have left is an ex­pens­ive mess.The con­sequences of even a minor ex­pos­ure of a trade secret can be huge. As this re­port re­veals, the pro­tec­tion of trade secrets is rightly re­cog­nised by most seni­or ex­ec­ut­ives as a pri­or­ity is­sue. But the re­search also re­veals gaps that leave com­pan­ies un­ne­ces­sar­ily ex­posed to risks. The top named threats – cy­ber­se­cur­ity at­tacks and em­ploy­ee leaks – res­on­ate with what we see im­pact­ing our cli­ents. In­creased home and re­mote work­ing is strain­ing se­cur­ity meas­ures and em­ploy­ee loy­alty. Ad­ded to this, an ‘in­nov­ate or die’ at­ti­tude in highly-com­pet­it­ive sec­tors can mo­tiv­ate new join­ers to ar­rive with ques­tion­able ma­ter­i­al from their pre­vi­ous em­ploy­er, or worse: out­right theft between com­pet­it­ors. But while it is easy to fo­cus on the lurk­ing threats from weakened cy­ber se­cur­ity and dis­gruntled em­ploy­ees – and they are im­port­ant – there are more routine ac­tions a com­pany can take to safe­guard its secrets than just up­dat­ing its IT sys­tems or the em­ploy­ee hand­book. Com­monly, those who most need our help already have a trade secrets policy but have not prop­erly im­ple­men­ted it in re­la­tion to the secret in ques­tion. Or the policy has not been up­dated to re­flect the in­tan­gible as­sets the busi­ness now owns. Or pro­tec­tion was taken for gran­ted.With trade secrets – which for many busi­nesses are stra­tegic­ally more im­port­ant than a pub­lic pat­ent port­fo­lio – it is al­ways cost­li­er and messi­er to find solu­tions after a theft or a leak. Identi­fy­ing the trade secrets and the threats posed to them, com­bined with rig­or­ous in­tern­al pro­cesses and well-draf­ted con­tracts, can help pre­vent such prob­lems from hap­pen­ing. Harder, but just as ne­ces­sary, is en­ga­ging hearts and minds in cor­por­ate cul­ture, to know why trade secrets are im­port­ant, why we are all are re­spons­ible for pro­tect­ing them, and what may hap­pen if we do not (to both the com­pany and the in­di­vidu­al). In our ex­per­i­ence, the busi­nesses with the strongest de­fences have not only thought stra­tegic­ally about their in­tan­gible as­sets and how best to pro­tect them but are also pre­pared for the worst. The trick to avoid­ing an as­set be­com­ing a crisis is to be wise be­fore the event.
CMS Ex­pert Guide to trade secrets
Glob­al Ex­pert Guide on trade secrets which of­fers the leg­al frame­work per...

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CMS PROTECT

Authors

Portrait of Rogier Vrey
Rogier de Vrey
Amsterdam
Portrait of Aukje Haan
Aukje Haan
Amsterdam
Portrait of Ayşegül Avci
Ayşegül Avci
Amsterdam

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07/06/2022
Trade secret laws in the Neth­er­lands
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...
Comparable
09/09/2021
The Chan­ging Face of Cy­ber Claims
A cy­ber in­sur­ance loss study in Con­tin­ent­al Europe