The recipe for this iconic soft-drink has been zealously guarded
for over a century. Recently, there have been unconfirmed reports
that the formula has been revealed publicly. But given the ubiquity
of this drink, how is it that the formula could have remained
hidden for so long?
Casual observers may – incorrectly – assume
that the makers of Coca-Cola hold a patent for the recipe. Patents,
by virtue of the time-limited monopoly they confer, require their
subject matter to be publicly known. In contrast, secret recipes
such as that for Coca-Cola belong to an entirely different class of
intellectual property: trade secrets.
Although there are differing definitions, depending on
jurisdiction, a trade secret can be characterized as information
that is not generally known and that is valuable because it is not
generally known. Moreover, owners of trade secrets must make
reasonable efforts to protect the information.
There is no registration system for trade secrets. In general,
any information that meets the above criteria can form the basis of
a trade secret. Some common examples include formulas and recipes,
blueprints, and compilations of information (such as customer
The principle factor is the secrecy of the information.
Unlike the protection available to patent holders, there is no
accompanying right of a trade secret owner to prevent others from
fairly discovering or learning the information. Indeed, defendants
in a trade secrets case can escape liability by establishing that
they discovered the information independently.
However, the law may offer protection to parties whose trade
secrets have been unfairly revealed or stolen. In particular,
courts can provide various forms of relief if the secret
information has been disclosed improperly to a third party, and the
third party is aware that the information should not have been
disclosed. In particular, owners of trade secrets can seek relief
if their secret information was revealed through theft, bribery,
misrepresentation, breach of a duty to maintain secrecy (e.g.,
under a confidentiality agreement), espionage, or other such
Somewhat ironically, the lack of formal requirements concerning
the establishment of a trade secret can make it difficult to make a
claim at a later date. Accordingly, companies should be pro-active
both in identifying appropriate parts of their current
technologies, and in establishing policies and procedures to
safeguard them. A documented paper trail can be critical if a trade
secrets case is ever launched.
The specific policies and procedures that should be implemented
will vary according to industry and resources. But trade secrets
are no exception to the mantra: forewarned is forearmed.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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A recent Saskatchewan Court of Queen's Bench decision allowed a court-appointed receiver to sell and transfer intellectual property rights free and clear of encumbrances, finding that a license to use improvements of an invention was a contractual interest and not a property interest.
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