United Arab Emirates: Rats, Traps And Trade Secrets

Last Updated: 2 July 2018
Article by STA Law Firm
Most Read Contributor in United Arab Emirates, November 2018

While we know more about the world now than ever before, in some ways, it can seem more mysterious and complicated than ever before. The pursuit of information has always driven humans and is what has got us to the modern state we find ourselves within. It is what has inspired humans to become the most advanced there is, and that goal still pushes to this day. However, in today's world, a world governed by rules and laws, information is more and more becoming a guarded secret. Knowledge is power, and in the modern age, power is everything. Those with lofty ambitions, such as businesses, require as much of an advantage as they can get to put themselves ahead of their competition. In the present day, these concepts are modernizing and growing with the technological advancements the world is seeing. From this arises the globe of RATs TRAPs  and Trade Secrets.

Trade secrets are inside knowledge within a business regarding its functionality and practices that the company chooses to keep secret, usually because the mystery gives them an element of advantage over their competition. It enables them to stay a step ahead in specific areas which could include processes, commercial methods, patterns, and designs. These trade secrets are often held close to the businesses for the simple reason that if competition were to gain access to this information, what makes one industry unique and allows it to excel would then be taken up by others and would become standard practice. From the businesses standpoint, they would have to look for a new way to differentiate themselves in the market. Trade secrets are often inventions that may or may not qualify to receive a patent. A patent is a form of exclusivity right that gives to a business that qualifies for it through an application. It provides that business the right to exclusivity for a set amount of time, usually 20 years.

Can you keep a secret?

The product must be new and creative for it to receive a patent. Something that is useful and yet something that no others have latched on. If a patent is not a possibility, perhaps due to the product not being outlandish enough in its idea, a business will have no choice but to go for a trade secret. If the invention does qualify, a company will have to weigh up the pros and cons of a trade secret and move forward from there. An example of a trade secret would be the recipe for coca cola. There is a large market of companies that make carbonated cola-flavored drinks, though the reason coke has been chief for so long is due to their trade secret of famously guarded recipe secretly stored in a vault.

On the one hand, trade secrets seem a much more informal method of protecting a business's asset or invention. There are no registration costs, and the government doesn't have to be made aware of them. They also have the benefit of not being limited to 20 years in length, and they have an immediate effect.

However, there are some glaring risks to a trade secret. For one thing, there is nothing to stop others from figuring out the mystery directly through an attempt to better their own business. For example, if a trade secret did merely a new evolution of a type of machinery and technology was already headed in the direction of the new invention.  On top of this, trade secrets are more difficult to enforce than patents. The laws for trade secrets vary from country to country, but most importantly they are not as strong as the laws covering patents. A small point I would like to add is that if one business were not to apply for a license, another company could obtain one through legal means even if they were second to use the method, and this would cause complexities for both businesses.

Thankfully for businesses, countries usually have laws that protect trade secrets. A significant player in the global protection of Intellectual Property (IP) is the World Intellectual Property Organisation(WIPO). WIPO has 191 member-states and is one of the 17 specialized agencies of the United Nations. WIPO established in 1970, with the aim of promoting the protection of intellectual properties around the world. WIPO itself drives its member states' legislatures to produce legislation which would further the protection of IP's.

UAE on Trade Secrets

The UAE covers trade secrets under its Federal Law Number 31 of 2006. Section 6  (The Knowhow) discusses, through Articles 39 to 42, the rights of businesses with the particular knowledge and also, the methods by which they can go about protecting them. Section 40  does mention that if a company does acquire understanding through its legal means, it shall be allowed to use that knowledge even if another business or businesses have already learned that knowledge. It is something that would seem quite sensible, as the law protects the information is not a necessarily a new invention, ergo it is not being patented, and therefore, the law does not protect it. It would only cause certain businesses to be able to rise above others if they were able to learn new and more accessible methods of performing their business, which could lead to monopolies forming. It is of course not what desires for a healthy economy.

UAE civil code covers provisions concerning trade secrets. Article 905  mentions that one of the responsibilities of the employees is to keep the trade secrets of their employees a secret. Section 922  furthers this by indicating that, while there shall be no claims heard after the end of one year from the date of the termination of an employee's contract, this doesn't apply to breaches about trade secrets.

UK perspective

The UK also looks to protect trade secrets of businesses, though its methods of doing so are different and far more flexible. It is part of equity law. There are no statutes which specifically protect trade secrets, and since there are no statutes, trade secrets cannot be ' stolen.' There are remedies available to businesses who have had their trade secrets inappropriately appropriated though, and some of these include getting injunctions preventing the use of the information. Another method would be to claim damages; this may be difficult to calculate though since the property is intellectual.

United States of America

The United States has, quite recently, implemented the Defend Trade Secrets Act of 2016. It is quite a new act, and it allows a business to bring forward a civil action against any who misappropriate their trade secrets. Section 2 subsection 2A  outlines the requirements to bring up a case including the application itself which must include a verified complaint or affidavit. The form is only accepted when specific standards are satisfied. These include that the immediate action will cause no irreparable harm and that the case would be likely to succeed, to look at a couple of the points. The piece of legislation is relatively in-depth and covers many aspects of the issue from how the law enforcement should go about seizing the intellectual property, protection of the individual against whom the action is being brought up, the question of trade secret theft abroad, and also enforcement and the punishments for committing trade secret theft.

The law here is very in depth and covers all elements of trade secret theft. It is beneficial and provides excellent clarity to businesses. The total transparency here is something that would allow companies to be confident in the system and in many ways; it could give rise to a more innovative society.

As a whole, the US system would seem to be the most well-regulated and consumer and business friendly. The UAE system is also backed up by legislation. However, UK has no laws covering the matter. There are specific remedies available in a case of trade secret misappropriation.

Trade secrets are often as secure as those who know of them. Directly not speaking of the matter would have, at least in the past, meant that competitors would have been unable to access the confidential information. The world has been on a path of rapid change of late though. For the last 60 years, more and more has become digitalized. The computer is now the hub of large quantities of business information that holds many secrets. However, the online world is not necessarily one that is entirely secure. There are indeed ways to access confidential information online if one has the necessary knowledge and software.

RAT technique

One such technique is to use a Remote Access Tool (RAT). Remote access tools are not necessarily always used with evil intentions. However, when they are, they are then known as Remote Administration Trojans (RATs). They can be used to access computers and when used legally, are a tool that can significantly help IT departments within a business. When used illegally they can be used to gain administrative powers over computers and allow those who use them to access sensitive information.

Once individuals have access to this sensitive information, especially in this digital age, the knowledge could spread like wildfire. It could lead to many issues. One thing to note, however, is that business itself would be unlikely to use RATs to get the upper hand over its competitors by stealing their trade secrets (not a company within the same country). It would more likely be individuals who perhaps have personal prejudices against a specific business or businesses or even more likely; it could be employees of the companies themselves. These individuals would likely know trade secrets of the stores simply due to them being parts of their jobs, and from here the secrets could be revealed through criminal acts from those employees, or even merely by mistake. A case that is currently continuing in the US is of the CEO of the drug giant Apotex. In this case, it has alleged that the president and CEO Jeremy Desai may have accepted leaked trade secrets from competitors. The lawsuit from Teva Pharmaceuticals claims Barinder Sandhu leaked trade secrets to Mr. Desai.

If trade secrets leak online, it will be challenging to fix the matter, as it would be almost impossible to figure out who has seen the information, and removal of the information could be quite a useless procedure if too long a time has passed. It would also make it quite tough to judge damages to the business. Another added layer of complexity could be the fact that if an individual wished to do so, they could potentially steal trade secrets using RATs and keep the information to themselves. They could then do with the information what they please. In this way the business that has its trade secrets stolen maybe unaware and thus unable to pursue the matter.

 While businesses in the same country would be unlikely to steal trade secrets from each other, on the global scale, the story is entirely different. Some countries such as China had a cyber espionage unit which breached 115 American company websites over the course of a few years. On the international playing field, the same level of regulation isn't present nor can they be. Of course, many nations would likely agree not to steal IP from each other, though at the same time many consider enemies or at least not on friendly terms and those nations could undoubtedly take trade secrets. In past recent years, IP has acquired approximately $1 trillion.

Is it a TRAP?

So far this may look like a large and complicated situation. However, there is another side to it all. It would involve Technologically Responsive Active Protection (TRAPs). Every business must take the appropriate measures to protect their trade secrets. In some cases, courts will not even be willing to hear an example of stolen trade secrets if the business had extremely inadequate protection systems in place. TRAP reinforces the notion that companies must apply what measures are within their power to use to protect their secrets. While a RAT is capable of stealing vast quantities of sensitive materials from a system, it must first get into that system. It means that a firewall and antivirus, at the very least, will help to reduce the chances of a RAT entering the system. RATs are becoming more and more technologically advanced, and there are always new ways in which they can enter an order and beyond this, there is more than they can do once they are in the system.

Businesses often lack the necessary levels of cybersecurity to handle these issues. However, they cannot be entirely to blame. With the technology changing so fast, incorporating an expensive security system is seen as being a waste of money as it would be obsolete within a year or even less. On top of this, there is very little a business can do if there is an internal leak in the industry. Employees unaware of the fact of revealing trade secrets are not feasible to be under control adequately.

The entire idea of trade secrets has become a lot more complicated in the last few decades as more and more businesses have gone online. With technology improving at such a rapid rate, keeping people your secrets secure would be a massively expensive process that would require specialists to help ensure the maximum security. Constant testing and keeping up to date with the latest advancements would also be a necessity. The laws covering the issues also vary significantly on the international level with countries such as the UK having no specific requirements, while the US is recently adding to theirs. Also, the global plain does consist of a fair few enemies. There is far less than done when the cybersecurity issue is between nations. In the end, though, businesses must merely do what they can to best secure themselves. Remedies are available as a last resort if the trade secrets mismanaged, and the only other way to keep trade secrets from the hands of any outside the business would be to keep them offline.

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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