Friday , 19 April 2024

PROTECTION OF TRADE SECRETS

Section 26. Privilege relating to trade secrets. – A person cannot be compelled to testify about any trade secret, unless the non-disclosure will conceal fraud or otherwise work injustice. When disclosure is directed, the court shall take such protective measure as the interest of the owner of the trade secret and of the parties and the furtherance of justice may require. (n)

1. Trade secret – is a technology, formula, or procedure which is being strictly kept and concealed to protect the product from being copied exactly. It is being strictly kept and concealed so that it cannot be copied and used by the possible imitators. Example: the formula of San Miguel Corporation in making its pale pilsen beer, the procedure in making the pale pilsen beer, or the technology in the manufacturing of Red Horse Beer.

2. The jurisprudence defined trade secret as follows:  

“A trade secret is defined as a plan or process, tool, mechanism or compound known only to its owner and those of his employees to whom it is necessary to confide it.  (BLACK’S LAW DICTIONARY 1494 (1991), 6th ed).The definition also extends to a secret formula or process not patented, but known only to certain individuals using it in compounding some article of trade having a commercial value. (Id., citing Palin Mfg. Co., Inc. v. Water Technology, Inc., 103 Ill.App.3d 926, 59 Ill. Dec. 553, 431). A trade secret may consist of any formula, pattern, device, or compilation of information that: (1) is used in one’s business; and (2) gives the employer an opportunity to obtain an advantage over competitors who do not possess the information.   (AMJUR EMPLOYMENT § 178, citing Saunders v. Florence Enameling Co., Inc., 540 So. 2d 651 (Ala. 1988)Air Products and Chemicals, Inc. v. Johnson, 296 Pa. Super. 405, 442 A.2d 1114 (1982).  Generally, a trade secret is a process or device intended for continuous use in the operation of the business, for example, a machine or formula, but can be a price list or catalogue or specialized customer list. (Id). It is indubitable that trade secrets constitute proprietary rights. The inventor, discoverer, or possessor of a trade secret or similar innovation has rights therein which may be treated as property, and ordinarily an injunction will be granted to prevent the disclosure of the trade secret by one who obtained the information “in confidence” or through a “confidential relationship.” (9 A.L.R.3d 665, citing Am Jur, Injunctions (Rev.ed. sec. 72). The Restatement of the Law of Torts sec. 757)”.

3. Revealing industrial secrets is unlawful, as a rule. But revealing the industrial secrets can be ordered by the court if the non-disclosure will conceal fraud and/or in order to dispense justice. 

4. The Revised Penal Code provides penalty for revelation of industrial secrets, to quote:

Article 292. Revelation of industrial secrets. – The penalty of prision correccional in its minimum and medium periods and a fine not exceeding 500 pesos shall be imposed upon the person in charge, employee or workman of any manufacturing or industrial establishment who, to the prejudice of the owner thereof, shall reveal the secrets of the industry of the latter.

5. Trade secrets may not be the subject of compulsory disclosure. 

Trade secrets should receive greater protection from discovery, because they derive economic value from being generally unknown and not readily ascertainable by the public. There must be a compelling reason to lift the veil of confidentiality

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