Signing an NDA does not by itself make it secret
A confidentiality agreement is among the most frequently signed and least frequently read documents there is. What is not widely understood is that the law does not protect information because an agreement exists; it protects it because the information was looked after the way a secret should be.
The three limbs of a trade secret
Section 3 of the Trade Secrets Act B.E. 2545 (2002) defines a trade secret as trade information not yet generally known or not yet accessible among those normally concerned with such information; which is commercially useful because it is secret; and for which the controller has taken appropriate measures to keep it secret. All three limbs must be present; they are not alternatives.
The third limb is where these cases turn
The requirement of appropriate measures to keep the information secret is about what was actually done, not what the agreement says. Information circulated across an organisation without limiting access, held without controls, or handed round at a meeting without conditions is hard to describe as having been kept by appropriate measures, however fully the agreement was signed.
Infringement under section 6
Section 6 defines infringement as disclosing, taking or using a trade secret without the owner's consent in a manner contrary to honest commercial practices, where the infringer knew or had reason to know that the act was contrary to such practices. The second paragraph gives examples, among them breach of contract, inducing a breach of confidence, bribery, coercion, fraud, theft, receiving stolen property, and espionage by electronic means.
What does not count as infringement
Section 7 sets out several exclusions. The two that matter commercially are independent discovery, where the finder arrives at another's trade secret through their own knowledge and skill, and reverse engineering, where a generally known product is assessed and analysed to work out how it was invented, made or developed, provided the product was obtained honestly.
Where the agreement genuinely does work
The final paragraph of section 7 provides that the reverse-engineering exclusion cannot be relied on where the person doing it has expressly agreed otherwise with the owner of the trade secret or with the seller of the product. This is the point at which a contractual term genuinely changes the legal result: it closes an exclusion the statute otherwise leaves open. But it has to be expressed, not implied.
Court orders, and the alternative to an injunction
Section 11 provides that where the controller sues for an order under section 8(2) and the court finds infringement but special circumstances make the order sought inappropriate, the court may instead fix reasonable compensation and allow the infringer to continue using the trade secret for such period as it thinks fit. And where the secret is later disclosed generally or ceases to be secret, the party restrained may apply to have the order cancelled.
PREPARE
What to bring
- Every relevant confidentiality agreement and its date
- The access controls actually in place over the information
- Records of who could reach the information, and when
- What suggests the information was disclosed or used
- The commercial value of the information and its source
QUESTIONS
Questions this raises
Without an NDA, is there no protection at all?
No. Section 3 ties protection to the character of the information and the measures taken, not to the existence of an agreement, and section 6 also covers acquisition by means such as theft or espionage, which need no contract at all. An agreement is a tool for proving intention and for closing certain exclusions; it is not a precondition of protection.
An employee left and is using our information elsewhere.
There are two layers to separate. The first is whether the information meets the section 3 definition at all, particularly on appropriate measures. The second is the general skill and knowledge an employee accumulates through working, which is a different thing from the organisation's specific information. The two are distinct in law, and the evidence needed for each differs.
LAW
The legislation
- Trade Secrets Act B.E. 2545 (2002), section 3
- Trade Secrets Act B.E. 2545 (2002), section 6
- Trade Secrets Act B.E. 2545 (2002), section 7
- Trade Secrets Act B.E. 2545 (2002), section 11
ENQUIRIES
