January 19, 2023

Trade secrets in the age of algorithms

In today’s data-driven world, intangible assets are of paramount importance so their protection is essential. Within this field, trade secrets occupy a capital position as a means to protect these intangibles. However, different international experts, after multiple cases of infringement of secrets, observe that many companies are still not fully up to date in this area, with the danger that this entails. 

It is important to note that since 2016, laws related to the protection of trade secrets have been tightened in the United States, Europe, Japan and China. All of this to avoid possible cases of unfair competition, giving more and more value to the need to protect trade secrets against competition. In the European case, the transposition of the Trade Secrets Directive entails the protection of secrets as a separate practice in addition to other types of intellectual property. 

Protecting trade secrets in the digital world 

The advance of new technologies has led to changes in the way companies protect intellectual property. Trade secrets are not different. Trade secrets are becoming the key protection measure for business assets based on data, algorithms, and artificial intelligence results. For some experts, this could replace patents as a protection measure in some cases, as the nature of business is changing. The intangible economy is gradually displacing physical capital. 

Software algorithms, customer data, business plans, formulas or engineering specifications are just some of the assets that companies manage today and must be protected. Access to this information is sensitive and vulnerable to illegitimate leakage, a risk that is increasing with the digitalisation of companies and remote working. The value of these assets makes them trade secrets, even if they are sometimes not identified or treated as such, which precludes them from being judicially recognised as business secrets. 

According to the report Open secrets? Guarding value in the intangible economy by The Economist Intelligence Unit, trade secret theft reaches 1.7 trillion US dollars. 

Trade secrets, what to consider? 

The protection of trade secrets is based on opposition against unfair competition practices, consisting of specific acts such as unlawful acquisition and/or use. In addition, to be eligible for protection, trade secrets must be secret information, which has commercial value because it is secret, and has been the subject of reasonable measures to keep it secret. 

More and more large companies are aware of the power of information and are looking for ways to protect data, algorithms and strategies. However, there are still many that do not pay enough attention to the protection of the secret information they have developed, without considering the fatal consequences of not implementing a series of internal measures for that information. 

To avoid this happening to you and be sure that everything is in order and well protected, do not hesitate to contact PONTI & PARTNERS by email at ponti@ponti.pro or by telephone on 934 87 49 36, and we will advise you on the best way to ensure that your most secret intangibles are safe.