Trade Secret

Trade secrets are confidential business information that provides a competitive edge, such as formulas, methods, algorithms,
customer data, or business strategies. Unlike other intellectual property rights, trade secrets are not registered but must be
protected through internal policies, contracts, and confidentiality agreements. Maintaining trade secret protection is vital for
businesses that rely on proprietary know-how or sensitive data to stay ahead of competitors.

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In Malaysia your trade secret may be protected by common laws or tort laws which you can take legal action against unauthorized use without permission. However, a large part of responsibility and onus rest on the trade secret owner to present the ground and evidence to the court.

With our extensive expertise in Trade Secret Protection and vast experience handling various confidentiality issues, we’re equipped to safeguard your trade secrets both locally and globally! Once we understand the essence of your business, our team will develop a customized protection strategy that aligns with your business model and financial plan.

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Trade Secret Fundamentals

To be recognized as a trade secret, the information must meet the following criteria:

Commercial value: It is crucial to the success of your business

Confidentiality: The information must be known to only a limited number of individuals and must not have been previously disclosed to the public or exist in the public domain.

Designation as a Trade Secret: It must be explicitly communicated to all relevant parties that the information is considered a trade secret. Without clear indication that the information is a trade secret, it may not be eligible for protection.

Term of Protection for Trade Secrets

Trade secrets last as long as the commercially valuable information remains confidential. Unlike most other forms of intellectual property, trade secrets are not protected for a specific duration. They remain protected as long as they consistently meet the criteria for being a trade secret. If the information ceases to be confidential, it loses its status as a trade secret and will no longer receive the same legal protection once it enters the public domain.

Types of information protected by trade secrets

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Technical Information: This encompasses research and engineering data, engineering drawings, process sheets, and computer software source code, chemical formula, algorithm etc.

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Commercial Information: This includes marketing strategies, production data, and records related to commercial activities.

Essentially, any confidential information that gives your business a competitive advantage and remains undisclosed to third parties can be protected as a trade secret.

Types of protection offered by Trade secrets

Depending on the legal system, the protection of business secrets may be part of the general concept of protection against unfair competition or be based on specific laws or case law regarding confidential information.

While the final determination of whether trade secret protection has been violated depends on the specifics of each case, unfair practices involving secret information generally include industrial or commercial espionage, breach of contract, and breach of confidence.

However, a trade secret owner cannot prevent others from using the same technical or commercial information if it was independently acquired or developed through their own research and development, reverse engineering, or market analysis. Unlike patents, trade secrets are not made public and do not offer “defensive” protection as prior art.

How can Trade secrets be protected?

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Non-Disclosure Agreement (NDA) : Prevent and mitigate risk of employees and business partners from disclosing the trade secrets.

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Trade secret management : Design a holistic Plan-Do-Check-Act to manage your trade secret.

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Non-Compete Agreement (NCA) : Prevent and mitigate risk of employees and business partners from competing using the trade secret after their employment ends.

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Robust IT Security Infrastructure : Implement strong IT security measures to safeguard digital information.

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Controlled Accessibility : Restrict access to important documents to only those who need it.

FAQ ( Frequently asked Questions)

What is a trade secret?

It is confidential business information that provides a competitive edge, such as formulas, processes, methods, or strategies.

How are trade secrets protected in Malaysia?

Through confidentiality agreements (NDAs), employment contracts, and internal security practices. There is no formal registration.

Is there a time limit on trade secret protection?

No, as long as the information remains confidential and gives a competitive advantage.

What happens if someone discloses my trade secret?

You may take civil legal action for breach of contract or misappropriation.

Can software be protected as a trade secret?

Yes, especially source code or proprietary algorithms that are not publicly known.

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