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How to protect Trade Secret in UAE with a Non- Disclosure Agreement

How to protect Trade Secret in UAE with a Non-Disclosure Agreement

Unlike patents, trade secrets are protected without registration; they are secured without the need to go through any procedures. Unless found or lawfully obtained by others and made available to the public. A trade secret can be protected for an indefinite period. Trade secret consists of any knowledge that is not widely known and offers your company a competitive edge in the marketplace. For these reasons, trade secret protection may appear to be particularly appealing to some businesses. However, the knowledge must meet specific criteria to be classified as a trade secret.

The information is a trade secret because if the competitors had access to it. The company’s distinctive aspect would be gone, and such knowledge would become standard practice. From a business standpoint, new techniques to stand out in the market and differentiate oneself would be required. Trade secrecy is a method of preserving a company’s intellectual property that permits innovations to be kept confidential and possibly protected indefinitely. 

This article will focus on the requirements for trade secret protection in the UAE . And the significance of the Non-Disclosure Agreement (referred to as “NDA”) in protecting such information. 

What is Trade Secret?

Trade secrets are proprietary knowledge protected by intellectual property (IP) rights that can be sold or licensed.

In general, for information to qualify as a trade secret, it consists of the following elements:

  1. The trade secret must contain some information,
  2. It must have some economic value derived from the fact that it is unknown to others and so cannot be used,
  3. The data cannot be made available to the general public, industry competitors, or others.
  4. The knowledge must be regarded as a secret, and reasonable measures must be made to keep it that way.

Most popular Trade Secret Examples

  1. Formula Coca-Cola
  2. Mix of KFC Secret Spices
  3. Big Mac sauce from McDonald’s
  4. Google’s algorithm for searching.
  5. Lena Blackburn’s Baseball Rubbing Mud

You must read: CRYPTO ASSETS AND REGULATORY FRAMEWORK IN UAE: AN OVERVIEW

How does the UAE protect trade secrets?

The following is a brief explanation of the primary UAE trade secret laws.

  1. Protection under Federal Law 31 of 2006, pertaining to the Industrial Regulation and Protection of Patents, Industrial Drawings, and Designs.

Articles 39 to 42 of the Law also establish trade secret protection for businesses that want to preserve their information or “know-how.”

  • Article 39 states that as long as the know-how (confidential information) hasn’t been published or put at the public disposal, it has the benefit of protection from any illegal use, disclosure, or announcement from third parties, provided that the owner of the know-how has taken the necessary measures to maintain the secrecy of its elements in the manner specified by the bylaws.
  • Article 40 particularly restricts trade secret protection, stating that if a party obtains the “know-how” by lawful ways, they are free to use or impart it to others.
  • Article 41 stipulates that the “know-how” must be certified in writing and specified, and,
  • Article 42 stipulates that false disclosure of the “know-how” is prohibited.
  1. Article 905(5) of Federal Law No. 5 of 1985 on the Civil Transactions Law of the UAE

This Article provides that “The employee shall protect the industrial or commercial secrets of the workplace, even after the contract has expired, as required by the agreement or as per the practiced customs”. Further, under Article 922 of the same law, it has been stated that unlike a contract of employment, which requires actions arising from the agreement to be taken within one year after the contract’s expiration. Actions involving the disclosure of trade secrets are exempt from such limitation of time.

  1. Federal Law No. 8 of 1980 on the Regulation of Labor Relations

Article 120 of the law gives an employer the power to terminate an employee without cause if such employee “reveals any secrets of the company where he is working.”

  1. Federal Law No. 2 of 2015 on Commercial Companies

Article 369 of the law imposes penalties of imprisonment and/or a fine on “Any person who utilizes statements or information” obtained at “any stage of the company’s incorporation from a wide range of parties involved in the process. The chairman, board members, and any other employee who uses or discloses a corporate secret or intentionally seeks to do damage to the firm’s operation face similar sanctions.”

You should know: What is “Cybersquatting” and how to protect your Domain name in UAE?

How to protect Trade Secret with Non-Disclosure Agreement (NDA)?

Owners of trade secrets are required to protect their secrets with “reasonable methods.” One of the most effective methods to secure trade secrets is to use a Non-Disclosure Agreement (NDA). An NDA is an agreement that protects the secret information of businesses, Executives, and business owners. It helps in preventing someone from revealing secret knowledge. An NDA is used to establish a personal connection between the person. Who owns a trade secret and the person to whom it is provided.

Parties involved in such a confidential relationship are legally obligated to keep the knowledge confidential. Companies like Coca-Cola and KFC, who rely on trade secrets for existence, required chosen workers to sign NDA or analogous contracts.

The purpose of this article is to provide a general overview about the protection of trade secret, if you are looking for someone who could assist you in protecting your trade secret HHS lawyers and legal consultants is the best option. Our attorneys have clear and realistic solutions for protecting your trade secret as intellectual property. To know more about trade secret protection, don’t hesitate to contact us for further consultation.

References:

  1. https://www.wipo.int/tradesecrets/en/tradesecrets_faqs.html
Trademark & Intellectual Property Attorney

Shahnaz Kaushar is a senior Trademark and Intellectual Property (IP) attorney in HHS Lawyers. A seasoned lawyer based in Dubai, she has handled some of the firm’s complex, high-profile cases – many involving the protection of trademark and IP rights. Read more