The pursuit of information is what has driven humanity to what it is today and the modern world we live in is the result of this. With laws and rules governing today's world, information is getting more protection than it ever used to. Knowledge is wealth, and in the modern age, wealth is what everyone strives to gain. Those with ambitions of starting a business in the UAE require an advantage over competitors. This means that they would require more information than that is available in the public domain.
Trade secrets are knowledge within an enterprise regarding its practices and functionality that the enterprise chooses to keep secret because of the competitive advantage it offers. A trade secret in the UAE helps a firm stay a step ahead in certain areas which could be processes, patterns, designs and commercial methods. The reason for the information being a trade secret is because if the competition was to gain access to information, then the unique element of the enterprise would be lost, and such information would become standard practice. From a business's perspective, they would have to come up with new ways to stand out in the market and differentiate themselves. Trade secrets are usually inventions that may or may not have to requisites to receive a patent.
How Does UAE Protect Trade Secrets
Trade secrets in the UAE were introduced under Federal Law 31 of 2006. Section 6, through its Articles 39 to 42, discusses the rights of businesses with particular knowledge and moreover, the methods that can be used to protect such knowledge. Section 40 of the law states that if an enterprise acquires special knowledge through legal means, it is allowed to use that knowledge if other businesses already have such information in their hands. This law protects information that is not necessarily a new invention as long as it’s not patented. It would again limit competition as only some enterprises or companies would be able to rise above others if they were capable of learning new and much more accessible methods of performing businesses. This would create a natural monopoly, thereby benefiting the enterprise.
The civil code of the UAE also has certain provisions relating to trade secrets. According to article 905, one of the responsibilities of the employees is not to reveal any trade secrets of the employer and keep all confidential information a secret. Article 922 further stresses on the point by stating that even though no claims can be made after a year post-termination, this does not apply to the breaches about trade secrets in the UAE.
A patent in the UAE must be creative and new for it to receive protection. It must also be useful and not been patented by someone else. However, sometimes, if a product is not innovative enough, then the only choice left is to go for trade secret protection. If however, the product is qualified for a patent, then the advantages and disadvantages of both have to be compared and the company. If we look at the example of Coca-Cola, there are numerous firms that produce carbonated drinks. However, coca-cola has been a leader in the aerated drinks market because of their extremely well-guarded secret.
Trade secrets seem like such a viable option as the secret can last forever. There is no requirement to register, and no government needs to be made aware of the presence of such a trade secret. There is no limitation of 20 years applicable as well as there are no long procedures involved in trying to protect trade secrets. They are effective from the moment they are voluntarily protected.
How to Protect Trade Secrets in the UAE
In light of this, companies are trying to identify and protect trade secrets in the UAE properly. Breaches with respect to trade secrets can happen not just from outside the business but also from internal sources within the company. One preventive step is draft and comes up with a valid non-disclosure agreement against any employee or third party to whom the trade secret is to be revealed, or to whom access is permitted.
In addition to the non-disclosure agreement, corporations with trade secrets must take measures not to reveal the trade secret in any manner . The company should have in place certain guidelines controlling any disclosures. To avoid disclosure the process should start with evaluation of the third parties to whom the information is to be revealed for the purpose of operations or smooth functioning, and the next step is to evaluate if such disclosure is mandatorily required for the purpose of the business If the trade secret information is revealed to a third party, then a fair warning must be issued to the third party to treat such information as confidential and sanctions must be prescribed for unauthorised disclosures of such vital information.
Are you looking to protect your precious trade secret? Our team of experts at Commitbiz are one of the best intellectual property service providers in the UAE. Feel free to contact us, and we'd be more than happy to help you.
1. In which laws the trade secret protection rules are mentioned?
Commercial Companies Law (Federal Law No. 2 of 2015), as amended;
Civil Code (Federal Law No. 5 of 1985), as amended;
Penal Code (Federal Law No. 3 of 1987), as amended; and
Industrial Regulation and Protection of Patents, Industrial Drawings and Designs Law (Federal Law No. 31 of 2006).
2. What is the use of having different laws for trade secret protection?
Every law has different penalty measures for the misappropriation of the trade secret.
3. What is the penalty amount for the disclosure of the trade secret?
Patent Law: a fine of no less than AED5, 000 and not more than AED100, 000.
Penal Code: minimum fine of AED20, 000.
UAE Companies Law: a fine of at least AED50, 000 but no greater than AED500, 000.
4. What is the imprisonment time for violating the trade secret protection measures?
Patent Law: not less than three months and not more than three years
Penal Code: minimum one year
UAE Companies Law: no longer than six months.
5. What does the Civil Code Article cover regarding trade secret protection?
Every employee is obligated not to mention the trade secret, and if they violate the norm, he is subject to damage or compensation.