Introduction

Before delving into this approach, it is opportune to clarify two key concepts of this short essay namely trade secret and patent.

According to Mozambican Industrial Property Code, Patent is the right granted by a competent administrative authority for protection of an invention (article 1/o) of Decree 47/2015 of 31^st of May). In fact, the administrative authority referred to in this law is the Industrial Property Institute (IPI). One relevant aspect when talking about patents and trade secret is related to the period of validity. In Mozambique, the validity of patent registration is twenty years from the filing date (article 73).

Contrary to patents, trade secrets are protected without registration, which means, trade secrets require no procedural formalities for their protection. A trade secret can be protected for an unlimited period of time, unless it is discovered or legally acquired by others and disclosed to the public. For these reasons, the protection of trade secrets may appear to be particularly attractive for certain companies. 

Criteria to consider a trade secret

According to WIPO[1] there are some conditions that must be observed in other to conclude if a certain information can be considered a trade secret or not. On this path, there are three criteria that make us conclude whether we are facing a trade secret or not.

First, the information must be secret (i.e., it is not generally known among, or readily accessible, to circles that normally deal with the kind of information in question). Absolute secrecy is not required. For example, trade secrets can be kept by several parties, as long as it is not known to other persons working in the field.

Secondly, the information must have actual or potential commercial value because it is secret.

Last but not least, the information must have been subject to reasonable steps by the rightful holder of the information to keep it secret (e.g., through confidentiality agreements). While the “reasonable” steps may depend on the circumstances of each case, marking confidential documents, placing physical and electronic restrictions to access trade secret information, introducing a systematic monitoring system and raising awareness of employees are the measures taken to safeguard trade secrets.

Differences between patent and trade secret

Once the conceptual and legal clarification on trade secret and patent has been completed, let us now understand the difference between the two concepts.

When patenting a formula or invention it is required to publish exactly how it can be reproduced and the specific use behind it. This grants exclusivity rights to the owner of the patent asset for a limited time. Trade secrets have no exclusive rights, the information is kept secret simply because it gives the company significant advantage over others. Nevertheless, these secrets can be broken through independent discovery and accidental or intentional disclosure (POUNDSTONE, 2001: 24), within the company that drastically affects their profit, image or reputation.

Let us think about the formula of Coca-Cola, a famous trade secret behind it.

There are some variations of how the story of the formula goes but the company has its own version of it. The drink’s original inventor John Pemberton created the drink in 1886 and had shared the recipe with only a couple of people before his death in 1888. Coke’s original founder Asa Candler purchased the rights in 1891 and made a few changes to it. The recipe, however, would not be written down until 1919. It had originally just been passed down by word of mouth. Then, in 1919, a group of investors led by Ernest Woodruff took out a loan to purchase the company and he needed collateral for the loan. Coke gave him a written version of the formula to use as such. From that time on, the document was guarded in an Atlanta bank for many years.[2] 

Some of Coca-Cola’s patent inventions refer to methods that recognize contaminants, specific recipients, refrigerants and other types of sample-taking systems. However, the exact composition of the formula is unknown to the public and has gone through many changes over the years.

If a trade secret only lasts as long as the IP can remain secret, it may seem to make more sense to get a patent because a patent grants its owner the right to exclude all others from the invention. Absolutely, there is an even more important reason. In Mozambique, United States of America, South Africa patent only lasts for less than 20 years to be exact.

Well, patenting a Coke formula, means that the company would have to disclose its closely guarded formula, thus opening itself up to competitors copying the recipe.

Keynotes for the better protection of Trade Secret

There are some points that must be considered for better protection of trade secret, below listed.

• Development of a trade secret policy inside the organization.
• Establishment of binding rules for the employees in their employment contracts that shall guarantee greater protection of trade secret.
• Approval of code of conduct and ongoing training programs about trade secret in other to ensure its protection and the ability to enforce.
• Strategy based on a cost-efficient plan to protect and make the most out of the intangible assets.

Singapore, 19^th of May of 2023

[1] https://www.wipo.int/tradesecrets/en/tradesecrets_faqs.html (visited on 18th of May of 2023).

[2] https://blogs.luc.edu/ipbytes/2022/12/15/coca-colas-clandestine-operation-the-story-and-the-rationale-behind-the-worlds-greatest-trade-secret/ (visited on 18th of May of 2023)