What is a commercial secret?

A commercial secret is information of a technical, organizational, commercial, manufacturing nature, as well as any other information provided that:

1. such information is not known and not easily accessible for persons, who usually deal with this sort of information. In other words, the commercial secret first of all should be a real secret.

2. such information has commercial value, i.e.it gives advantages over other persons not having it (competitors).

3. a person legally controlling the information (owner), takes proper measures for keeping its secrecy.

4. it does not belong to any category of information, which can not be a commercial secret .

IT SHOULD BE TAKEN INTO ACCOUNT that information is a commercial secret only as long as these conditions are satisfied. As soon as at least one of them is not satisfied, the information ceases to be a commercial secret.

"Information" in this case should be understood in the broad sense of this word. For example it can be:

Technology - if it is not protected or may not be protected as invention but is known only to its owner and gives him/her/it advantages over competitors.

Composition of substance (raw material, preparation) - such as information may be more advantageously kept as a trade secret, if it cannot be determined by analysis of the finished product.

Know-how - methods or algorithms of fulfillment of production operations.

Methods of business administration, methods of management

The foregoing examples are only a part of information that can be a commercial secret.

In daily use one also encounters the term " know-how", which is frequently identified with a commercial secret. The legislation of Ukraine does not specify what belongs to "know-how" but based on the use of this term in world practice, know-how is close to a commercial secret.

The term confidential information is connected with a commercial secret.

PLEASE NOTE that:

• A commercial secret, if it is determined as such, belongs to confidential information.

• Not all kinds of confidential information are commercial secrets. For example a lawyer is obliged to keep a secret of information received from his/her client, however this information has not any commercial value personally for him/her.

The following categories of information CANNOT BE a commercial secret:

• incorporation documents, authorization documents for carrying out of business or individual lines of activity (for example licenses)
• information according to all established forms of financial accounting
• data necessary for examination of calculation and payment of taxes and other obligatory payments
• information on number and composition of employees, their wages as a whole and by professions and positions, as well as on availability of vacancies
• documents attesting payment of taxes and obligatory payments
• information on environmental pollution, non-observance of safe working conditions, sales of products injurious to health, as well as other violations of the legislation of Ukraine and amounts of damages
• documents concerning solvency
• information on the interests of officers of enterprises in co-operatives, small enterprises, unions, associations, other organizations carrying out business activity
• information that should be made public according to current legislation

Owners of a commercial secret have the right to use the commercial secret at their own discretion.

They have also the following exclusive rights:

1. the right to AUTHORIZE the use of a commercial secret.

2. the right to PROHIBIT the illegal disclosure, collection or use of a commercial secret, including to prosecute infringers at law.

The rights in a commercial secret are not subject to state registration in view of the nature of a commercial secret itself.

IT IS IMPORTANT TO KNOW that the rights in a commercial secret may belong to:

1. Legal entity or individual that legally determined information as a commercial secret, for example an enterprise, which developed a new technology, if the governing body of the enterprise took a decision that such technology was a commercial secret, and the rights in such technology do not belong to its developer (for fulfillment of the last condition it is necessary, as a rule, that it should have been stipulated by an agreement beforehand).

RECOMMENDATION: even if information may be obviously qualified as a commercial secret, it is more preferably to give it such status in writing - for example by issuing an order to classify such information as a commercial secret, etc.

2. Other persons, if their ownership of rights in a commercial secret is stipulated by an agreement. In this case several variants are possible:

1. rights in a commercial secret may to belong to an author (creator, developer) of such information,

2. owners of a commercial secret may transfer their rights in it to other persons under agreement.You can find out more information on the protection of a commercial secret by clicking here .