Sunday, February 10, 2013

Post 4 Trade Secrets? Or no secret?

Happy Chinese New Year! Today I am going to share some thoughts about trade secrets. First, let's define trade secrets. From the TRIPS agreement, trade secret is defined as information that:

  • is not generally known to the public;
  • confers some sort of economic benefit on its holder (where this benefit must derive specifically from its not being generally known, not just from the value of the information itself);
  • is the subject of reasonable efforts to maintain its secrecy.

For small/medium-size companies, trades secrets are particularly important since their resources are no match to large corporations. However, trade secrets also weight heavy in the eyes of large corporations. It is a common sense that tech companies, like Intel, Apple or Google will classify their product R&D information as their trade secrets. But trade secrets are actually beyond that. For instance, Intel treats their fabrication yield (how many chips are function per wafer) as their top secret. By knowing the fabrication yield, people can predict how much Intel profit from these chips. Also the information on fabrication yield may reveal possible methodologies of Intel chip manufacturing. Leakage of these trade secrets will directly harm companies by letting their opponents to gain unfair advantages.

But as professor Lavian mentioned in the class, some companies, like Apple, always appear to have information leak that considered as "trade secret." Whether it is intentional for advertising effect or not, the fact that trade secrets are hardly to be kept in secret, makes me wonder how companies actually "value" their trade secrets. In my opinion, legal actions on violating trade secrets are much less effective than those on patent infringement. Don't get me wrong, law enforcement of violating trade secrets are very effective individually. But the targets of the legal actions on trade secret violations are never on the companies which gather these trade secrets, since that are incredibly hard to provide strong and clear evidence that the information/data is, in fact, not original. That means the companies that have their trade secrets leaked, usually cannot cover up their losses. And that really makes me rethink the importance of patent, with the truth that, you can't guarantee today's trade secrets of yours, are still your trade secrets of tomorrow.




2 comments:

  1. I agree, the flow of information is so ubiquitous today that even a crack in the dam of information can lead to very large consequences. Consider the example of if an Apple employee leaks the next iPhone. No matter how much Apple sues this poverty stricken man in China, Apple won't be able to recover the billions of dollars of loss in sales and information. It's all a tricky situation that keep CEO's awake at night.

    -James Maa

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  2. I think that the protection of trade secrets is something that only a few companies can do well, Apple and Coca Cola being the two that come to mind. Apple is well known for being able to keep the complete design of its new phones under wraps until their press conferences, and Coke is well known for concealing its formula.

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