IP 103 - Trademarks v Trade Secrets v Patents– What’s the difference? (Trade Secrets)

By: Davidson Oturu


This is the final part of the article where we will examine trade secrets. We will also distinguish trademarks, patents and trade secrets.

Definition of trade secrets

The Black’s Law Dictionary defines trade secrets as “A formula, process, device, or other business information that is kept confidential to maintain an advantage over competitors; information — including a formula, pattern, compilation, program, device, method, technique, or process”. Thus, any confidential business information which provides an enterprise a competitive edge may be considered a trade secret.

As I referenced in the second part of this article, not all “inventions” can be protected as patents. As a result of this, scientific theories, food recipes, mathematical methods and commercial methods cannot be patented. You can read more on the part two of this series here. Part one of the article can also be read here as well.

However, certain “inventions” which are valuable can still be protected as trade secrets. It may be argued that strictly speaking, a trade secret is not an intellectual property right (IPR). However, in practice it has the same legal and commercial relevance as other IPRs and so it is dealt with in the same manner as other IPRs.

Article 39 of the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) provides for the protection of trade secrets. The TRIPS is an international legal agreement binding on all member nations of the World Trade Organisation (WTO). It sets out the minimum standards for the regulation by national governments of IPRS.

The factors that qualify confidential information as trade secrets are highlighted by TRIPS are as follows:

a)    It is a secret not generally known to the public;

b)   Due to the fact that the information is not publicly disclosed, it must have commercial value:

c)    It is the subject of reasonable efforts by the holder to maintain its secrecy.

Unique nature of trade secrets

Trade secrets can be broadly classified into two:

i)    trade secrets that protect inventions or manufacturing processes that do not meet the patentability criteria and therefore can only be protected as trade secrets. An example of this is a manufacturing process or customers list that cannot be protected as a patent but is considered valuable; and

ii)     trade secrets for inventions that fulfil the patentability criteria and could therefore be protected by patents.

A unique trait of trade secrets is that they are protected without registration or any procedural formalities. Thus, unlike patents and trademarks that are registered for a period of time, a trade secret can be protected for an indefinite period, provided it is not disclosed to the public.

Furthermore, unlike the United States of America that has a Uniform Trade Secrets Act, trade secrets in Nigeria and several countries are not protected by statute but are governed by contract, tort and other basic legal principles.

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