Trade Secrets in Kenya: A case for Small & Medium Enterprises

Trade Secrets in Kenya: A case for Small & Medium Enterprises 150 150 administrator

trade secret
It is evident that the Kenyan economy is being driven by the SME sector. The hosting of the Global Entrepreneurship Summit by Kenya and the rush by investors, banks included to inject billions of shillings into the SME sector is a testament that Kenya is indeed a hotbed for opportunities. The growth of the Kenyan SME sector is characterized by entrepreneurs who are innovative, wildly creative, and ambitious with a burning urge, need and desire to always push boundaries. These breed of entrepreneurs is always willing to wander into uncharted territories with an aim of breaking set societal ceilings.
The characteristics of the drivers of the Kenyan SME sector has given rise to countless innovations that give their respective business a competitive edge against their competitors. It is thus becoming necessary for SMEs to implement appropriate intellectual property management strategies to protect their trade secrets.
Trade secrets include sales methods, distribution methods, consumer profiles, advertising strategies, lists of suppliers and clients, manufacturing processes e.t.c. Broadly speaking, any confidential business information which gives an enterprise a competitive edge may be considered a trade secret and where the unauthorized use of such information by persons other than the holder is regarded as an unfair practice and a violation of the trade secret and includes industrial or commercial espionage, breach of contract and breach of confidence. Due to the fact that constant innovation is the only distinguishing factor amongst the SMEs, protection of trade should thus follows as a mandatory measure. It is only through innovations that SMEs can expand their capacity, generate capital investments, increase productivity, advance technologically and increase their overall market share.
Contrary to patents, trade secrets are protected without registration, that is, trade secrets are protected without any procedural formalities. Consequently, a trade secret can be protected for an unlimited period of time. For these reasons, the protection of trade secrets may appear to be particularly attractive for SMEs. However for some information to be considered a trade secret it must comply with the following requirements referred to in Art. 39 of the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS Agreement) which Kenya is a party to:
• 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).
• It must have commercial value because it is a secret.
• It must have been subject to reasonable steps by the rightful holder of the information to keep it secret (e.g., through confidentiality agreements).
SMEs should rely on trade secrets for the protection of their intellectual property due to the following reasons:
• Trade is not limited to time and thus operates indefinitely as long as the secret is not revealed to the public.
• Trade secrets involve no registration costs apart from the costs of preparing the various documentation that protects the secret.
• Trade secrets have immediate effect as opposed to the patenting process which takes about 2 years in Kenya.
• Trade secret protection does not require compliance with government regulations apart from formalities of contract law.
• Where a secret is not patentable then a protection as a trade secret is appropriate.
• Broad range of protectable subject matter
• Applies to innovations that are in the conception stage
• May be used in combination with other IP protection mechanisms to protect complex inventions Unlimited
• Assists in appropriating returns to innovation investment
• Assists in arranging for financing of further commercial development
• Availability of legal remedies in cases of breach.
Some of the strategies that can be used by SMEs to protect their trade secrets include:
• If a secret is patentable then organizations should consider whether they should patent them
• Ensure that only few high level executives have access to trade secrets and ensure that even the access to this special group is highly controlled.
• Use of confidentiality and non disclosure agreements with employees and business partners where such people come into contact with any confidential information.
For any SMEs that may want to adopt the use of trade secrets, it is always important to have the following as your standard checklist:
• Identify and catalogue your trade secrets.
• Put in place physical, technical, and contractual measures for protecting your trade secrets.
• Document trade secret protection measures you take as a reference tool in case of disputes.
• Develop and implement a trade secret protection policy and sensitize all employees on the provisions of this policy.
• Always have non-disclosure agreements (NDAs) before entering negotiations with third parties.
Written by,
Eugene Sudi
Managing Partner