Overview of Trade Secrets

The World Intellectual Property Office (WIPO) provides the
following elements for information to qualify as a trade secret.
The information must be:

• commercially valuable because it is secret;




• known only to a limited group of persons; and




• subject to reasonable steps taken by the rightful holder of the
  information to keep it secret, including the use of confidentiality
  agreements for business partners and employees.

According to WIPO, “the unauthorized acquisition, use or
disclosure of such secret information in a manner contrary to
honest commercial practices by others is regarded as an unfair
practice and a violation of the trade secret protection”.

Famous examples of well-known trade secrets include: KFC’s
original recipe; The Coca-Cola Company’s secret formula for
COKE; the chemical formula for WD-40 and LISTERINE; and
Google’s search algorithm.

Trade Secrets in the UAE

The UAE does not have a standalone federal trade secrets law.
Instead, a piecemeal array of protections and remedies for trade
secrets can be found under the following federal laws:

• Commercial Companies Law (Federal Law No. 2 of 2015), as
  amended;




• Civil Code (Federal Law No. 5 of 1985), as amended;




• Penal Code (Federal Law No. 3 of 1987), as amended; and




• Industrial Regulation and Protection of Patents, Industrial
  Drawings and Designs Law (Federal Law No. 31 of 2006).

As a result, there is no unified legal definition of what
constitutes a trade secret onshore in the UAE, and the laws do not
define what type of information can be protected as a trade secret
and what conditions must be met for the trade secret to qualify for
protection. Each law does, however, set out its own penalties for
the misappropriation of a trade secret.

Non-Disclosure Agreements (NDA)

While the federal laws set out below do provide some protection
for trade secrets in certain circumstances in the UAE, the absence
of a specific trade secrets law means that there will always be
some uncertainty as to the type of information that is capable of
protection as a trade secret, what conditions must be present for
that information to qualify for protection, and what amounts to
unlawful disclosure.

Consequently, parties in possession of trade secrets should
consider putting in place a non-disclosure agreement with any third
parties to whom it wishes to disclose any confidential information.
NDAs are typically enforceable before the UAE courts.

UAE Laws under which trade secrets may be protected

The following federal laws contain protections and remedies for
trade secrets in the UAE:

UAE Companies Law – Article 369

The Companies Law provides sanctions against any person who
utilises or discloses a trade secret of a company. The penalties
are imprisonment for no longer than 6 months and/or a fine of at
least AED50,000 (equivalent to around USD 13,617) but no greater
than AED500,000 (equivalent to around USD 136,170).

Civil Code – Article 905(5)

The Civil Code provides that employees, are under an obligation
to keep the industrial and trade secrets of their employer, failing
which, the employee could be exposed to claims for damages or
compensation.

Penal Code – Article 379

The Penal code provides for sanction over the unauthorised
disclosure of trade secrets, for a person’s own
interest/benefit, or the interest/benefit of another, and the
person became entrusted with the secret by virtue of their
profession, craft, position, or art. A convicted person shall be
sentenced to imprisonment for a minimum period of 1 year and/or to
a minimum fine of AED20,000 (equivalent to around USD 5,447).

Somewhat unusually, the UAE Patent Law also contains provisions
that protects confidential “know-how”. However, these
provisions appear to be focused more towards protecting know-how
which contains patentable subject matter from disclosure before it
can be filed as a patent application.

Patent Law – Article 39 to 42

The UAE Patent Law prohibits the disclosure, use or publication
of know-how, where:

a) the owner of the know-how must show that necessary measures
had been adopted for maintaining the secrecy of the elements of the
know-how;

b) a written agreement had been in place, validly regulating the
know-how acquired and disclosed between them (the agreement must
include a definition of the elements of, the purpose of using, and
conditions for transferring, the know-how. The latter is defined to
include information, data, or knowledge of a technological nature,
acquired through a profession, which is capable of practical
application);

c) the know-how must not have been published or put at the
disposal of the public; and

d) the disclosure must have been unauthorised, with the
disclosing party knowing that the know-how was confidential, or if
it can be proven that another person in his position, would not
have been unaware of the confidentiality of the know-how (the
disclosure would then be deemed to have been unlawful).

Under the Patent Law, imprisonment for a period not less than 3
months, and not more than 2 years and/or a fine of no less than
AED5,000, and not more than AED100,000 (equivalent to around USD
1,362 to USD 27,233).

Originally Published 19 August 2021

The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.

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