This paper by Jennifer Brant and Sebastian Lohse intends to inform policymakers about the contribution of trade secrets to knowledge transfer and collaborative innovation, with emphasis on technological know-how. It also aims to inform policymakers about certain shortcomings in existing frameworks for trade secret protection, which can undermine cross-border collaboration in particular.
The authors of this paper describe the value of trade secrets to innovative firms of all sizes and the role of trade secret protection in facilitating knowledge flows. At the same time, it identifies several factors that complicate the protection and management of trade secrets in today’s business environment. Many of the factors relate to the business environment itself, which is characterized by networked R&D and open innovation, globally dispersed teams of employees, increased employee mobility, digital storage of data, and the growing value of know-how as a source of competitive advantage – and thus a target for corporate theft.
Other risk factors derive from inadequate legal frameworks for trade secret protection, which make it difficult for trade secret owners to recover in the event of misappropriation. Legal fragmentation across countries, and even within countries and economically integrated areas, compounds this difficulty and further compromises collaboration and the sharing of know-how with external partners.
To overcome the challenges described in this paper, policymakers and industry groups may consider providing training for SMEs, to guide them in using trade secrets as part of their intellectual asset management strategies. Compared to larger firms, SMEs have relatively lower levels of experience with and fewer resources to dedicate to IP management. Innovative SMEs are likely to benefit from training on the appropriate actions they must take to protect confidential business information, in order to be able to enforce their rights before the courts in the event of misappropriation. They could also benefit from insights into how to institute effective processes for managing confidential information internally and vis-à-vis partners.