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Trade Secrets in UAE

Trade Secrets in UAE

Trade Secrets in UAE

For a business, it is essential to bring new technology, innovations, and practices to stand out in the market. Since all these new practices provide a unique Identity to a business in terms of  process, patterns, and designs, it becomes highly important to protect them from the competitors. If the competitor came to know about it, then the unique element of the business will be lost, and it will become a standard practice. So, in order to protect the commercial interest of the business, all such information and practices are protected by the concept of “Trade Secrets”.

In legal terminology, trade secrets refers to a company’s intellectual property (innovations, practices, functional knowledge, etc.) which can be kept confidential and protected for an indefinite period.

For classifying a particular innovation as Trade secret, certain conditions need to be fulfilled. These conditions are as follows-

  1. The Trade secret must contain some commercial relevant information.
  2. It must have economic value and it is unknown to others.
  3. It can’t be made available to the general public, private enterprises, or even to the government.
  4. The knowledge must be secret, and reasonable steps should be taken to protect it.

One of the special characteristics of trade secrets is that they can be protected without any registration. Further, they can be protected for an indefinite period of time. Some of the common examples of trade secrets include, the formula of making Coca-Cola, the mix of KFC Secret Spices, Google algorithm for searching, etc.

UAE Laws Regarding Trade Secrets
In the UAE, trade secrets are strictly protected through various federal legislations. The main provisions pertaining to trade secrets are as follows-

The Federal Law No. 31 of 2006 (Industrial Regulation and Protection of Patents, Industrial Drawings, and Designs) provides a framework for the protection of commercial sensitive information of a business. Article 39 of the law states that the confidential information of a business shall be protected from Illegal use, disclosure, or announcement by any third Party.  Article 40 of the same law allows a business to use the know-how(confidential information) in a free and fair manner.

Further, as per Article 905(5) of Federal Law No. 5 of 1985 (UAE Civil Transactions Law), there is an obligation on the employee to not disclose the commercial secrets of a business even if the contract of employment has terminated or expired.

Moreover, Article 120 of the UAE Labour law allows an employer to terminate the employee from the business, if he reveals any trade secrets of the business. The Commercial Company Law of UAE imposes a criminal liability on a person which indulges in revealing the commercial relevant information of a business in a fraudulent manner.

Non-disclosure Agreement
One other effective way, which is widely used, to protect the trade secret is a non-disclosure agreement (NDA). It is an agreement which legally prohibits a person (who possesses this information) from disclosing it to other parties. In UAE, It is becoming a common practice for the companies to ask its potential employees to sign a non-disclosure agreement before joining the company. If a person breaches the agreement, strict legal action can be initiated against him/her.

So, as we saw above, trade secrets are one of the most precious assets of a business and they are protected with a well dedicated legal framework in the UAE.

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